Here is some simple arithmetic. Suppose you are a miller and you pay a farmer 15,000 baht for a tonne of paddy and, after the grain is milled, you sell the produce at 10,000 baht. Your loss is 5,000 baht, which is simple and straightforward.
But this is not what the government is thinking. It has been trying to convince the gullible among us to accept their logic - or twisted logic - concerning the 136 billion baht losses incurred by the rice-pledging scheme for the 2011-12 crop years.
In the "Yingluck Government Meets the People" programme broadcast on Saturday, Prime Minister's Office Minister Varathep Rattanakorn was quoted as saying, "as a matter of fact, the use of the word 'losses' I do not fully agree with because in taking care of the farmers, which means money has to be injected to subsidise [the scheme], the government has no intention whatsoever to make profits from the scheme, but the subsidies have to be kept in a proper proportion vis-a-vis the national budget".
So, Mr Varathep's statement can be interpreted as meaning that the 136 billion baht losses should not entirely be regarded as losses because the rice scheme is non-profitable. Then what should be the right word to use? Donation?
As the main speaker on the TV programme, Prime Minister Yingluck Shinawatra also said that the 136 billion baht losses should not be treated as a complete waste. "We should not just look at the figures of the losses but look at the benefits that the farmers have gained which has improved their livelihood," she said, adding that the amount of money injected into the economy from the scheme which has helped drive the economy could be as much as the amount of losses.
In short, the government's message is that the 136 billion baht losses were not a complete waste at all as viewed by all critics and the rice pledging scheme, the flagship populist policy of the Pheu Thai Party, will continue, at least throughout the government's term in office.
Interestingly, the prime minister said that the price cutback was a decision of the National Rice Policy Committee and the cabinet just acknowledged it. What actually does it mean anyway? I guess it means Ms Yingluck was not responsible. And if anyone should take the blame, it should be the committee and its head, Commerce Minister Boonsong Teriyapirom.
Despite the buck passing, my question is that if the benefits to the economy as a whole from the rice scheme are on par with the losses, why the need to reduce the pledging price of the "white" paddy from 15,000 baht to 12,000 baht a tonne?
The prime minister also had a few tips for rice farmers - that they should turn to planting sugarcane or tapioca because the crops can be processed into bio-fuel which is still in great demand. However, a zoning system has to be put in place first, she added.
I only hope that rice farmers do not quickly abandon rice cultivation and turn their rice fields into tapioca or sugarcane plantations - unless the government comes up with a zoning plan, a marketing plan for the two cash crops and a plan for bio-fuel development and production.
The world market is currently facing a sugar glut, and sugarcane planters here are demanding a price increase from 950 baht to 1,200 baht a tonne. Output for the 2013-14 years is estimated at 100 million tonnes. So switching to sugarcane cultivation this year would be suicidal.
Although tapioca growers are now happy with current prices and the produce is still in demand, growing more tapioca will result in a surplus which will suppress prices.
More importantly, how serious is the government about promoting the bio-fuel industry? What is the government's long-term plan about biofuel?
A look at rubber cultivation in recent years should serve as a good example of how a project, which initially looked so rosy, eventually went bad due to a lack of proper planning. At the height of the good old days when the price of para rubber surged skyward to more than 150 baht a kilo, every enterprising Thai was breathing in and out about rubber as if it were a God-sent plant which would bring in quick cash. Almost every politician then who had a plot of un-utilised land would turn it into a rubber plantation. And if they did not have the land, they simply encroached on forest land, stripped it bare and turned it into a rubber plantation.
Many fruit orchard owners, frustrated with the low prices of their fruits _ be it durian, mango, rambutan or mangosteen suppressed by the middlemen _ also joined the mad rush for rubber by cutting down their fruit trees. But with the price of rubber now hovering at slightly above 80 baht a kilo, most of them regret their decision.
Back to the rice-pledging scheme. The government has tried to explain that the cutback in the pledging price will not impact much on farmers because they can still make a profit from their crops. A publicity campaign is being launched to clarify matters to the farmers, the need for modification and the profits farmers can still enjoy. However, I wonder if any farmers with a modicum of intelligence will heed the government's clarification.
It seems that all the statements from state agencies involved in the rice pledging scheme, be it the Commerce Ministry, the Public Warehouse Organisation or the Bank for Agriculture and Agricultural Cooperatives (BAAC), cannot be taken seriously unless they are double or triple-checked with independent sources. Mr Lak Wajananawatch, manager of BAAC, the chief financier of the programme, said that the scheme had not hurt the bank's financial situation although it had spent about 600 billion baht on rice purchases so far. He said the lower rice price will not have much impact on the farmers. He claimed that overall, savings by farmers had almost doubled from 146 billion baht in 2011 to 250 billion baht in 2012 as a result of the scheme.
I wonder whether the bulk of the money spent by the BAAC has gone into the pockets of poor farmers or to rich farmers, millers and assorted crooks. I wonder, too, if the bank's financial standing is really in good shape and whether it will be able to pay the farmers for the pledged paddy if it does not receive any more payments from the Commerce Ministry or new funding from the government?
The mess about this ill-conceived populist scheme has just started _ as the popular Thai saying goes: When water ebbs, the stumps emerge.
More are waiting to emerge beginning with dissenting farmers descending on Bangkok to flex their muscles. Not to mention the white mask movement which is increasingly gaining strength and whose voice is getting louder.
Veera Prateepchaikul is a former editor, Bangkok Post.
About the author
- Writer: Veera Prateepchaikul
Position: Former Editor