February 12, 2014 00:00 By Petchanet Pratruangkrai,
World Bank says pledging scheme poorly implemented, tainted by corruption
Rice farmers will soon take the Yingluck Shinawatra government to court to seek compensation for their overdue payments under the rice-pledging scheme, in what could be the first case in Thai history of the government being sued by farmers. Several ministers involved in the populist policy are also facing demands to give farmers, who have not been paid what they were owed, a hand with financial aid to ease their plight. Now there are some 1.2 million farmers who have not yet been paid their money due under the rice-pledging scheme. The World Bank said the rice subsidy scheme was a good idea to help stabilise farmers’ income, but added that it had been badly implemented and that corruption was another big problem. The farmers’ legal petition would be managed and supported by the Lawyers Council of Thailand under Royal Patronage. It would be first a civil claim, but if corruption was found, it could become a criminal case. Dej-Udom Krairit, president of the council, met with protesting farmers at the Commerce Ministry, warning them not to seize or try to inspect the government’s rice granaries by themselves, as they could be committing a crime. They should rather use judicial power through the courts, and seek an emergency investigation.
“The council plans to file a petition as a consumer-protection case and civil case, so that the filing process would not take too long, to ensure that farmers get their overdue payments soon,” he said. The filing process and investigation should be completed within three months.
At the Commerce Ministry, the council has set up a location for farmers to submit their pledging documents and names for filing the case against the government. It expects to file the suit on the farmers’ behalf at provincial courts within two weeks. Initially, about 40 organisations and individuals would be named as defendants, including the ministers of finance and commerce.
The council is considering whether to also charge caretaker Prime Minister Yingluck and ministers involved in the rice-pledging project.
Besides damages, statutory interest at 7.5 per cent will be sought.
Caretaker Deputy Finance Minister Thanusak Lekuthai urged the Bank for Agriculture and Agricultural Cooperatives (BAAC) to hurry to help farmers with debt extensions of six months without penalty charges, and to raise credit limits to provide capital for planting the next crop.
More than 1.05 million households have not yet received payment for rice pledged to the state under the subsidy scheme. The government will ask the Election Commission whether it can disburse the central budget to relieve the burden shouldered by the BAAC.
“The measure took effect on February 6 and the payments are expected to reach the farmers’ hands on Monday,” he said.
The credit limit for growers would be capped at Bt100,000 each.
The Cabinet approved Bt712 million from the central budget to pay growers for paddy pledged last September under the rice-mortgage scheme.
“But, we don’t expect farmers will end their protests, even though they should be quite pleased,” Thanusak said.
Caretaker Finance Minister Kittiratt Na-Ranong insisted before the Cabinet meeting that all farmers would be paid every baht they were owed. The government is trying to secure funds to pay the farmers, but it might take a little more time. Many banks have shown their intention to extend loans to those who produce pledging receipts.
As for whether the government has sufficient money for payments, Kittiratt said the government’s treasury reserves were much higher than before. In October, the Finance Ministry said treasury reserves had reached about Bt600 billion.
Some warehouse owners have suffered because the government has not paid them rent since 2012.
Representatives of farmers from central provinces held a closed meeting yesterday with the commerce minister and his two deputies to discuss a way out of problems over the government’s overdue payments to farmers after an earlier meeting failed.
Ulrich Zachau, the World Bank’s director for Cambodia, Laos, Malaysia and Thailand, said a price-support policy, such as the government’s rice-pledging scheme, was useful for stabilising farmers’ income if it was implemented and managed properly.
Such price-support policies are common throughout the world. However, the policy is costly and takes time to perfect. It took Germany decades to successfully manage the policy, he said.
There should be supplemental policies to help support the price-support scheme and lower the cost burden of the government, he added.