Section 44 urged for rice sales

Section 44 urged for rice sales

The government is being urged to exercise the powerful Section 44 of the interim charter to cut red tape and speed up sales of state rice stocks.

Nipon Poapongsakorn, a distinguished fellow at Thailand Development Research Institute (TDRI), said the government's rice sales of 750,000 tonnes over the past two years were considered relatively slow and small compared with the 17.3 million tonnes accumulated through various rice pledging schemes from 2011-14.

Mr Nipon was speaking at a seminar jointly held by TDRI and the Agricultural Research Development Agency yesterday.

He said the government would be subject to more losses while rice stocks would be degraded on a gradual basis should it fail to speed up rice sales.

The government is estimated to shoulder annual warehousing costs and interest of up to 18.3 billion baht or about 1,570 baht a tonne.

Mr Nipon suggested the government sell rice stocks twice a month both on a whole-warehouse basis and a stack basis.

Substandard rice suitable for animal feeds or ethanol production should not be sold on the whole-warehouse basis as this would incur hefty losses.

The government could evoke Section 44 to cut complicated state procedures in selling rice, he said.

The government is estimated to control about 4.6 million tonnes of substandard and even rotten rice no longer suitable for human consumption.

Mr Nipon said the government also needed to come up with control measures to prevent those grains from being resold to consumers.

"According to our study, the faster the government can sell its rice stocks, the lower the losses it will incur," he said.

TDRI estimates the government will face additional losses of 10 billion baht should it fail to dispose of rice stocks within a year.

It estimates the rice scheme, which offered farmers prices much higher than market prices, cost the state about 580 billion baht based on rice prices as of May when milled rice was quoted at 14,000 baht a tonne. The losses were earlier estimated at 540 billion baht.

Mr Nipon said the heftiest losses were incurred largely from sales using fake government-to-government contracts without disclosing any information.

He said transparent auctions are the best way to fetch good prices.

"The costly lesson we have learned from the rice pledging programme is that the government should not think about price intervention for all farm crops," he said. "Various and complicated state regulations don't facilitate rice sales."

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