Govt needs EC-approved loan to pay for latest crop; farmers rallying over delay in payments
Problems related to the government’s huge rice stockpile are now being left at the Election Commission (EC)’s doorstep.
The Commerce Minister wants the EC to advise him whether it is legal to sell rice from the stockpile, while the Finance Minister also wants to know if he can borrow more funds to pay for the latest crops, bought under the 2013/14 pledging scheme.
Caretaker Finance Minister Kittiratt Na-Ranong said after the Cabinet meeting yesterday a report on funding for the rice-pledging scheme showed Bt463.8 billion was spent out of a budget of Bt500 billion set for last year. That meant only Bt36.2 billion remained.
Kittiratt expected there would be no more than 11 million tonnes of paddy rice for the 2013/2014 crop, ending next month. “We expect to spend not more than Bt130 billion on the pledge, lower than the expected budget of Bt270 billion, which was given initial Cabinet approval on September 3, 2013.”
He said the caretaker government would not spend all of the Bt270 billion it will seek, as spending would only be used for main crops, which account for not more than Bt130 bn.
“We have sought approval for the amount of this loan from the EC,” Kittiratt said, adding that the size also depends on how much of the rice stockpile is released.
Caretaker Deputy Prime Minister and Commerce Minister Niwatthumrong Boonsongpaisan said yesterday the government was waiting to hear from the EC on whether the caretaker administration had the legal right to enter into new rice sale deals.
“In fact, about one million tonnes of rice is waiting to be sold to China,” he said, adding that there were also other prospective buyers.
“If the EC says ‘No’, everything will have to wait,” Niwatthumrong said. He expected an answer from the EC by the end of the week.
The rice-pledging scheme is highly controversial. Critics point out that it has caused massive financial losses, as the government buys rice from farmers at a high price, which makes it tough to sell stock without incurring a loss.
Yesterday, farmers from five provinces blocked a highway in Phichit causing a serious traffic jam, while they demanded that the government quickly address their woes.
“We want the payments by January 15,” Kittisak Rattanawaraha said, in his capacity as the chair of the Northern Farmers Network.
He said the government should also pay for interest on loans that the farmers needed to get from the Bank for Agriculture and Agricultural Cooperatives (BAAC) because of the delay in payment.
“Farmers have to use the scheme’s certificates of rice as collateral to get those loans, despite the fact the certificates should warrant immediate payment. So, the government should pay for the interest from such loans.”
Kittisak said the government should also offer a one-year and interest-free moratorium to affected farmers related to other BAAC loans. “If the government doesn’t answer our demands, we will combine our protest with the rally against the government,” he said.
Senior officials stepped in to negotiate with the protesting farmers, who agreed to only partly block the highway.
Phichit Governor Surachai Khan-asa assured the farmers that Deputy Finance Minister Tanusak Lekuthai had confirmed that the government had already approved Bt70 billion for payments to them.
That news satisfied the protesters, who ended their partial blockade of the highway in the evening. But they warned they would come out again if they were not paid by January 15.
Another rally was also held in Phitsanulok, where about 500 farmers gathered in front of the provincial city hall yesterday to demand that the government provide quick help. They said they have waited for payment for months already. These farmers said the payment should be made by January 31.
Phitsanulok Governor Rapee Phong-buppakit met with farmers and promised to relay their demands to the caretaker government.
According to Niwatthumrong, all payments pending for the 2013/14 crop season will be paid to the rice farmers before the end of this month. This crop season runs from last October to next month.
BAAC labour-union chief Prasit Pahome expressed concerns about the government’s plan to use the BAAC’s available cash to pay farmers participating in the rice-pledging scheme. “It affects our liquidity,” he said.
The BAAC had about Bt100 billion in liquidity and payments for the rice scheme would require about Bt50 billion, he thought.
Supannee Phutpisut of the BAAC labour union said if BAAC used Bt50 billion for the rice scheme, depositors’ confidence in the BAAC would falter.
Meanwhile, the Election Commission has not had any notice from Cabinet about a Bt55-billion loan to fund the rice-pledging scheme, secretary-general Puchong Nutrawong said yesterday. He advised the Cabinet it would need to get prior approval from them to get such a loan, or to carry out any projects or policies before it tries to implement them.