The problem with handouts is that once you start, it's very hard to stop.
A rubber farmer shouts in anger at a street protest in Surat Thani. The Pheu Thai government’s refusal to help rubber farmers in the same way it has aided rice farmers is being criticised as a policy double standard.
Prime Minister Yingluck Shinawatra and the Pheu Thai Party have committed _ well, lost _ hundreds of billions of baht over the past three years in a failed effort to move global rice prices upwards.
With all the largesse spent on rice farmers, why wouldn't other farmers seek their own handouts? The government last week caved in to rubber farmers by approving additional subsidies following nationwide protests.
Now maize growers are gearing up to launch their own campaign for state aid, under the concept that a government which purportedly stands for social and political equality would certainly offer equal treatment to all farmers, regardless of the crops planted in their fields. Three years ago Ms Yingluck offered rice farmers a boon in the form of a 40% price hike for their crops. Why shouldn't other planters receive the same?
And to what end? The reality is that local farmers invariably produce more than justified from domestic demand alone, whether it be cassava, palm oil, longan, lychee or rambutan. Do they also not deserve state assistance at a similar scale as rice farmers?
The crux of the problem however is that after two years and over 700 billion baht spent on the rice-pledging scheme, the government has made no case that rice farmers and the country's rice industry has fundamentally improved.
The standard of living of farmers has not improved, nor has debt decreased. Indeed, household debt in the first quarter stood at 77% of gross domestic product, compared with 56% in 2008. More alarmingly, among households earning less than 10,000 baht per month, as much as 62% of income is set aside to pay debt, or more than double the overall average, showing that the problem of poverty and debt has hardly improved.
From an industrial perspective, Thailand has lost its position as the world's largest rice exporter, as the high pledging prices have made Thai grain uncompetitive on the world market. Thai rice shipments in 2012 fell 35% from the year before to 6.95 million tonnes, while exports from January to July of this year were off 5% year-on-year to 3.61 million.
Most damningly, the rice-pledging scheme has done little to move market prices. According to the Office of Agricultural Economics, average paddy prices with 15% moisture nationwide in 2012 was 10,156 baht a tonne, and 9,949 baht for the first eight months of 2013.
Because of high moisture content, many farmers receive less than the 15,000 baht per tonne for paddy rice so widely publicised by the government. Farmers in remote rural areas, meanwhile, prefer selling paddy to merchants who find a way to pledge the grain and profit from the scheme.
It is estimated that there were 35 million tonnes of paddy or 23 million tonnes of milled rice pledged over the past two seasons, while current government stockpiles now stand at more than 17 million tonnes. If management expenses are included, overall losses for the rice-pledging programme to date are as much as 300 billion baht.
And even with these problems, the government has already approved 270 billion baht in fresh funds to support the pledging scheme for next season.
This in turn has created an uproar among farmers of other crops, such as rubber planters, who led protests against the double standards employed by the government in justifying its overall agricultural support policy.
Rubber planters from the South demanded the government pay 95 baht per kg of unsmoked rubber sheet against the market price of 78 baht, to help compensate for rising production costs, including labour and farm inputs.
Ultimately the government agreed to set aside 21.2 billion baht to pay rubber planters at 2,520 baht per rai, which policymakers believe would translate into earnings of 90 baht per kg.
This comes on top of assistance given earlier this year, when the government spent 20.2 billion baht to buy 200,000 tonnes of rubber from planters to help absorb excess supply and shore up domestic prices.
The reality is that prices for rubber, like rice, are driven by global market forces well beyond the resources of the government to influence on a large scale. Farmers understand this well.
A boom in energy crops worldwide helped push domestic unsmoked rubber prices to 80 baht a kg in 2008, but fell to just 60 baht the following year as the global economic crisis erupted. Prices rebounded in 2010 and 2011 to 106 baht per kg and 133 baht respectively, driven by high demand from the Chinese auto industry.
Uthai Sornlaksap, chairman of the Thai Rubber Council, said production costs now stand at 84 baht per kg, well above the 64 baht figure offered by the Agriculture Ministry.
Mr Uthai estimates there are one million tonnes of rubber sheet set to enter the market over the next seven months. But prices in March and April 2014 should receive a boost as production enters the low season.
Mr Uthai said that the best way to subsidise rubber growers would be for the government to pay the difference between market and target prices.
If using market prices on Friday of 78 baht per kg of unsmoked grade-3 rubber sheet, this would mean a subsidy of 12 baht based on a target price of 90 baht. Overall, this would require a subsidy fund of about 12 billion baht.
Using a similar principle for rice farmers would still benefit growers while significantly reducing the outlay for taxpayers, Mr Uthai said. If paddy prices next season are targeted at 15,000 baht a tonne, the subsidy cost would be 5,000 baht per tonne direct to the farmers based on current market prices of 10,000 baht per tonne for paddy rice.
"If we limited the subsidy plan at 10 million tonnes, it would require about 50 billion baht to run the scheme, far less than the 270 billion baht set aside for the next crop," Mr Uthai said, adding this would help alleviate the feelings of injustice and unfair treatment between rice farmers and planters of other crops.
Walailak Keeratipipatpong is an assistant business editor for the Bangkok Post.