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Thread: Rice scheme is 'pro-rich'
08-08-12, 03:49 PM #1Paknam Web Online Staff
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Rice scheme is 'pro-rich'
Rice scheme is 'pro-rich'
TDRI says pledging puts entire industry at risk
Published: 8/08/2012 at 01:52 AMNewspaper section: News
The government rice pledging programme is rife with corruption and inefficiency, putting the entire industry at risk unless changes are made, local economists and rice experts said.
One of the most important economic policies of the Yingluck Shinawatra government, the programme represents a guarantee by the state to purchase unlimited amounts of rice from local farmers at prices as much as 50% higher than market value.
But economists said the programme, which has cost the state more than 200 billion baht to date, is one of the worst-designed and costliest policies enacted by the Yingluck government as it nears the end of its first year in office.
Ammar Siamwalla, honorary economist at the Thailand Development Research Institute (TDRI), said the rice pledging scheme was "pro-rich and anti-poor", with high pledging prices raising the cost of living for the entire public.
"The policy is biased in favour of farmers who can produce more rice compared with those who produce less," he said yesterday. "The policy has also added to the hardship faced by the poor who must purchase rice for their own consumption."
According to the TDRI, 63% of the funds spent on the pledging programme went to merchants and millers, with the rest going to farmers. Only 5% of funds spent went to poor farmers.
The pledging scheme offers farmers prices of up to 15,000 baht per tonne for white rice paddy and 20,000 baht per tonne for jasmine Hom Mali rice.
The TDRI estimates losses for the first year of the programme have reached more than 100 billion baht, based on current global prices and including storage and maintenance costs.
Dr Ammar said the price guarantee programme of the Abhisit Vejjajiva government was more efficient in ensuring funds went directly to farmers. The programme, developed with the TDRI, would pay farmers the difference in crop market prices and regularly-adjusted benchmark prices.
"The insurance programme avoided government intervention in the market, and helped farmers regardless of how much they produced," Dr Ammar said.
But Kittiratt Na-Ranong, the finance minister and a deputy prime minister, said the government is committed to maintaining the pledging scheme.
He added that the Abhisit government incurred losses of 50 billion baht from its insurance programme.
"I don't think it's right. Why would we want to export rice at low prices simply to increase volumes? Thai farmers would suffer. I would rather keep prices high, even though it will cost the government," Mr Kittiratt said.
But TDRI president Nipon Poapongsakorn said the pledging programme must be "fine tuned".
While policies to help raise crop prices were well-intentioned, high prices should go together with high quality, he said. The pledging prices, as much as 50% over market value, encourages farmers to raise production without concern for quality.
Dr Nipon said hopes that the policy would raise global rice prices have proven false, as the government is unable to influence world supply or demand.
"If rice prices are high, who can force the more than 400 million rice farmers around the world to reduce their plantings?" Dr Nipon said.
Thailand is one of the world's largest rice exporters but ranks far behind China, India, Indonesia and Vietnam in terms of total production.
Exports this year fell 45% in the first half from the same period the year prior to 3.45 million tonnes, with export values down 34% to 71.4 billion baht.
Dr Nipon said the pledging scheme has the potential for corruption, with funds channelled away from farmers to surveyors, rice mills and middlemen.
Vietnam and other rice-exporters are benefitting from the higher prices of Thai rice. "Thai taxpayers are helping the exporters of other countries," said Dr Nipon.
Somporn Isvilanonda, a researcher from the Knowledge Network Institute of Thailand, agreed. The government must sell rice for at least US$800 (25,000 baht) a tonne to justify the pledge price of 15,000 baht a tonne, he said.
But white rice is currently priced at just $575 a tonne, and Vietnam currently sells its rice at just $450 a tonne.
Mr Somporn said the government should invest in educating farmers on how to reduce production costs and fund more agricultural research.
"But the Agriculture Ministry only devotes 1.3 billion baht per year to agricultural research," he said.
Even farmers have complained about the pledging scheme. Prasit Boonchoei, chairman of the Thai Farmers Association, said that with so much rice now in storage for the state, rice mills are able to negotiate lower prices with farmers for new paddy pledges.
Farmers are forced to accept lower prices or risk losses due to spoilage, he said. Rules against the cross-provincial sale of paddy also limits options.
Mr Prasit said 75% to 80% of all rice farmers who rent land are also facing rising rental costs.
Kiat Sittheeamorn, a Democrat MP, noted that the government has committed vast amounts of funds to help only a small segment of the population.
More than 200 billion baht has been spent buying rice from just 1.7 million farm households, out of 5.6 million rice-farming households nationwide.
Mr Kiat called for investigations into allegations that the high pledging prices have resulted in around 2-3 million tonnes of imported rice being sold to the government under the programme.
08-08-12, 08:47 PM #2
Re: Rice scheme is 'pro-rich'
Free markets are always best. Small-scale farmers should form cooperatives and jointly negotiate the sales price for their crops. Small-scale farmers should also engage in more direct marketing, selling directly to local businesses and at farmer's markets. People need to take control of their own destiny and quit relying on government to "solve" all of their problems. What governments provide is rarely a "solution" and is more likely to exacerbate the problem.Life is learning. If you stop learning, you might as well be dead.
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