Government may boost rice-pledging payments

The Bank for Agriculture and Agricultural Cooperatives (BAAC) will propose that the government raise the ceiling on rice pledges from Bt350,000 per farmer to Bt500,000, executive vice president Ennoo Suesuwan said yesterday.

Some farmers have complained current prices were not appropriate.

The Cabinet last week approved rice pledges of about Bt14,000 per tonne, covering 2.5 million tones of rice worth an estimated Bt35 billion. Rice mills may also receive additional fees to mill the grain.

The fee should rise from Bt400 per tonne to Bt550, Ennoo said after chairing a meeting of a committee overseeing the pledging scheme. After the scheme began on Sunday, 359 farmers pledged 4,564 tones of rice, with millers acting for government, said Ennoo. The turnout was considered relatively small, and observers blamed bureaucratic red tape.

Many farmers have complained that to sign up, they must fill out time-consuming paperwork for the rice mills and the government, but Ennoo said such documentation was vital, because it would prevent graft. He said all millers acting for the government should be ready to receive rice from farmers this week.

There are 223 rice mills that will stockpile the rice after milling it.

Ennoo said expanding the value of pledges and raising the fees for milling would not exceed government's budget of Bt35 billion for the scheme.

"We expect the total amount of rice pledge not to exceed 1.5 million tonnes, as farmers will sell their rice when the price rises," said Ennoo.

Ennoo said to prevent corruption, the millers would be asked to mill 60 per cent of the grain within seven days. The rice will then be stored in central warehouses, and the Commerce Ministry will decide when it will sell it in the global market.

Ennoo promised farmers they would be paid within three days after they pledged rice with the millers. Three days are needed because the BAAC must investigate, in order to guard against fraud. The government will also attach microchips on the bags to track their movements.

Some critics say the subsidy has distorted market prices and could result in financial losses for the government. The government hopes to turn a profit from the current high prices in the world market.

The export value should offset state spending for the subsidy.

The government scheme seems unnecessary, said the critics,

who viewed the low turnout as

a sign of the plan's failure.

"Low amounts of rice are entering the pledging scheme. This proves that farmers do not want the price guarantee, because they are satisfied with market prices," one trader said.

The Commerce Ministry reported the price for 15-per-cent white rice ranged between Bt11,500 and Bt13,800 a tonne. More than 2 million tonnes of white rice out of a total of 4 million tonnes will enter the market this month.

Thai Rice Millers Association spokesman Kriengsak Tapananont said the rice-pledging scheme should be the last option for the government to intervene in the market.