Rice sale to China delayed by legal limbo over 'caretaker' powers

Economy January 15, 2014 00:00

By Petchanet Pratruangkrai
The N

The caretaker government is likely to face a new threat of more protests by farmers, who have suffered from the delay of payments for their pledged rice.

The sale of 1 million tonnes of rice to China has been delayed while a Bt130-billion loan waits for the green light from the Election Commission (EC). 
Some 100 farmers from Phichit gathered on Monday to block the inbound lanes of Route 11 from Wang Thong, Phitsanulok, to Tak Pha, Lamphun, threatening to escalate the protest to oust the government if their claims are not settled by today. 
Farmers from Ratchaburi, Nakhon Ratchasima and Khon Kaen also asked the government again for their payment for pledged rice, giving Wednesday as the deadline. They also threatened to block roads.
The Commerce Ministry has delayed its plan to sell 1 million tonnes of rice to China. It is afraid of breaching the laws limiting the functions of a caretaker government after receiving vague guidance from the Election Commission.
The ministry late last year asked for permission from the EC to sell rice, and the EC appeared to give it the nod in a written response last week. However, Commerce Minister Niwatthumrong Boonsongpaisan said yesterday that the reply did not specify the prices and periods of shipment. The ministry needs to clarify these points before it can finalise the deal with China.
The deal agreed by the Foreign Trade Department was to ship a total of 1 million tonnes to China over the course of this year. But in its reply to the ministry, the EC said it should not make long-term commitments that would affect the incoming government.
Legal experts are studying the powers of a caretaker government to try to sort out whether the ministry can legally sign a rice contract for a period that would still be in effect when the new government is established.
Wichian Phuanglamchiak, president of the Thai Agriculturists Association, said many farmers had been suffering from non-payment by the government for months.
“Farmers are desperately hoping that the government can pay the pledged cost to them soon, as they have many liabilities piling up such as the cost of harvesting their rice, driving their trucks and feeding their families,” he said.
Niwatthumrong said: “If the China rice sale is postponed, the new government would be expected to sign on to it in the near future.” 
Thought farmers participating in the pledging programme have been complaining about late payments, the minister said postponing the China deal should not affect the government’s ability to pay up. The Bank for Agriculture and Agricultural Cooperatives should be able to get all payments up to date by the end of this month, he said.
Finance Minister Kittiratt Na-Ranong said he was waiting for an appointment with the EC to explain the need to borrow Bt130 billion to pay for the 2013-14 harvest season. 
“The loan is not an obligation for the next government as the Cabinet in the third quarter of last year assigned the ministry to secure it,” he said. 
Expenses might be lower than the budget of Bt130 billion, depending on the proceeds from selling rice from the state’s stockpiles. As a source of money, the financial market now has high liquidity. The government could tap BAAC’s liquidity by offering it high rates of return, Kittiratt said. 
A report showed the government had already spent Bt701.8 billion for 50 million tonnes of pledged rice since 2010. The Commerce Ministry was able to sell rice worth Bt180 billion, but the government needs more to pay the pledging costs.
The ministry also reported that about 10 million tonnes of rice were now in government storage. Also, 5 million tonnes have shipment contracts, while 10 million tonnes of paddy rice have entered the government’s granaries under the current pledging round (2013-14).