The Bank for Agriculture and Agricultural Cooperatives (BAAC) made the final two payments of outstanding debt owed to farmers participating in the rice-pledging scheme to two growers in Khon Kaen province on Tuesday. The payments marked an official end of probably the most costly and corruption-prone policy ever implemented in this country.
Altogether 92 billion baht has been paid to some 800,000 farming households in less than a month, from the BAAC’s own revolving fund and loans secured from financial institutions through the Public Debt Management Office, after the decision made by the National Council for Peace and Order (NCPO) to address the plight of the rice farmers.
NCPO chief Prayuth Chan-ocha has made it crystal clear that the contentious pledging scheme will be scrapped. He also ruled out any return to the rice price guarantee scheme which was implemented by the previous Democrat-led government — another costly populist programme, although not as costly as the Pheu Thai-run scheme.
The death knell has been sounded for rice pledging. But the mess that the scheme has left behind has yet to be cleaned up. And the biggest part of this mess is the alleged massive corruption and the lack of credible information about rice inventories kept in government stockpiles.
The NCPO, however, has realised the need to continue supporting rice farmers in the absence of the rice-pledging scheme.
A new budget, amounting to 60 billion baht, will be made available to subsidise rice production costs, helping to pay for inputs such as chemical fertilisers, pesticides and land rental fees. It is estimated that, through this approach, the production costs for each farming household can be cut by 500 baht per rai for each crop.
What the military junta appears to have overlooked at this juncture is the second-crop farming in the Central Plains, which will soon be harvested. Apparently, these farmers will not be covered by the 60-billion-baht fund. Some kind of help should be worked out to ensure they receive fair prices for their crops.
The concept of cost cutting has been standard practice in the private sector to improve financial standing. But for farmers, production costs should not be the only benchmark to determine their revenue or to determine the fair price that their crops deserve. Farmers should be able to have quality of life, which means they should be able to sell their crops at a price above their costs or above the average cost of living.
While subsidising pesticides and fertilisers will help cut production costs for farmers, heavy dependence on chemical usage will destroy farmers’ health and the environment in the long run.
The NCPO should make it a policy to encourage farmers, on a voluntary basis, to turn to organic farming. There are several success stories of organic farming which should be presented to the farmers as motivation for them to change. In its initial stage, however, organic rice farming may not generate good yields, and may take several years to do so. State financial support is therefore needed during this period.
As far as rice farmers are concerned, the ultimate aim of the NCPO, the interim government which will soon be formed and future governments is not to sustain Thailand’s position as the world’s top rice exporter, but to ensure that our farmers can enjoy a better life than they have been living for generations, and secure a better future for their children.