Thailand extends costly rice-buying scheme

AP News
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Posted: Sep 03, 2013 7:25 AM

BANGKOK (AP) — Thailand's Cabinet agreed Tuesday to extend rice subsidies widely criticized for high costs and knocking the country from its spot as world's top rice exporter.

The Cabinet approved a total budget of 270 billion baht ($8.4 billion) to buy 16.5 million tons of rice at above-market prices from farmers for another year, Deputy Prime Minister Kittirat Na Ranong told reporters.

Under the renewed program, farmers will be paid 15,000 baht ($467) per ton, or about 50 percent above what they would get on the world market. The government will cap the total value for each qualifying household at 350,000 baht ($10,890).

The rice-buying scheme, a flagship policy of Prime Minister Yingluck Shinawatra's government, has accumulated losses of at least $4.46 billion since it was introduced in 2011. Attempts to lower the payments faced resistance from farmers, whose votes helped Yingluck's party win a commanding victory in 2011 elections.

Despite the purchasing limit, which was introduced for the first time, the government will pay 30 billion baht ($933 million) more than it did in the last harvest year.

Deputy Agricultural Minister Warathep Rattanakorn said the government expects losses will be as much as 100 billion baht ($3.1 billion) for the harvest year that began September.

Rice, Thailand's staple grain, is one of the country's main exports. India and Vietnam surpassed Thailand as the world's top rice exporters in 2012 as the Thai government stockpiled rice to avoid even bigger losses.

Thai governments have intervened in the rice market through a variety of means since the early 1960s to help farmers, but the current scheme has its roots in the populist policies of Yingluck's brother, former prime minister Thaksin Shinawatra, who won landslide victories in two elections before he was ousted in a 2006 coup.

The scheme has been dogged by corruption and accusations the government has hidden its true cost. Previously, officials refused to reveal how much rice the government had stockpiled.

Warathep said the government has installed CCTV cameras at buying points and weighing stations, and put extra police officers at checkpoints to make sure that rice payments are made to farmers.


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