More grains pledged than state expected
The government’s rice pledging budget for the 2012-13 season may increase as a great amount of paddy poured into the scheme, spurring the national rice policy committee to request an extra 9 billion baht in funding from the cabinet.
Deputy Prime Minister and Commerce Minister Niwatthamrong Bunsongphaisan, who led yesterday’s meeting, said up to 1.34 million tonnes of paddy was found in excess of the 22-million-tonne target the government planned to buy from farmers during the previous harvest season.
Of the 1.34 million tonnes, 450,000 belong to farmers who have already been issued vouchers to cash in at the Bank for Agriculture and Agricultural Cooperatives but have yet to be paid.
The remaining 890,000 tonnes are owned by registered farmers who failed to complete their harvests in time for the season’s end on Sept 15.
The state expects to spend 6 billion baht on the former group and 3 billion baht on the latter.
For the latter group, however, payment will come in the form of compensation to farmers of 2,500 baht a tonne for up to 30 tonnes per household.
The government has already spent 330 billion baht to buy 22 million tonnes of rice from the first and second crops of the 2012-13 season.
Mr Niwatthamrong said the committee also agreed on a plan to ask the government to set aside 7 billion baht.
The amount is the value of rice the Commerce Ministry has taken from the state’s stockpile for donations both inside and outside the country as dictated by the government.
The proposal will be put forward for cabinet approval next week.
The cabinet approved the extension of the scheme in August, aimed at buying 16.5 million tonnes of paddy from farmers in the 2013-14 season using a budget of 270 billion baht.
MR Pridiyathorn Devakula, a former Bank of Thailand governor, said the government will be subject to 205 billion baht in estimated losses each year from the rice pledging scheme.
Rice farmers have obtained only 40% of the budget spent, he said.
The Finance Ministry panel overseeing the pledging scheme’s accounting, led by Supa Piyajitti, the deputy finance permanent secretary, estimates a combined 400 billion baht in losses from the scheme over the past harvest years.
The programme’s losses arise mostly from the difference between the pledging price and the global market price.
MR Pridiyathorn said increasing farmer income must not damage the government’s fiscal sustainability.
Nipon Poapongsakorn, a former president of the Thailand Development Research Institute and now a fellow at the TDRI, said ballooning spending reflects inefficient management of the rice scheme at the expense of taxpayers.
“The rules and pledging procedures have been set, but the administration has never abided by them,” he said.
“That’s the root cause of inflated payouts. And if this happens, it’s better not to have any rules or resolutions of the rice policy committee or even of the cabinet.”
First published in Bangkok Post, 10 October 2013.