Rice exports plunged by half to a mere 4.7 million tonnes between October last year and this month, mainly because of the government’s rice-mortgage policy, the Thailand Development Research Institute (TDRI) has said.
During the same period a year earlier, rice shipments out of Thailand were as high as 9 million tonnes. Export value also dropped from Bt160 billion in the previous year to about Bt100 billion this year, TDRI president Nipon Poapongsakorn said.
The rice-pledging policy had destroyed the competitiveness of Thai rice in the world market because the government’s mortgage prices were a lot higher, he said.
Nipon also pointed out that Thailand would suffer a loss of Bt87 billion to Bt100 billion immediately if the government decided to release 10.2 million tonnes of rice in its stocks. That was because the pledging price is high and the market price still low.
Thai rice currently costs more than rice from Vietnam. Thailand will end up losing $75 to $77 (S$93 to S$96) per tonne if it sells at current market price, and this would not include the cost of pledging – about Bt260 billion (S$10 billion).
So, he said, the government should review its pledging policy by paying farmers directly.
“Thailand is losing huge amounts on subsidies that are helping not just poor farmers but also landlords and rich farmers, because the government is accepting all the rice that is entered in the pledging scheme.
More than 52 per cent of the rice entered in the pledging scheme comes from rich farmers,” Nipon explained.
He added that if the government changed its pledging measure to providing direct subsidies to a particular group of small farmers, then it would only spend about Bt30 billion to Bt40 billion a year.
According to TDRI, about 80 per cent of Thai farmers are small, producing only about 10 tonnes of rice per harvest.
Hence, the government should focus subsidy plans on these small farmers so taxpayers do not have to shoulder the burden of subsidising the farming sector and that prices do not get distorted.
Nipon also called on prime minister Yingluck Shinawatra to urgently investigate the pledging project for corruption, pointing out that more than 3 million tonnes of paddy rice from neighbouring countries seem to have entered the pledging scheme.
He went on to say that though the government was planning to limit the volume of rice that can be pledged in the upcoming harvest season, it would still face the problem of graft and exports would continue dropping as the subsidy remained high.
The most efficient method would be to subsidise the price of rice and promote export growth by directly paying the difference to farmers under a price-guarantee scheme.
He said the government could change the name of the price-guarantee scheme if it did not it to sound like the same policy as the one introduced by the previous Democrat government.