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Senate panel calls for urgent review of Thai rice subsidy scheme

Publication Date : 23-10-2012

 

The near-daily criticism over corruption and losses in connection with Thailand's rice-pledging scheme has led a key Senate committee publicly to express grave concern about what it considers the widespread failure of the programme.

The panel regards the pledging project as the worst government policy for 26 years, and one that is taking the country down the road to economic collapse, as it risks sinking under the burden of public debt.

The Senate's Committee on Economics, Commerce and Industry yesterday held a news conference on its study, titled "The Truth on the Government's Rice-Pledging Scheme: Does It Really Benefit Farmers?"

The committee presented eight points of failure in the scheme and called for the government urgently to review it to save the country from further huge losses.

The panel will also submit its study on the pledging scheme, which is part of the government's broader populist policy, for debate in the upper house, as well as passing it to the National Anti-Corruption Commission, the Election Commission and the Office of the Auditor-General, calling for an investigation into the alleged failure of the pledging project.

Committee chairman Maharnnop Dejvitak said the crop-pledging scheme was the worst policy introduced by any government since 1986.

It has not only created huge budgetary losses, but farmers - the intended beneficiaries - have not enjoyed any meaningful benefits from the programme, he said, adding that only some groups of traders and politicians had made gains as a result of loopholes in the scheme.

"The committee does not agree with the government's populist policy, which has led to short-term benefit rather than promoting sustainable growth. This half-political, half-economic policy has had a huge impact on the country's macroeconomy and will result in massive public debt, which could mean Thailand becomes another Greece in the future," Maharnnop said.

If the government continues with the measure, it could push the national public debt to more than 100 per cent of gross domestic product in the next decade, he warned.

According to a Thailand Development Research Institute study, the rice-pledging programme will increase public debt by an average of 4 per cent per annum.

Senator Wanchai Sornsiri said the failure of the pledging policy should be debated and widely acknowledged by the public and involved sectors. The project has led to corruption and huge losses from its inception through to the end of the rice-release process.

He said poor farmers were the major losers, as they had not benefited from the pledging despite what the government had promised, while traders, unscrupulous officials and politicians had enjoyed extensive benefits from pledging and corruption.

To save the Kingdom from racking up even more massive losses from the policy, the Senate panel suggested a number of measures to the government.

First, it must review and change the policy by reducing the pledging price, limiting the volume of pledged rice and focusing the project on small farmers. It should also take serious measures to suppress corruption inherent in the scheme.

The government should also restrict rice-field landlords from participating in pledging, inform the public clearly about its government-to-government rice deals to ensure transparency, and draw up a sustainable plan to promote the farming sector and boost farmers' incomes.

The committee also pointed out eight weak points of the rice-pledging policy as voiced by academics and the private sector. The main criticisms are as follows:

lContinuation of the unlimited rice-pledging policy would mean losses of 405 billion baht (US$13 billion) for the country by the end of next year, from the current level of 300 billion baht.

lPledging has created huge losses for Thai rice exporters, to the tune of 72 billion baht a year.

lMost medium-sized and rich farmers have benefited from the pledging, while poor, smaller farmers have not really gained from the measure.

lThe government would lose more than 100 billion baht if it sold 10 million tonnes of pledged rice at the market price.

lThe quality of Thai rice continues to suffer, because the pledging policy is focused only on price and does not promote rice-quality development.

*US$1=30.7 baht

 

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