Fri, August 19, 2022


Thai rice politics and the future of agricultural subsidies

Each wet season, Thai farmers begin cultivating their annual crop anticipating both natural and market uncertainties. For these farmers, nothing can be taken for granted.

Last year excessive rain destroyed much of their crop, this year too little or too much water could do the same. Nevertheless, the uncertainties confronting Thai farmers are typical of the problems farmers face worldwide, thus subsidies remain crucial for the survival of farmers. 
The previous Yingluck administration implemented one of the most controversial and expensive farming subsidy policies in Thai history, allegedly costing the state more than Bt500 billion. Her rice-pledging policy was criticised for a lack of substance to help farmers survive in the capitalist market, instead simply putting cash in their hands. 
Yingluck’s rice policy has also been fiercely criticised by her political opponents for destroying market mechanisms, and perhaps violating Thailand’s world trade commitments. In a 2013 meeting of the WTO Agriculture Committee, Canada, the US, Australia and the EU questioned whether Thailand had breached its domestic support limits.
Although, 86.5 per cent of farmers were reportedly satisfied with the policy, the rice-pledging scheme was politicised and became one of the main contributing factors to Yingluck’s ouster by military coup in 2014, resulting in allegations against her of corruption and charges she neglected her duty to oversee the scheme. 
The Supreme Court rules on August 25, and a guilty verdict would have serious ramifications for the political futures of Yingluck and her Pheu Thai Party, as well as for the ongoing Thai political conflict. But it would also indicate the future prospects of farm subsidies in Thailand.
That there was corruption in the implementation of rice-pledging is undeniable, and rigorous law enforcement is required to handle the case. Indeed, corruption was also observed during the implementation of the rice price-guarantee policy under her predecessor, Abhisit Vejjajiva.
In addition, a number of corruption allegations made against rice-pledging were targeted not at its implementation, but at pre-existing problems in the Thai rice industry, one example being the rigging of scales to measure moisture in farmers’ paddy in the rice mills. It is crucial to scrutinise all stakeholders involved, rather than primarily focusing on politicians. 
The public is now questioning whether Thailand should maintain such policies to support rice farmers. Is there any future prospect for rice subsidies?
“I cannot survive with the money from selling rice, now. I used to make just enough money from the [rice-pledging] policy. You don’t understand why it [the subsidy] is important, because you are not a farmer. I still hope this [Prayut] government restores the rice-pledging policy to help us. I borrowed money to buy lots of things for farming,” stated a rice farmer in Si Sa Ket province.
Thai farmers have always received sympathy for their hard work from the urban-middle class, and they have been regarded as the backbone of the nation for centuries. Nevertheless, public sympathy doesn’t necessary translated into support for rice subsidies, especially since the rural populace has been stereotyped as easily falling into debt and expecting to be rescued by the government. The urban-middle class respect is often based on an idealised and romanticised vision of rice farming that fails to reflect the financial vulnerability.
Indeed, the very high price of rice during the Yingluck government was a double-edged sword. Not only did it help provide household liquidity for rice farmers, but it also encouraged farmers to increase their production in order to increase their household income, resulting in oversupply of rice to the market. Rural farmers are typically attracted by economically viable crops, so it is logical that they would seek to maximise their potential profit.
Of course, farm subsidies must not be treated as a form of entitlement, especially in the form of cash payments. Subsidies should be provided as a form of relief programme, which can financially support farmers to be able to compete in the market in the long run. 
The military government and its supporters are not entirely convinced of the need for rice subsidies and their importance for the growth of the Thai economy. Indeed, few Thais are aware of the historic contribution rice farmers have made to the economy, since this rarely features in the history books. 
Between 1950s and 1970s, the “rice premium” (export tax) was a crucial source of government revenue, used to boost the country’s industrialisation. In 1953, government revenue from rice was 32 per cent of the total revenue. This missing piece of information prevents new generations from appreciating the transfer of public resources to subsidise the Thai agricultural sector today.
Rice and agricultural subsidies are often dismissed as populist policy, motivated by politicians’ desire to win elections. A vast majority of Thais still believe that subsidies represent a wasteful use of public resources. 
They are correct to an extent, but not entirely. At the very least, farmers have to produce crops in order to obtain support from the government, so there is no such thing as a free lunch for rice farmers. In addition, working in a rice field is not a dream career for any Thai youngster, even those doing degrees in agriculture. Therefore, rice subsidies can also be utilised as a long-term national strategy that secures our ability as a nation to feed ourselves.

Titipol Phakdeewanich is dean of the Faculty of Political Science at Ubon Ratchathani University, and a visiting fellow at the Centre for the Study of Globalisation and Regionalisation at the University of Warwick in England.

Published : July 28, 2017

By : Titipol Phakdeewanich  Special to The Nation