Accessibility links

Breaking News

Thailand Tallies Billions in Rice Program Losses

A farmer works in his rice field in Nakhonsawan province. The Thai government has offered 2 million tonnes of rice and 200,000 tons of rubber to China, the commerce minister said on Friday, as the government attempts to sell off stockpiles that are hanging over global markets and pushing down prices, Nov. 14, 2014.

Thailand’s former Prime Minister Yingluck Shinawatra remains under legal scrutiny for failing to stop massive losses and corruption in the country’s controversial rice price support scheme. The Thai Finance Ministry estimates that the country has spent more than $21 billion to support rice price programs by various governments over the past decade.

The government-backed rice price support scheme launched by Yingluck and her Pheu Thai Party proved an election winner at the 2011 national polls.

The plan promised farmers a fixed, above-market price for their rice crop. Authorities hoped it would give them greater control over Thailand’s rice export, and lead them to consolidate the country’s position as the world’s biggest rice exporter.

But regional rice producing countries such as India, Vietnam and Myanmar, increased their harvests and sold more exports on the open market, better meeting demand than they had in years past.

Losses, unsold rice

That meant the Thai rice went unsold and payments to farmers were delayed. The government began stockpiling the unsold rice, which authorities now estimate at 19 million metric tons.

Viroj na Ranong, an economist with the independent think-tank Thailand Development Research Institute (TDRI) said the losses estimated by the Finance Ministry could rise as the military government sets about attempting to clear the enormous rice stockpile.

"In fact, the bad thing was not only the Pheu Thai Government was incompetent to sell its rice, my expectation is that most of the rice will sit there for a long time and well before the military would be able to do something with it," Viroj na Ranong said.

The Thai Ministry of Finance estimates the losses from the rice scheme under Yingluck’s government total more than $16 billion. All told, the Ministry said, similar programs dating back to 2004 led to total losses in excess of $21 billion.

Corruption cited as one reason for failure

Critics of the rice program say it also lost enormous funds through corruption. Members of Yinglucks party insist the program’s main beneficiaries were Thailand’s rice farmers.

But the opposition Democrat Party published detailed reports on the rice scheme, based on information supplies by bureaucrats and officials in government ministries and state-owned banks.Warong Dechgitvigrom, a member of the Democrat Party, said the corruption required the involvement of rice millers, government-owned banks as well as official surveyors sent to assess rice quality. Overseas sales on a government-to-government (or G to G) basis were also questionable.

"The surveyor is also corrupt. This is why bad quality rice, yellow rice, or rice from Cambodia or Myanmar, are sent to the stockpile [warehouse]. And finally when the government sell the rice they are also corrupt - G to G - its fake," stated Warong. "It's not the real thing."

Former leader face charges

Yingluck, who chaired a committee overseeing the rice program, faces charges of negligence and is due to appear before the National Assembly on November 28. If impeached, she would be barred from politics for five years.

Economist Viroj said the National Anti-Corruption Commission (NACC) moves to target former leader Yingluck appears "political" based on weak charges of her position as chair of the national rice program she should be held accountable.

But Warong Dechgitvigrom, a member of the Democrat Party, said the legal moves against Yingluck could succeed, in part because many rice farmers grew angry by delayed payments."I believe the impeachment will be successful and the criminal high [Supreme] Court finally I believe also a success. Both ways," he said. "The poor also agree with the Court - the politician must take responsibility for the corruption and about the impeachment and the criminal [acts]."

Private rice exporters remain confident Thailand will recover its position as the world's largest rice exporter in the coming year.

Rice industry executives predict Thailand will ship around 10 to 12 million metric tons of rice in 2014, in line with India's 10 million tons.