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Rice pledging scheme aim to boost income for 37 millions Thais

The Government’s rice pledging scheme will begin tomorrow to boost income for 37 millions Thais and stimulate domestic spending.

Boris Sullivan

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Vietnam rice paddy field

The Government’s rice pledging scheme will begin tomorrow to boost income for 37 millions Thais and stimulate domestic spending.

In her statement to the provincial rice policy committees, Prime Minister Yingluck Shinawatra said the population of farmer, which equates roughly to 37 million families, was a significant force to a growing economy.

She said that the price guarantee of 15,000 THB and 20,000 THB per ton for unrefined rice and jasmine rice respectively were reasonable. These figures had been calculated in relation to the cost of production and the appropriate return per ton of rice.

Vietnam rice paddy field

High rice price from Thailand will help competing exporters such as Vietnam and India. Picture : adb.org

Ms. Yingluck assured that the pledging scheme would be corruption free as a special unit had been assigned to monitor every step of the process. Any offenders will be prosecuted according to law.

The period during which the scheme will be carried out in every part of the country except for the South is from tomorrow until 29 February, 2012. Southern farmers can expect to pledge their rice from 1 February-31 July, 2012. Farmers are expected to redeem their rice within 4 months from the day their rice is pledged.

Thailand could lose its position as the biggest global exporter

According to the premier, the government plans to release rice stockpiles through the Agricultural Futures Exchange of Thailand (AFET) or by selling the rice to exporters, local distributors to increase domestic consumption or donating it to natural diasater stricken nations. Ms. Yingluck also stressed that these actions would be carried out in such way that it would cause no disruption to the rice market in the country.

via Rice pledging scheme to kick off tomorrow : National News Bureau of Thailand.

Thailand, the world’s biggest rice exporter, has vowed to boost the minimum price farmers receive by buying unmilled rice directly at 15,000 baht ($485) per tonne, but the current price is about 10,000 baht. The Thai Rice Exporters Association, concerned that the country could lose its position as the biggest global exporter, Thai rice prices stand above free market level.

Studies of previous scheme show that only 37% of the benefits did go to the farmers

While it is unclear what effect the policy might have on global consumers, prices have already risen and observers fear a spike could pile further pressure on poor importer nations.

The rice export price has jumped from $500 per tonne in early July to around $600 as Thai farmers withheld stocks to take advantage of the rice deal, according to analysis from Capital Economics.

A 2010 study by Thailand Develop Research Institute, a nonprofit think tank in Bangkok, found that the earlier rice buying program caused losses of baht 19.1 billion ($628 million) for the government in 2005. It said the program was “plagued with corruption at all stages” and that only 37% of the benefits did go to the farmers, the rest been eaten by huge administrative cost (17%), millers and a few big exporters.

Thailand’s rice exports could fall by as much as 20 per cent according to Forbes magazine.http://www.forbes.com/sites/simonmontlake/2011/09/22/thailand-subsidies-and-the-price-of-rice/

Since rice is a perishable commodity, the government will be forced to unload its large stockpiles to avoid spoilage before the next harvesting season. By that time the world will be inundated with rice from other exporters. Thus, Thailand will be compelled to dump its prices even lower in order to penetrate the market.

 

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