News / Asia

Thailand Ends Controversial Rice Subsidy Scheme

FILE - Thai workers unload rice from the truck of a farmer, at a rice collection center, in the northeastern province of Roi Et , in Thailand.
FILE - Thai workers unload rice from the truck of a farmer, at a rice collection center, in the northeastern province of Roi Et , in Thailand.
Ron Corben
Thailand's military government ended a rice price-support scheme, put in place under the former civilian government, as investigations continue into widespread corruption and losses of billions of dollars from the program.

The policy change comes as Thailand is predicted to return as the world's largest rice exporter, eclipsing the current market leader, India.

Thailand's military leader, General Prayuth Chan-Ocha, said all rice price-support schemes were dismissed unless they provided direct benefits to the farmers. Prayuth said alternative measures were needed to boost agricultural development and support to farmers.
 
FILE - Thai farmers march through the street during a rally to put pressure on the Office of the Anti-Corruption Commission in Bangkok, Thailand, Feb. 7, 2014.FILE - Thai farmers march through the street during a rally to put pressure on the Office of the Anti-Corruption Commission in Bangkok, Thailand, Feb. 7, 2014.
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FILE - Thai farmers march through the street during a rally to put pressure on the Office of the Anti-Corruption Commission in Bangkok, Thailand, Feb. 7, 2014.
FILE - Thai farmers march through the street during a rally to put pressure on the Office of the Anti-Corruption Commission in Bangkok, Thailand, Feb. 7, 2014.
Under the rice price-support scheme of former Prime Minister Yingluck Shinawatra, the government paid farmers 50 percent more than world market prices. The government believed the plan could make Thailand, then the world's largest rice exporter, a price leader and force up global rice prices.

The program was a central policy of Yingluck's government and key to the Pheu Thai party's 2011 election victory.

But the scheme, costing over $19 billion and shrouded in official secrecy, floundered as Thailand, unable to sell its rice at the higher prices, was left with millions of tons of the grain in warehouses, while the government was engulfed by allegations of widespread corruption.  
 
Government financing for the scheme dried up last year, leaving hundreds of thousands of farmers unpaid.

About 20 farmers are alleged to have committed suicide because of financial distress, while others took to the streets in protest in Bangkok pleading for funds.

In March, Yingluck's caretaker government, in a bid to raise money, began releasing rice at discounted prices onto the world market.

Thailand's warehouses could be holding as much as 18 million tons of rice - double normal levels.
 
David Dawe, a senior economist with the United Nations Food and Agriculture Organization (FAO), said sales of Thai rice this year led to lower global prices.

"One of the ways that they were raising money is they realized that they were going to have to sell some of the huge stocks that they had," Dawe said. "They just couldn't continue to borrow money and sit on all these stocks and so they just started selling stocks. Thailand only went out of the market because they were trying to hoard everything."
 
Corruption charges

In early May, prior to the military takeover of the Thai government, the National Anti-Corruption Commission (NACC) found Yingluck at least partially responsible for corruption related to the scheme.

A subcommittee is examining the former prime minister's declared assets along with those of other cabinet members linked to the program.
 
Farmers from neighboring rice-growing countries, including Vietnam and Cambodia, were illegally shipping their rice to Thailand to be sold at the higher prices. Rice millers are also under investigation for overstating rice stocks.
 
The NACC is investigating losses of up to $16 billion, with almost 3 million tons of rice missing from warehouses.
 
Thai Rice Exporters Association honorary president, Vichai Sriprasert, said the military is now assessing the actual quantity of rice in warehouses.
 
"We address first the quantity - let's say the quantity, how many tons do we have? That hasn't been resolved yet. And after the quantity is resolved, to check the quality is much more difficult because the warehouse is full," Vichai said. "You cannot really go into the center of the warehouse. It's not possible to do that now - but once you know the quantity is correct, then the second stage would be to identify quality."
 
Currently, Vichai said Thai rice is the cheapest on the global market, as the country works to clear the backlog.
 
However, the outlook for Thai rice is optimistic.

The U.S. Agriculture Department said Thailand is forecast to be the largest rice exporter again by 2015, shipping almost 10 million tons - the highest since a record of 10.6 million tons in 2011 prior to the rice-price scheme.

Some information for this report provided by Reuters.

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Comment Sorting
Comments
     
by: Akearoon from: Thailand
June 17, 2014 5:16 AM
There's still no real proof of corruption yet! It's just an allegation. If later found out the corruption allegation is nonsense, the rice price-support program should be brought back to reimplement as a way to improve farmers' income. Should not this be a good policy for a good government?
In Response

by: Ryan Coughlin from: Bangkok
June 22, 2014 9:54 AM
I would like to see someone show ANY evidence that the existed any sort of official corruption in the rice plan. Just because people say something enough times, doesn't make it true.
In Response

by: Theodore Whittlinger from: Nevada
June 17, 2014 3:58 PM
The article points out that the program was a FAILURE at all levels! The rice could not be sold at the high price that resulted from the program. Corruption is only a part of the problem - also, I have been in Thailand many times for extended stays and, like you if you are honest, corruption is always involved in government programs!

by: Dolamite from: US
June 17, 2014 1:42 AM
Would you have expected anything less from the likes of this country. Pretty much a no brainer.

by: Mark Olanackaraseyranee
June 16, 2014 1:11 PM
Finally an end to a nightmare for the farmer and taxpayer of Thailand.
In Response

by: Medulla Oblongata from: Bangkok Thailand
June 17, 2014 1:37 AM
Couldn't agree more Mark. Good riddance of this unrealistic corruption plagued scheme designed by Taksin for grabbing farmers' votes. Populist propaganda don't sell any more..rural people are now wiser.

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