B100bn still owed to bank from earlier rice schemes

Amid growing debate over the costly rice pledging programme, the Bank for Agriculture and Agricultural Cooperatives (BAAC) says the government still has outstanding debt of 100 billion baht accrued under previous rice schemes.

The amount excludes the financial burden created by the incumbent government in last year's rice pledging scheme and future plans, according to BAAC president Luck Wajananawat.

The rice mortgage scheme run more than a decade ago by previous governments was partially funded by excessive cash flow at the BAAC, the state bank responsible for implementing the programme, and by loans backed by the Finance Ministry.

In practice, the government must repay the debt owed to the BAAC, either using proceeds from the government rice auctions or through direct allocations from the central government budget.

In the past, the government gradually serviced the debt owed to the BAAC, repaying 30 billion baht last year and set to pay 49 billion baht this year.

To date, the government still owes an estimated 100 billion baht to the BAAC.

Mr Luck said the BAAC spent 269 billion baht on last year's rice pledging to buy 18 million tonnes of paddy from farmers starting last October.

The funds included 90 billion baht in bank cash flow.

In the new pledging scheme for the 2012-13 rice harvest, which began this past Monday, the government has already agreed to allocate an additional 150 billion baht from the BAAC, which must borrow the funds from the local markets using debt guaranteed in turn by the Finance Ministry.

The government plans to offer as much as 405 billion baht for the 2012-13 season to cover 34 million tonnes of paddy, with 23 million tonnes in the main crop and 11 million tonnes in the second crop.

Mr Luck said 14 billion baht from the previous scheme has been repaid by the Commerce Ministry, which promised to repay an additional 20 billion baht next week.

Commerce Minister Boonsong Teriyapirom insisted again yesterday that the government will proceed with plans to buy rice paddy and Hom Mali rice at the same pledged prices to raise farmers' incomes.

About the author

Writer: Wichit Chantanusornsiri
Position: Business Reporter