Pledging scheme house of cards waiting to fall

The rice-pledging scheme was one of the most controversial issues of 2012.

The matter was put to a three-day censure debate from Nov 25-27 in which the opposition Democrat Party blamed the government for Thailand losing its rank as the world's top rice exporter.

Prime Minister Yingluck Shinawatra was also accused of failure in tackling widespread corruption in the scheme, which ran for the second season since October 2010.

Despite surviving the debate, what Ms Yingluck told members of parliament failed to convince the opposition party or some academics.

She claimed pledging directly benefits farmers and increases prices of Thai rice.

But economists from the Thailand Development Research Institute (TDRI) disagree.

The researchers said 9.9 million wealthy and middle-income farmers have reaped the most rewards, with poor farmers benefiting only slightly.

Since the state has vowed to pledge every grain, farmers with big plantations benefit the most, they said.

The TDRI estimates 80% of the 350 billion baht earmarked for this first year of the new scheme eventually went to wealthy farmers.

They also believe the scheme could destroy Thailand's rice industry in the long run by taking away the incentives for farmers to develop better grains since the government will just buy their rice at high prices anyway _ 15,000 baht a tonne for regular paddy and 20,000 baht for Hom Mali.

Regarding exports, poor management by the government in handling the stock has upset traders and exporters.

Exporters blame the Commerce Ministry for not selling rice from its stockpile promptly, resulting in intermittent supply shortfalls.

Selling prices quoted by the ministry are also high and make Thai rice uncompetitive with rivals, particularly India and Vietnam, they said.

Exporters forecast a rice export volume of only 6.9 million tonnes in 2012, down from 10.7 million tonnes in 2013.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said India, which has assumed the mantle of world's biggest rice exporter, will continue to produce substantial amounts of rice at competitive prices.

India's milled rice production in 2013 will be an estimated 100 million tonnes, close to the 104 million tonnes produced in 2012.

Meanwhile, the new harvest will boost the Thai government's stock to 13-14 million tonnes.

Mr Chookiat still does not believe the government has sold 7.32 million tonnes of rice to foreign countries.

The situation concerns not only local exporters but also competitors for fear the Thai government may dump rice onto the global market at low prices in a bid to get more cash to buy more paddy.

But even critics concede that despite the perceived corruption and risk of destruction to the local industry, the rice pledging scheme remains extremely popular among farmers, the majority voters of the government.