Mortgage plan is flawed, says economist
By Post reporters
Benefits for farmers from the rice mortgage scheme urgently designed by the government to end a road blockade threat amid anger about decreasing prices are in question.
Chulalongkorn University economist Narong Petchprasert called the government's programme, which it is set to implement next Sunday to shore up paddy prices, a belated measure and said it was likely to benefit only millers and middlemen, many of them politicians' canvassers.
With paddy from second-crop farming harvested in May and no storage space of their own, most farmers had already sold their paddy at low prices, said Mr Narong, who studied the issue and found that seven out of 10 millers were linked to local politicians.
So far most second-crop farmers only have a small volume of paddy left to join the government's mortgage scheme, he added.
Mr Narong warned of possible corruption by millers, middlemen and even officials because of no measures to make sure the money set aside by the government for the programme will be efficiently used to achieve the goal.
Without prudent supervision from officials, millers could take paddy from farmers and pay them lower than the government's mortgage rates, then enjoy the margin, he added.
While the government would guarantee the price of paddy with 15% moisture at 14,000 baht per tonne, millers could claim the moisture in farmers' paddy exceeded that percentage and pay them much lower than the guaranteed price. Millers could then get 14,000 baht a tonne for the same paddy from the government's mortgage scheme, according to Mr Narong.
''Under the scheme, the government is handing state money to millers, so that millers could buy paddy from farmers and keep it in their warehouses without any inspection by government officials,'' he said.
To prevent rice and paddy price manipulation in the long run, Mr Narong suggested the government build state paddy warehouses around the country to lend farmers space to store their paddy. It would enable farmers to keep their paddy while waiting to sell it at preferable prices, he added.
The scheme announced last Wednesday will be run by the Bank of Agriculture and Agricultural Cooperatives, under the Finance Ministry.
Rewat Saengnil, a miller in Saraburi, said he agreed with Mr Narong that the scheme came too late, even though the guaranteed prices are satisfactory.
He said the government should not allow any miller to accept especially high volumes of mortgaged paddy. The volume of mortgaged paddy via each miller should be capped at between 2,000 and 3,000 tonnes, in order to spread the risk of damage.
Mr Rewat added there are both honest and corrupt millers, and the government should blacklist those who have been found to be corrupt and bar them from the scheme.
''I don't know why they allow corrupt millers to join the scheme,'' he said.
But Chaiyaporn Prompan, an award-winning farmer from Suphan Buri's Bang Pla Ma district, welcomed the scheme, saying although it is coming a bit late, it is better than nothing.
Mr Chaiyaporn said he, too, had sold most of his paddy, but expected the new paddy next July to fetch higher prices under the mortgage scheme.
''With the scheme, millers and middlemen can't push down paddy prices as much as before,'' he added.
In an attempt to make the scheme truly benefit farmers, Agriculture Minister Somsak Prissananantakul recommended mortgage scheme operators to group provinces into different mortgage zones and allow farmers to mortgage their paddy via any millers in their zones.
His suggestion was intended to give farmers a wider choice of millers in the mortgage scheme.
Mr Somsak said in the past farmers were allowed to mortgage their paddy with millers in their province only, giving local millers the chance to exploit them.
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