The rice price guarantee scheme started on Tuesday, with eligible farmers set to receive the difference when market prices fall below the predetermined benchmark.
Commerce Minister Jurin Laksanawisit said the state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) transferred 9.4 billion baht in compensation directly to the accounts of 349,000 registered farmers.
The compensation will be paid mainly to growers of white rice paddy and fragrant Pathum Thani rice paddy if the market prices stay below a certain level.
Mr Jurin said the government is scheduled to pay the compensation every 15 days until the end of the harvest season.
On Aug 27, the cabinet approved a package worth 59 billion baht in price guarantees and subsidy schemes for rice and oil palm. Of the total budget, 13.3 billion baht is for rice price guarantees, 21.4 billion baht for oil palm and 25 billion baht to subsidise production costs for rice farmers.
The rice price guarantee covers five types of rice: white rice paddy with 15% moisture, hom mali rice paddy, fragrant Pathum Thani rice paddy with 15% moisture, glutinous rice paddy with 15% moisture and provincial fragrant rice paddy.
Under the scheme, running from October this year to October 2020, farmers will see the price of white rice paddy with 15% moisture guaranteed at 10,000 baht per tonne, but the guaranteed rice cannot exceed 30 tonnes per family or 40 rai.
The guaranteed price is set at 15,000 baht a tonne for hom mali rice paddy, but limited to 14 tonnes per family or 40 rai, while fragrant Pathum Thani rice paddy with 15% moisture is set at 11,000 baht a tonne with a limit of 25 tonnes per family or 40 rai.
The price of glutinous rice paddy with 15% moisture is set at 12,000 baht a tonne for a limit of 16 tonnes or 40 rai, while the price of provincial fragrant rice paddy is set at 14,000 baht at tonne for a limit of 16 tonnes per family or 40 rai.
The scheme will be run by the BAAC.
Under the programme, farmers will be paid the difference only when prices fall below the benchmark.
Pramote Charoensilp, the president of the Thai Agriculturalists Association, said most farmers felt satisfied with the government's scheme, but he argued that the government should compensate farmers at 2,000 baht per rai.
He said farmers do not need to monitor paddy prices every 15 days.