Can the Commerce Ministry be trusted even now?

Can the Commerce Ministry be trusted even now?

On June 18, the National Rice Policy Commission slashed the rice pledging price by 20% from 15,000 baht to 12,000 baht per tonne. Less than two weeks later it made an about turn, reverting to the old price and putting its own credibility and that of the government at rock bottom.

Call it a "flip-flop", "backpedal", or to "swallow your own saliva" - whatever term is used, it does not matter as far as this government and the rice pledging scheme is concerned.

There is no need to wonder, either, whether this flip-flop could hurt the government’s credibility or not -- because there is no more credibility to lose.

Self-respect? Sorry, what does that mean?

Exactly 13 days ago, the National Rice Policy Commission chaired by then commerce minister Boonsong Teriyapirom made a policy change, slashing the pledging price of ordinary "white" paddy from 15,000 baht to 12,000 baht per tonne from July 1 and limiting the value of paddy each household could pledge or, to be more accurate sell, to the government at 500,000 baht.

The reason for the price reduction was "to create fiscal balance corresponding with the world market price". The decision was hailed by critics and economists as quite sensible, as it showed that the government had finally realised the need to maintain fiscal discipline. Farmers, however, cried loud and long against the decision and threatened mass protests if the price was not maintained until at least September.

Weevil-infested pledged rice improperly stored at a warehouse in Chachoengsao in June, 2013. (Bangkok Post file photo)

Then, on Monday, July 1, the same commission headed by Deputy Prime Minister and Finance Minister Kittirat Na-Ranong made a huge 180 degree turn, reverting to 15,000 baht a tonne for the same rice and promising to hold to the rate until Sept 15.

The excuse was that the government had come up with fresh ideas to sell more rice and that the 200,000 farmers signed up to the pledging scheme need to be taken good care of, even though maintaining fiscal discipline is still necessary.

Mr Kittirat said that about three million tonnes of second-crop paddy were expected to be bought by the government and that was well within the 345 billion baht budget. The extra amount needed would be 45 billion baht – up nine billion baht from 36 billion baht if the paddy was bought at 12,000 baht a tonne.

Another nine billion baht to curry favour with the farmers is just chicken feed compared to the 600 billion baht already spent supporting the rice pledging scheme since 2011 - a policy which has, so far, incurred a loss of about 136 billion baht with 17 million tonnes of ageing, unsold rice still held in stockpiles. From the government's point of view it is money well spent because it has an immediate effect – no protests by the farmers who, instead, will shower the government with flowers.

Government supporters, including several academics, often accuse critics of the rice pledging scheme of being unkind to farmers. Their standard argument is: what’s wrong with the scheme if farmers stand to benefit?

Personally, I don’t have any objection if farmers are the only beneficiaries; it would be much better if farmers received the full amount of the pledging price, without any cuts at all for moisture content, impurities and other factors.

The point is, there are many other uninvited people at the party – parasites you may call them – who have benefitted from the scheme and, perhaps, have eaten the biggest chunk of the pie while the government, the Commerce Ministry in particular, has done nothing to stop this malpractice.

How the Commerce Ministry intends to sell, or "release" as it's euphemistically termed, a large part of this huge unsold rice stockpile – one million tonnes per month for the next three months, as claimed by new Deputy Commerce Minister Yanyong Puangrach – remains a mystery.

I wish Mr Yanyong good luck, and he'll need a lot of luck in the current global market, otherwise the Bank of Agriculture and Agricultural Cooperatives will be in a big trouble if it does not have the money to pay farmers for their crops.

The flip-flop on the rice pledging price has added one more negative dimension to the opaque and dubious way the Commerce Ministry has been handling the rice scheme. The big question is: Can the ministry, and whatever information about the scheme that is released under the new commerce minister, Niwatthamrong Boonsongpaisarn, be trusted?

Veera Prateepchaikul

Former Editor

Former Bangkok Post Editor, political commentator and a regular columnist at Post Publishing.

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