Rice money could be better spent

The Commerce Ministry has proposed that the government guarantee prices for more than 4 million tonnes of rice paddy, an increase from the previous proposal of 2.5 million tonnes, to solve the problem of depressed rice prices at home. Although the Democrat Party - before it was able to form the coalition - said it didn't think the pledging programme was a good solution to the problem of falling agricultural prices, the government has launched a series of price pledging programmes to appease farmers in the short term.

Several parties agree the pledging programme is not an ideal answer to help the farming sector. The government has spent more than Bt150 billion on price pledging but the programmes have done little to shore up agricultural prices in the long run. In fact, as it turns out, the middlemen and the rice millers have become the biggest beneficiaries of the programme, not the farmers.

Not many rice farmers are able to offer rice according to the requirements of the Commerce Ministry, which requires a certain moisture level in the rice, among other factors. In addition, only those farmers or rice millers with huge storage facilities or rice drying facilities are able to pledge their rice with the government. Very few ordinary farmers are able to meet these criteria.

The rice-pledging programme can have a psychological impact on the market by lifting the overall rice price, but only temporarily. The farmers themselves receive few benefits. Taxpayers' money is thus not wisely spent on this scheme.

The timing for serious consideration about cutting or limiting the use of the rice pledging programmes will come when the government feels the need to screen projects due to fiscal constraints. The Cabinet earlier announced a Bt200 billion cut in the fiscal budget for next year because overall revenue collection is less than the original target.

Even Commerce Minister Porntiva Nakasai has admitted that there are loopholes in the pledging programme. For instance, the scheme has led to the smuggling of rice from neighbouring countries such as Cambodia because rice prices there are much lower than in Thailand. Some traders know they can benefit from the differential between prices paid there and those guaranteed by the government here.

Another problem is that the government at times does not have enough storage space to stock the pledged rice and it has to lease facilities from the millers, who tend to press for a low price from the suppliers. The government thus runs a double loss from the programme. Previous governments also tended to offer very high prices in order to win the support of people in rural constituencies.

But Porntiva noted it was unlikely the government would be able to end the programme, especially as it is under greater political pressure from rice farmers due to the economic crisis. Some who have lost benefits have encouraged farmers to protest and to block the roads.

In spite of its short-term benefit, the rice-pledging programme often distorts the market. The distortion of local prices affects the competitiveness of Thai rice on the international market because exporters are forced to sell Thai rice at a much higher price as compared to our competitors from, for instance, Vietnam.

Even Prasit Boonchauy, chief of the Thai farmers' association, said that what farmers really need are measures to help them in the longer term. The association would agree to the suspension of the rice-pledging programme if the government was able to offer supplementary measures to help farmers.

He added that, whatever measures the government may announce, any proposals should come from the mobilisation of ideas from all concerned parties. Otherwise, the benefits from the pledging programme would continue to fall into the hands of the middlemen.

Future assistance measures should help farmers develop their productivity in a comprehensive manner, including the selection of rice strains, the increase of yields per rai, fertiliser supplies and, most importantly, irrigation systems. Vietnam has set a good example for developing rice production in a sustainable manner, and its yields per unit of land are now much better than Thailand's.

Instead of focusing on price levels, the government should concentrate on how to help farmers reduce the cost of production.

The government has lost more than Bt20 billion from the rice-pledging programme. This sum of money should have been spent in other more sensible ways - to produce sustainable results that directly benefit farmers.

The agricultural sector is the backbone of the country and it should be preserved and nurtured. The best way to show gratitude to farmers is by helping them to flourish and to stand on their own feet.