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Controversial Rice Scheme Risks Thai Ruling Party's Popularity

  • Daniel Schearf

Thailand's unfinished election means the current caretaker government cannot create any new debt, leaving rice farmers owed billions of dollars as part of a budget-busting, controversial subsidy program. The ruling party campaigned on the subsidy plan, which analysts now say has become a spectacular failure.

The embattled government came to power pledging increased incomes for rice farmers through a plan that pays up to 40 percent above market price for all the grain they can sell.

The rice pledging program encouraged over-production and made Thai rice uncompetitive for export, ballooning government spending by billions and creating a mountain of stored grain.

A Chinese company Wednesday pulled out of a deal to buy over a million tons of stockpiled Thai rice.

The collapsed deal struck a blow to the government's efforts to off-load an estimated 20 million tons in danger of rotting in warehouses.

Ammar Siamwalla of the Thailand Development Research Institute says the program also appears rife with corruption.

“Very shady. And, most of it is in the disposal of the rice, in the sale of the rice," he said. "And, it is not shady, it is completely dark... Because no figures are ever revealed."

The rice pledging scheme in 2012 cost Thailand the title of world's biggest rice exporter, a position it had held for three decades.

Reports of cheaper rice smuggled from neighboring Burma and Cambodia and sold as "Thai rice" further tarnish the program's image.

Thailand's National Anti-Corruption Commission (NACC) is investigating Prime Minister Yingluck Shinawatra's role in the rice scheme that could see her impeached.

Several other officials, including a former commerce minister, are being investigated for corruption over the policy.

The subsidy is an expansion of populist programs by her brother, former Prime Minister Thaksin Shinawatra, that included cheap loans and affordable health care for the countryside.

Those policies helped Thaksin get elected twice before he was ousted by the military in a 2006 coup.

Ammar Siamwalla says newer policies, including tablet computers for school kids and tax rebates for first time car owners, show mixed results.

“The health care is probably the best policy the Thai government, any Thai government, has ever implemented... Just as the rice pledging scheme, the current rice pledging scheme, is the worst policy any Thai government has ever implemented,” he said.

Farmers hold signs in front of a combine harvester during a rally demanding the Yingluck administration resolve delays in payment from the rice-pledging scheme outside the Commerce Ministry in Nonthaburi province, on the outskirts of Bangkok, Feb. 6, 2014

Farmers hold signs in front of a combine harvester during a rally demanding the Yingluck administration resolve delays in payment from the rice-pledging scheme outside the Commerce Ministry in Nonthaburi province, on the outskirts of Bangkok, Feb. 6, 2014

Thailand's anti-government protesters, supported by the opposition, cite the rice program as a failure of the ruling party's populist rule.

Thousands have occupied major Bangkok intersections since January and are encouraging farmers to join them in calls for an un-elected reform council to take over government and clean up corruption.

The protesters tried to stop the February 2 national elections by blocking candidate registrations and voters. Legal challenges and by-elections are expected to take months to complete.

The standoff over elections means rice farmers, not paid in months, have longer to wait.

But most are still reluctant to turn on the politicians who supported them.

Rice farmer Thitiya Boonkhean is owed $6,000. She now sells anti-government T-shirts to protesters to make a living.

She says she is neutral in the political dispute and does not favor any side. She wishes the two sides would hold talks and come to an understanding. Farmers are now facing great hardships, she says, as they have not received any money from the rice pledging scheme.

There are signs farmers are losing patience. Some are blocking roads in protest against the withheld payments and on Thursday petitioned Thailand's government and the revered monarch for help.

But so far, their numbers are small.

Prime Minister Yingluck says, if re-elected, she will revise the rice pledging scheme but has not yet said in what way the bloated program will change.

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