While a fierce debate is raging over whether the government's rice subsidy is more effective than the rice-pledging policy initiated by the Yingluck Shinawatra administration, at least the cash giveaways have proved a better method of passing on subsidies to needy farmers.
A farmer in Kalasin province plants rice. Most rice farmers still want to receive subsidies. PATTARAPONG CHATPATTARASILL
About 60% of the government's 40-billion-baht handout has been given to farmers in the Northeast and upper North who are poorer than those in other regions, said Bank for Agriculture and Agricultural Cooperatives (BAAC) president Luck Wajananawat.
In comparison, a mere 20% of money spent on the rice-pledging scheme was distributed to farmers in the Northeast and upper North.
"This reflects money is flowing to small farmers who really deserve to receive assistance as they can grow only one crop a year. In the pledging scheme, most money was concentrated on farmers who live in areas with irrigation systems. A lot of farmers live in Isan but they got less," Mr Luck told the Bangkok Post.
According to the state-backed farm bank's data, each farmer in the Northeast received around 50,000 baht a year from selling five tonnes of paddy on average to the pledging scheme, five times less than those in the Central region.
Growers in the Central region earned 230,000 to 250,000 baht a year from pledging 12-16 tonnes of paddy for each crop. They can plant more than one crop in each harvest year.
Moreover, 491,000 small rice farmers with less than five rai of land received 1,000 baht per rai under the current scheme, while their output was too small to reap benefits from the pledging programme.
"Public policy [to help rice farmers] should be done in this way. If we are unable to provide direct income subsidies, we must seek the second-best strategy," Mr Luck said.
"When the market mechanism runs fully in a certain period, providing direct income subsidies to farmers who are really poor at that time is appropriate. I urge price interventions to be lowered."
The handouts, which provided a maximum of 15,000 baht to each farmer householder, are part of the Prayut Chan-o-cha government's package to help rice farmers faced with tumbling prices.
Other measures include lowering costs and offering cheap loans to farmers in the Northeast and upper North who have barns to store paddy to slow down rice supply in the market.
The package was designed to help rice farmers but avoid guaranteeing the selling price by allowing the price to move in line with the market mechanism. The aim was to prevent a repeat of the market distortion caused by the pledging scheme.
Even though the rice-pledging scheme was a major policy that helped sweep former prime minister Yingluck to power in the 2011 general election, its guarantee to buy every single grain at a pledging price of 40-50% above the market price incurred a substantial cost to taxpayers and encouraged farmers to grow low-quality rice, which normally takes less time to cultivate.
In addition, about 17 million tonnes of milled rice sold to the scheme have been stockpiled in thousands of warehouses nationwide.
The Finance Ministry's subcommittee on accounting aspects for the rice-pledging scheme recently estimated that losses incurred from running the programme for five crops, starting from October 2011, will reach 518 billion baht.
Although rice farmers adversely suffered from overdue payments from the pledging scheme for several months and it had turned into disaster, 90% of farmers surveyed by the Thailand Development Research Institute still want to have such subsidies.
This has raised worries that the rice-pledging scheme will be rekindled after an elected government is set up.
"It is a transition period for Thai rice farming. Growing low-quality rice has been a main cause of the sagging prices," Mr Luck said.
After the rice-pledging scheme was terminated, rice farmers in the Northeast are increasingly keen to cultivate organic rice that complies with the euro zone's standards.
Thailand's rice industry is at risk of losing competitiveness if farmers do not turn to growing high-quality grains as the potential of farmers in other countries is on a par with Thai farmers but their labour costs are lower.
For example, Cambodian farmers can now produce fragrant jasmine rice called Phkar Mali.
To help Thai rice farmers in a sustainable way, the Agriculture and Cooperatives Ministry is planning to reduce plantation areas not suitable for rice by 700,000 rai within five years and to encourage farmers in these areas to grow sugar cane.
The ministry will encourage farmers with irrigation systems to plant more high-yielding rice breeds such as Hom Pathum, which yields more than one tonne per rai.
Mr Luck said the rice sector was also facing challenges from an ageing society and the transformation in production practices caused by a few companies buying land in cultivation areas and using advanced technology.
The BAAC is arranging a 10-year business strategy for the bank's and farming's sustainability. Under the plan, the bank will select 200,000 customers with good credit records to join a two-year pilot project.
Participants must identify who will be their heirs to take over their jobs. When the participants retire, their heirs will become BAAC customers and the bank will rebate 10% of the interest paid on loans to the retirees.
It is estimated the scheme will cost the bank about 70 million baht a year.