The Commerce Ministry is slowing its sales of stockpiled rice to ease pressure on market prices after the junta agreed to let the Bank for Agriculture and Agricultural Cooperatives (BAAC) use its own liquidity and issue bonds to settle overdue payments to rice farmers.
Luck: Billions to rice farmers to date
The ministry will reduce its monthly repayments to the state-backed farm bank to 6 billion baht a month from 8-10 billion, said BAAC president Luck Wajananawat.
With no fund-raising options available under the former caretaker government led by Yingluck Shinawatra, the Commerce Ministry's rice sales had appeared to be the only channel for steering funds to farmers.
But the speedy stockpile release has taken a toll on the market price, as seen by the fact that paddy with moisture content of 25% is selling at just over 6,000 baht a kilogramme compared with 11,000 to 12,000 baht per kg under the rice-pledging scheme.
The scheme was at the heart of the Pheu Thai Party platform that helped sweep Ms Yingluck to power in the 2011 general election.
But it created hundreds of billions of baht worth of losses with a pledging price 40-50% above the market price, filling state warehouses with a massive surplus of unsold rice.
The scheme began in October 2011 before being shelved for the 2014-15 second crop after Ms Yingluck dissolved the house last December.
The Yingluck government was months behind schedule in paying 92 billion baht owed to about 800,000 farmers who pledged rice during the 2013-14 main crop.
Mr Luck said the National Council for Peace and Order has yet to come up with a clear policy on rice subsidies.
The BAAC has already paid 40 billion baht to 400,000 rice farmers and plans to offer an additional 15 billion baht from the bank's liquidity to make advance payments, he said.