Finally, the government has accepted the fact that the rice-pledging scheme, the flagship populist policy of the Pheu Thai Party, cannot be allowed to continue without modifications.
If it carries on unchanged, the state coffers could end up empty as further massive losses are incurred, on top of the billions paid out to date.
The National Rice Policy Committee on Tuesday decided to slash the pledging price of unmilled white rice by 20% from 15,000 baht to 12,000 baht per tonne.
The committee has also limited the value of paddy that each farming household can pledge at 500,000 baht and set the maximum amount of paddy to be bought each harvesting year at 15 million tonnes.
The belated move by the government is intended to impose some fiscal discipline and cap the losses from the controversial scheme at no more than 100 billion baht a year, said Commerce Minister Boonsong Teriyapirom, who is also head of the committee.
But the minister seemed to be day-dreaming when he said that, despite the pledging price cut, farmers would still make a 40% profit on top of their production costs, estimated at about 8,000 baht per tonne.
His estimated profit for farmers is optimistic because the calculation does not take into account other factors which allow millers to suppress the pledging price, such as deducting for moisture content and impurities, and probably cheating in the process of weighing the grain.
Even when the rice-pledging price was set at 15,000 baht a tonne of paddy, most farmers were fortunate enough to get 12,000 baht from the grain they pledged with the millers. It would be foolish to believe that millers and a host of other crooks who have benefited from the scheme will suddenly turn saintly and give farmers the full pledging price without making any deductions.
It is indeed a pity the ministry has not taken any action to stop the abuses to ensure farmers will benefit the most from the scheme and not the millers, corrupt officials and politicians. The scheme's modifications, though welcome, are not adequate to ensure the public and, farmers in particular, stand to benefit the most.
There are other pressing issues which need to be rectified immediately, namely the lack of transparency on the part of the ministry, starting with Mr Boonsong himself. Prime Minister's Office Minister Varathep Rattanakorn should be commended for taking over the task of facing the media and clarifying the losses under the rice scheme on behalf of Deputy Prime Minister Kittiratt Na-Ranong and Mr Boonsong, who were in charge of the scheme from the beginning. He did his best to set the record straight that the losses from the scheme for the 2011-12 crops were actually 136 billion baht, not 260 billion baht as earlier reported.
Unfortunately, no details were given on how much rice was sold locally or exported, at what prices, and to whom, as well as the amount of unsold rice held in stock.
Another major problem the government needs to rethink is its negative mindset and suspicion of anyone who does not agree with its policies or decisions.
All criticism, no matter how constructive or well-intended, has been brushed aside simply because it was regarded as anti-government sentiment.
Warnings have been sounded occasionally by rice experts and economists, among them Ammar Siamwalla of the Thailand Development Research Institute, about the flaws of the pledging scheme and its threats to the economy. Unfortunately, they were all rejected until the financial realities of the scheme reared their ugly head.