The government's rice-pledging scheme is expected to accumulate a financial loss of 600 billion baht in two years, the Thailand Development Research Institute (TDRI) says.
Nipon Poapongsakorn, a distinguished fellow at the TDRI, said the estimate was based on the assumption that the government can release all the rice stock within four years.
The expected loss has taken into account rice quality deterioration, interest payments, warehouse expenses and average rice prices quoted by the Commerce Ministry.
He said the loss will be higher than the 205 billion baht per year predicted by MR Pridiyathorn Devakula, a former deputy prime minister and Bank of Thailand governor.
Mr Nipon, who is a former TDRI president, said the 2013-2014 rice-pledging scheme will be problematic as the government's expenses are expected to reach 600 billion baht, exceeding the 500-billion-baht limit set for the two-year scheme. The government has set aside 270 billion baht for the 2013-2014 season, which started on Oct 1.
Although the government may be able to earn 160 billion baht from rice sales during the last pledging season, only about 20 billion baht will be left for the government to spend for the new season.
This is because the money has to be sent to the Bank for Agriculture and Agricultural Cooperatives to repay loans it helped raise to finance the scheme, Mr Nipon said.
Meanwhile, Democrat MP for Phitsanulok Warong Detkitvikrom said only 19 rice mills have registered for the scheme for the 2013-2014 season, in contrast to the 250 mills targeted by the government. The small number of participating mills could force the farmers to sell their product outside the scheme, he told a House debate on the scheme yesterday.
Mr Warong said many farmers have complained they are still waiting for payment for the sale of their paddy during the last pledging season.
The government has been unclear where it would seek the money to pay farmers who sell their paddy in the 2013-2014 season, he said.
Deputy Agriculture and Cooperatives Minister Varathep Rattanakorn said the current season has just started, so the small number of rice mills taking part in the scheme does not pose a problem.
Some rice mills are still busy handling stock from the previous programme, which prevents them from joining the new one, he said.
Mr Varathep, who is also a deputy chairman of the National Rice Policy Committee, said 647 rice mill operators have asked to join the new programme. He said the cabinet will approve payments for farmers still owed money on Tuesday.