Losses from Thai rice scheme could reach $22b

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thai riceThe populist rice pledging scheme in Thailand that granted each farmer a fixed price of 15,000 baht ($484) per tonne could lead to a total loss of up to $22 billion for the Thai tax payer, Vichai Sriprasert, honorary president of the Thai Rice Exporters Association, said at a discussion in Bangkok on June 30.

These losses would occur if the government continues selling rice overstock way below what it paid for it to farmers just to get rid of it, Sriprasert said.

A study found that the commerce ministry so far sold 5 million tonnes of the pledged rice at $330 per tonne.

The projected losses are far more than earlier estimates of $10 billion of losses for three subsidised harvest periods since 2011. The government has so far only admitted that losses from the rice pledging scheme in the first harvest year 2011/12 amounted to $4.3 billion after heavy criticism and facing complaints from villagers that rice stored in warehouses throughout the country was starting to rot.

The failed rice scheme had a number of grave consequences. After the pledging price was reduced to curb the losses, angry farmers marched into Bangkok to voice their concerns. Furthermore, the Thailand Development Research Institute in an investigation found out that 4 million tonnes of rice went missing from warehouses all over the country as they were possibly sold illegally to unlicensed brokers.

Over concerns that Thai rice might be unclean because it had to be chemically treated during long phases of stockpiling, the US  Food and Drug Administration had reportedly quarantined Thai rice imports, news that, however, have been denied by the Thai foreign ministry.

In a latest move, Thai prime minister Yingluck Shinawatra, under heavy pressure from the failed rice scheme, sacked commerce minister Boonsong Teriyapirom on June 30 as part of a cabinet reshuffle.

Meanwhile, anger about the rice fiasco is boiling in the Thai public. The popularity of the ruling Pheu Thai party has dropped significantly, and an opposition movement called “V for Thailand” is now holding protests in Bangkok’s business districts every Sunday, demanding the government to step down over its failed populist policies.

A Bangkok University poll showed a 10 per cent drop in Yingluck’s popularity, from a 51.2 per cent approval rating in November 2012 to 40.4 per cent. Pheu Thai’s popularity declined from 48.8 per cent to 41 per cent.

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Reading Time: 2 minutes

The populist rice pledging scheme in Thailand that granted each farmer a fixed price of 15,000 baht ($484) per tonne could lead to a total loss of up to $22 billion for the Thai tax payer, Vichai Sriprasert, honorary president of the Thai Rice Exporters Association, said at a discussion in Bangkok on June 30.

Reading Time: 2 minutes

thai riceThe populist rice pledging scheme in Thailand that granted each farmer a fixed price of 15,000 baht ($484) per tonne could lead to a total loss of up to $22 billion for the Thai tax payer, Vichai Sriprasert, honorary president of the Thai Rice Exporters Association, said at a discussion in Bangkok on June 30.

These losses would occur if the government continues selling rice overstock way below what it paid for it to farmers just to get rid of it, Sriprasert said.

A study found that the commerce ministry so far sold 5 million tonnes of the pledged rice at $330 per tonne.

The projected losses are far more than earlier estimates of $10 billion of losses for three subsidised harvest periods since 2011. The government has so far only admitted that losses from the rice pledging scheme in the first harvest year 2011/12 amounted to $4.3 billion after heavy criticism and facing complaints from villagers that rice stored in warehouses throughout the country was starting to rot.

The failed rice scheme had a number of grave consequences. After the pledging price was reduced to curb the losses, angry farmers marched into Bangkok to voice their concerns. Furthermore, the Thailand Development Research Institute in an investigation found out that 4 million tonnes of rice went missing from warehouses all over the country as they were possibly sold illegally to unlicensed brokers.

Over concerns that Thai rice might be unclean because it had to be chemically treated during long phases of stockpiling, the US  Food and Drug Administration had reportedly quarantined Thai rice imports, news that, however, have been denied by the Thai foreign ministry.

In a latest move, Thai prime minister Yingluck Shinawatra, under heavy pressure from the failed rice scheme, sacked commerce minister Boonsong Teriyapirom on June 30 as part of a cabinet reshuffle.

Meanwhile, anger about the rice fiasco is boiling in the Thai public. The popularity of the ruling Pheu Thai party has dropped significantly, and an opposition movement called “V for Thailand” is now holding protests in Bangkok’s business districts every Sunday, demanding the government to step down over its failed populist policies.

A Bangkok University poll showed a 10 per cent drop in Yingluck’s popularity, from a 51.2 per cent approval rating in November 2012 to 40.4 per cent. Pheu Thai’s popularity declined from 48.8 per cent to 41 per cent.

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