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Thailand’s Rice Policy Committee Raises Rice for Farmers, After Cabinet Reshuffle

Government's rice-pledging program at 15,000 baht ($485) a metric ton

Government’s rice-pledging program at 15,000 baht ($485) a metric ton

 

BANGKOK – In a bid to appease angry farmers, Thailand on Monday boosted the price at which the government buys rice from local producers, the day after the Southeast Asian country’s embattled prime minister reshuffled her cabinet.

Thailand’s National Rice Policy Committee set the purchase price of rice in the government’s rice-pledging program at 15,000 baht ($485) a metric ton, reversing its decision last month to cut the price by 20%. The new move came amid protests by farmers unhappy with the earlier decision’s impact on their livelihood.

Thailand introduced the rice-pledging program as a way to help farmers and drive up rural incomes.

Thailand introduced the rice-pledging program as a way to help farmers and drive up rural incomes.

Meantime, Thailand’s new commerce minister, Niwatthamrong Boonsongpaisal, vowed to make the country’s rice program more transparent. “I will repair the image of the program, clear corruption accusations, and speed up the sale of the rice in the stockpile as soon as possible,” Mr. Niwatthamrong told reporters Monday on the first day at his post.

The shift at the commerce ministry was part of weekend changes by embattled Prime Minister Yingluck Shinawatra, who reorganized her cabinet midway through her term, a move seen as an attempt to boost the governments popularity, which has been undermined by financial losses from the rice program and delays in government projects. In a recent poll by Bangkok University, Ms. Yingluck’s popularity was at 40.4%, a 10.8 percentage-point drop from last November.

Boonsong Teriyapirom, the former commerce minister who oversaw the rice-pledging program, was removed from his post after running up 136 billion baht ($4.4 billion) of losses in the rice program. The losses stemmed partly from the government purchase price being set above market levels, as well as from global rice production and exports increasing, which put pressure on the price of the grain.

Government critics, however, said the new commerce minister will have difficulty curbing the program’s losses because its newly pledged price is still higher than the market price. “The new leadership may be able to slow down the losses, but it’s going to be difficult for the government to fix the problem,” said Panitan Wattanayagorn, a political-science professor at Chulalongkorn University.

Kittiratt Na-Ranong, the finance minister, said the rice committee will later adjust the pledging price for the next crop, starting October this year, based on market prices and increase market channels to speed up the sale of rice in its stockpile in the second half of the year. This includes government-to-government sales to Association of Southeast Asian Nations member countries, plus China and Africa.

The rice committee will submit Monday’s new purchase price of rice, which would be in effect until Sept. 15, to a cabinet meeting Tuesday for final approval, Mr. Kittiratt, who chaired the rice committee meeting, said. The price move is likely to be approved, given past actions.

Thailand introduced the rice-pledging program as a way to help farmers and drive up rural incomes. Policy makers bet that they would increase global prices for local rice by stockpiling the grain. Instead, other exporters such as India and Vietnam stepped in to fill the gap in the market. India knocked Thailand off its perch as the world’s biggest seller of the grain. Thailand has been left with millions of tons of unsold rice.

In a bid to stem losses in the rice program, the cabinet on June 19 approved the rice committee’s proposals for the government to buy rice from farmers at 12,000 baht ($390), down from 15,000 baht ($485), and imposed a purchase limit of 500,000 baht ($16,140) worth of rice per family, a new measure to control the program’s budget.

The cut angered rice farmers, who demanded that the government stick to the original purchase price until September, when the rice crop season is over. Last week, hundreds of rice farmers rallied in the capital to protest the cut.

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