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Rice pledging plan has full state support

Despite criticism from the industry and academics, the government is moving ahead with rice pledging, with a new national rice policy committee chaired by Prime Minister Yingluck Shinawatra approved by the cabinet yesterday.

Deputy Prime Minister and Commerce Minister Kittiratt Na-Ranong said the committee will hold its first meeting this week to discuss the rice mortgage scheme for the first crop of the 2011-12 season scheduled to start on Oct 7.

Any resolution on the rice price pledging programme would be tabled for consideration and approval by the cabinet meeting next Tuesday.

The crop mortgage programme aims to offer farmers 15,000 baht per tonne of paddy rice and 20,000 baht per tonne of Hom Mali paddy. The government plans to use funds paid through the Bank for Agriculture and Agricultural Cooperatives (BAAC).

The scheme, adopted in the past to offer subsidies to farmers, was scrapped by the Abhisit Vejjajiva government in favour of a crop insurance programme.

It has also recently drawn harsh criticism from Thailand Development Research Institute economists who warned the government would lose tens of billions of baht in taxpayers’ money annually if it revives the rice mortgage scheme as planned. The programme would also significantly distort prices in the local market, said the TDRI.

Mr Kittiratt said the premier had authorised governors in each province to help supervise the pledging programme to ensure transparency.

The Interior Ministry said it would act if corruption was found in any provinces, said Mr Kittiratt.

He added the government would ask related agencies such as the Department of Special Investigation and 18 inspectors of the Prime Minister’s Office to monitor the project.

“The government believes the plan will help boost farmers’ incomes and increase the multiplier effect to the economy,” he said.

But he admitted the mortgage programme could possibly raise the cost of packed rice and operating costs for entrepreneurs.

The Commerce Ministry pledged to consult rice packers to ensure cheap rice for consumers.

The ministry also authorised the Public Warehouse Organisation to produce cheap packed rice for consumers.

Deputy Commerce Minister Poom Sarapol said packed rice costing 120-130 baht per 5-kilogramme bag would be available once the mortgage scheme kicks off.

However, he said authorities would let the price of Hom Mali rice float according to the market. Hom Mali rice is now quoted at 180-200 baht per 5-kg bag, with white rice at 120-130 baht.

Kasikorn Research Center expects Thai rice prices will continue to rise this month because of the state pledging scheme, which was accelerated to Oct 7 from the earlier plan of Nov 1.

Ongoing flooding in northern and central Thailand will also affect rice supply, while Indonesia and Bangladesh are likely to be bigger buyers of local grains as Vietnamese prices have edged up to match Thai rice.

In August, the Thai rice export price was only US$5-20 a tonne higher than for Vietnamese grains. In the previous two years the difference averaged $100-200 a tonne.

Source: Bangkok Post

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