PM insists rice scheme stays

Farmers' rising incomes 'will stimulate economy'

Prime Minister Yingluck Shinawatra and her cabinet insist the rice pledging scheme will continue despite strong criticism by the government's chief adviser.

Protest gathers steam

About 500 rice farmers protest outside the campus of the National Institute of Development Administration (Nida) in Sikhiu district of Nakhon Ratchasima province yesterday. Nida’s academics oppose the government’s rice pledging scheme. The farmers say the policy has helped free them from massive debts and improved their lives. PRASIT TANGPRASERT

Ms Yingluck said Tuesday the rice pledging programme was aimed at helping rice farmers and the rising incomes of farmers would eventually stimulate the national economy.

She was responding to criticism by Bank of Thailand chairman Virabongsa Ramangkura who urged the government to scrap the scheme. Mr Virabongsa, who leads the government's Strategic Committee for Reconstruction and Future Development, said the programme is leading to huge debts and corruption, and does not benefit farmers, only politicians and millers.

Ms Yingluck said critics should ask farmers directly if they were benefiting from the scheme and that her administration specifically designed the scheme to help farmers.

The prime minister said her government was trying to export pledged rice in government-to-government deals at reasonable prices.

Ms Yingluck added that mechanisms were in place to tackle corruption in the scheme and she was ready to listen to critics.

Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong echoed Ms Yingluck's views. He said the government was watching out for possible corruption and the stronger purchasing power of farmers would benefit the national economy.

"It is good for many parties to raise their concerns," Mr Kittiratt said. "Please wait and see how good the implementation is. I am confident the policy is good and I am also confident that Mr Virabongsa thinks this project is good. That is why he said that unless it is implemented well and successfully, it will cause damage."

He said the government is generating money from the sales of pledged rice and will spend it to maintain the programme. Mr Kittiratt added the government will exclude corrupt millers from the scheme and will speed up payments for farmers who have pledged rice.

Commerce Minister Boonsong Teriyapirom said the comments by Mr Virabongsa represented an academic opinion. Mr Boonsong said he would work out measures to prevent graft.

The minister admitted the rice pledging scheme would suffer losses, but they would not be higher than the losses incurred from the rice price insurance scheme policy of the previous Democrat-led government.

He estimates the losses from the pledging scheme in the 2011-2012 crop season at 60-70 billion baht.

He said the previous Democrat-led government spent 70-80 billion baht annually to support rice prices but had no stocks of rice to manage.

The Pheu Thai-led government's rice pledging programme is better, he said, because it buys stockpiles of rice that enable it to manage exports and also domestic rice prices in order to ensure food security. The policy has led private exporters and millers to buy rice from farmers at higher prices, Mr Boonsong said.

The government expects to spend about 300 billion baht on the pledging scheme in the 2011-2012 crop season and will generate about 240-250 billion baht from selling the rice, Mr Boonsong said, adding that all the money will be collected by the end of next year.

The government has signed contracts to sell 8.38 million tonnes of rice; 7.33 million tonnes are under government-to-government deals, he said. The main buyers are China and Indonesia, with Ivory Coast and Bangladesh buying smaller amounts.

About 4.17 million tonnes of rice remain in the government's stocks, Mr Boonsong said.

The government said it plans to spend 405 billion baht on the pledging scheme in the 2012-2013 crop season and will borrow up to 150 billion baht to help fund the scheme next year.

To cope with possible corruption, the government will use satellite photos to estimate rice yields in the country and set a reasonable budget for the pledging scheme.

The government will also try to convince Vietnam, Cambodia, Laos and Myanmar to form a rice-producing bloc of nations that will join forces to raise rice prices in global markets.

Mr Boonsong thinks the idea is possible because the five countries in the Mekong River basin export 16-17 million tonnes of rice annually compared with global demand of 32 million tonnes. He expects the countries to reach an agreement on the plan next month.

Opposition leader Abhisit Vejjajiva urged the government to admit the rice pledging scheme was problematic and wasteful. He said many groups, including academics, had analysed the scheme and that their warnings were now coming to pass.

He said there were other ways to help farmers. With the government's pledging scheme, only one-third of the budget actually reached farmers' pockets, he said.

Mr Abhisit warned the scheme would end up hurting rice farmers because no one would buy their rice in the future.

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