Losses from Thai rice subsidies exploding

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rice pledgingThe Thai government is increasingly coming under pressure for its farming subsidy scheme that is now reportedly causing far more losses than earlier official figures and even pessimistic estimates by independent analysts stated.

Potential losses from four subsidised rice crops could exceed 300 billion baht ($10 billion) for three subsidised harvest periods since 2011, based on the accounting method of the Thai finance ministry’s subcommittee overseeing the programme’s accounting, the Bangkok Post reported on June 10.

Earlier in June, global rating agency Moody’s Investor Service estimated that losses from the rice pledging scheme would amount to $260 million baht and threatened to downgrade the country’s credit rating.

The Thai government was quick to say that such an estimation was based on “wrong and questionable figures”, without being immediately able to counter with own numbers.

However, on June 10 the commerce ministry came up with the figure of 300 billion baht which it said included “all expenses related to the programme before subtracting the amount received from selling rice in the government’s stockpiles.”

Expenses were milling, storage fees and the 3 per cent interest rate charged by the Bank for Agriculture and Agricultural Cooperatives on loans to fund the programme. Storage fees alone amount to 20 billion baht per year.

The Thai  government under the populist Pheu Thai coalition currently buys paddy at a guaranteed price of 15,000 baht per tonne and premium Hom Mali rice at 20,000 baht a tonne, 40-50 above global market prices to secure income for farmers, its main votership.

Commerce Minister Boonsong Teriyapirom on June 10 proposed to cut the price per tonne paid to farmers to 10,000 baht. He openly admitted that the money would not reach farmers pockets in full anyway “because of corruption.”

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Reading Time: 1 minute

The Thai government is increasingly coming under pressure for its farming subsidy scheme that is now reportedly causing far more losses than earlier official figures and even pessimistic estimates by independent analysts stated.

Reading Time: 1 minute

rice pledgingThe Thai government is increasingly coming under pressure for its farming subsidy scheme that is now reportedly causing far more losses than earlier official figures and even pessimistic estimates by independent analysts stated.

Potential losses from four subsidised rice crops could exceed 300 billion baht ($10 billion) for three subsidised harvest periods since 2011, based on the accounting method of the Thai finance ministry’s subcommittee overseeing the programme’s accounting, the Bangkok Post reported on June 10.

Earlier in June, global rating agency Moody’s Investor Service estimated that losses from the rice pledging scheme would amount to $260 million baht and threatened to downgrade the country’s credit rating.

The Thai government was quick to say that such an estimation was based on “wrong and questionable figures”, without being immediately able to counter with own numbers.

However, on June 10 the commerce ministry came up with the figure of 300 billion baht which it said included “all expenses related to the programme before subtracting the amount received from selling rice in the government’s stockpiles.”

Expenses were milling, storage fees and the 3 per cent interest rate charged by the Bank for Agriculture and Agricultural Cooperatives on loans to fund the programme. Storage fees alone amount to 20 billion baht per year.

The Thai  government under the populist Pheu Thai coalition currently buys paddy at a guaranteed price of 15,000 baht per tonne and premium Hom Mali rice at 20,000 baht a tonne, 40-50 above global market prices to secure income for farmers, its main votership.

Commerce Minister Boonsong Teriyapirom on June 10 proposed to cut the price per tonne paid to farmers to 10,000 baht. He openly admitted that the money would not reach farmers pockets in full anyway “because of corruption.”

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