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Prime Minister Abhisit Vejjajiva's abrupt decision to terminate the auctioning of rice only goes to show how many flaws the rice-pledging programme has. Abhisit, in his capacity as chairman of the national rice-policy committee, ordered the Commerce Ministry to terminate the contracts, arguing that the deals would only lose the government up to Bt20 billion from the 2.6-million-tonne rice-pledging scheme initiated by previous governments.

The premier wanted the agency in charge to overhaul the rice-pledging procedure so it became fairer to the government. After all, the money spent in the auction would be coming from the taxpayers' pockets. So obviously it would be desirable to make sure the money is well spent.

Nonetheless, there are several issues to be addressed with regard to the termination of 17 contracts for the sale of the 2.6 million tonnes of rice in government stock.

First of all, traders involved in the sale have been complaining about the uncertainty, which would cause them financial damage and credibility problems.

The cancellation of the contracts has also left sellers uncertain. Those who paid in advance have to be compensated. Therefore the government should quickly explain the necessity of cancelling these contracts to rice-traders and try its best not to create more uncertainty in the market.

The losses incurred by the rice-pledging programme have also confirmed that pledging schemes are not really favourable alternatives.

The government had to pay an unusually high price to put huge amounts of rice in its stocks, because previous leaders had pledged the grain at a much higher tag than market prices, causing huge losses to the taxpayer.

Despite all these pledges and programmes, the farmers barely got any help. In spite of the billions spent on this programme, farmers have received few benefits. The biggest beneficiaries are the traders, millers and exporters, who are equipped with facilities to dry and store the grain. They were able to sell rice to the government at a high price and could buy it back for much less. Farmers, meanwhile, suffered from the fluctuation of prices due to market intervention through the rice-pledging scheme.

Subsidy programmes such as the pledging scheme always become controversial because of the massive amount of money involved. Beneficiaries of the programme, such as rice-traders who won the contracts, were often accused of having connections with bigwigs in ministries.

Besides, politicians tend to launch these programmes during general elections, inviting allegations that political parties offer these subsidies only to finance their own campaigns.

Or they might be using these programmes for short-term political benefits at the expense of the taxpayer. For instance, previous governments wasted massive amounts in support of longan farmers. As it turned out, not only did the government waste money buying up dried longans but also ended up spending Bt90 million to destroy them.

More importantly, the controversy surrounding the rice trade showed failure in the policy to promote rice production. Instead of focusing on how farmers can be helped to improve their per-rai yield, the governments opted for short-term measures, which failed to assist the farmers in a sustainable manner.

As with our neighbours, the government should help farmers improve their productivity instead of disrupting the market through a series of market-intervention measures, which only deal a serious blow to farmers in the long run. For instance, at present, the rice-pledging programmes are disrupting the market by pushing the price of Thai rice too high in the export market, which is making it lose out to exports from Vietnam.

Despite the issue of rice-auction contracts being withdrawn showing a failure in the promotion of agricultural productivity, politicians and the media still focus on petty political friction instead getting to the root of the country's problems.

If Abhisit decided to terminate the contracts because he wanted to change things for the better, then he should be applauded. At the same time, apart from cleaning up the mess left behind by its predecessors, the Abhisit government should focus on how to solve the problem of depressed rice prices and ensure that any future agricultural subsidy programmes are executed transparently.

Otherwise, the government will only have to keep reconsidering projects over and over again.