The Government Savings Bank suffered large withdrawals over consecutive days after it granted a loan last week to the Bank for Agriculture and Agricultural Cooperatives (BAAC). Customers wanted to show their opposition to GSB’s alleged support for the controversial rice-pledging programme.
Caretaker Deputy Commerce Minister Yanyong Phuangrach said yesterday that a group of pro-government farmers, rice millers and the ministry would cooperate to encourage rice traders and others who wanted to help farmers withdraw their money from other banks to deposit at the BAAC. Once that happened, the BAAC should have sufficient revolving funds to assist the farmers who have not been paid for their pledged rice.
However, Yanyong did not provide a clear opinion on whether this idea would be workable.
Moreover, he said the ministry would set up a “Thai Rice Farmers Assistance Fund”. Those who wanted to help the farmers could donate money to the fund at BAAC account number 020033119718. This measure was designed to assist the farmers in the short term.
Liquidity for farmers
For the long term, Yanyong said the ministry would establish a “Thai Rice Farmers Bank” to manage farmers’ money and ensure that they have their own financial institution and more liquidity.
He said the BAAC should have a method to transfer money from deposit accounts to pay farmers under the rice-pledging scheme to relieve their suffering.
He added that he had withdrawn his own money from two commercial banks and deposited it in the BAAC to join the effort to help the farmers.
Asked about the practicality of his measures and their possible effect on the banking sector, he said there should not be any legal prohibition preventing people from helping farmers, as the BAAC should have authority to manage the money they deposit and pay the rice growers what they are owed.
However, according to the Bank of Thailand, payments to farmers under the pledging scheme should come from three sources: the national budget, the Finance Ministry’s borrowing, and income from sales of rice from the state stockpiles.
Yanyong said the proposed Thai Rice Farmers Assistance Fund would depend on donations and tax revenue paid by rice traders, which amounted to several billion baht.
The fund should be able to serve needy farmers interest-free, he added.
Wichian Phuanglamchiak, president of the Thai Agriculturist Association, said some farmer groups understood that the caretaker government could not meet its obligations under the pledging project as its normal sources of funds had been cut off. The Commerce Ministry’s proposals should increase the government’s ability to pay the farmers very soon.
Meanwhile, a survey this week by the National Institute of Development Institution found that 47.81 per cent of respondents did not believe the government could come up with all of the Bt130 billion it owes farmers before the end of this month.
About 16.76 per cent believed that the government could pay the farmers less than half that amount, while 16.23 per cent believed it could pay in full.