June 04, 2014 00:00 By Petchanet Pratruangkrai The N
The problems over payments to rice farmers - and their solutions - are now rapidly becoming clear following action since the coup on May 22.
About 70 per cent of the debt of nearly Bt200 billion owed to the farmers has been paid while the funding has also been sought successfully.
The Government Savings Bank (GSB) yesterday came out top in an auction for a three-year loan worth Bt50 billion, offering the lowest interest rate among 12 participants from both government and commercial banks, according to Public Debt Management Office (PDMO) director-general Chularat Suteethorn.
The PDMO’s term-loan auction aimed to pay off the debt owed to the farmers under the rice-pledging scheme.
GSB offered a 0.1 percentage point minus from the Bangkok Interbank Offered Rate (BIBOR), translating into an annual rate of 2.1792 per cent for the Bt30-billion loan, as the first lot to be forwarded to farmers via the Bank for Agriculture and Agricultural Cooperatives.
“The lending rate offered by GSB is below the government’s three-year bond yield of 2.45 per cent per annum currently,” said Chularat.
In addition, PDMO is also upbeat about opening new bidding for a Bt40-billion loan tomorrow, aiming to return money to the BAAC that previously advanced funds to pay the farmers off. The bank has advanced almost Bt40 billion for the rice payments.
As of yesterday, BAAC has made payments to 1.14 million growers worth Bt139.55 billion for 8.71 million tonnes of rice for the harvest season since last year under the rice-pledging project.
Out of the Bt195.45 billion (11.81 million tonnes of rice) under the rice subsidy project, 551,447 farmers were left waiting for overdue payments totalling Bt55.89 billion – equivalent to 3.1 million tonnes of rice.
The National Council for Peace and Order needs to not only solve the overdue payment problem under the rice-pledging scheme, but also to manage huge rice stockpiles – as many as 16 million tonnes – excluding incoming additional rice from the harvest season, according to BAAC managing director Luck Wajananawat.
“About 30 million tonnes of paddy rice are expected to enter the market in the upcoming year. With the low market price, the NCPO needs to find measures to manage those mounting rice stocks more efficiently,” he said.
Luck said the rice price had dropped substantially. White rice in Nonthaburi was quoted at Bt5,400-Bt5,600 a tonne, while production costs were at Bt6,000-Bt7,000 a tonne, for example.
The market price of rice has dropped continuously during the past two years because of the enormous output of rice to 55 million tonnes of paddy, equal to 30 million tonnes of milled rice.
The ousted government was able to release only half of the stockpiles worth about Bt200 billion.