BANGKOK – The controversial rice subsidy introduced by former Thailand Prime Minister Yingluck Shinawatra has apparently incurred a paper loss of 518 billion baht, or about $15.7 billion, according to the Junta appointed Finance Ministry.
That figure is considerably higher than the only earlier publicly available estimate—$9.2 billion, projected by the country’s anti corruption agency in May, although it said the true loss was probably higher. The new estimate—which one official said could grow—was released two weeks before the military-appointed legislative assembly is expected to begin debating an impeachment motion brought against Ms. Yingluck for allegedly mismanaging the subsidy program.
The $15.7 billion loss represents annual depreciation and the difference between the above-market prices the government paid farmers from 2011 to February of this year for their rice to be largely stored in warehouses versus its value today. Ms. Yingluck had hoped removing such a huge amount of rice from the global market would boost prices, but the opposite happened. Thailand also lost its place as the world’s top rice exporter to India during Ms. Yingluck’s gamble.
A Thai court removed Ms. Yingluck from office in May on an obscure legal point related to her demotion of a senior civil servant. Her ouster came amid months long street demonstrations by critics who demanded she resign. The remainder of her government was overthrown by the then-army chief Gen. Prayuth Chan-ocha, who is now the country’s prime minister.
Thailand’s anti corruption commission found Ms. Yingluck guilty of mismanaging the subsidy.
Ms. Yingluck maintains her innocence. She insists the program, which purchased rice from local farmers at up to 50% above market price, was meant to help boost farmers’ income.
An official can be impeached in Thailand even after leaving office. If Ms. Yingluck were impeached, she couldn’t run for office for five years.
Under the subsidy launched in 2011, Ms. Yingluck’s government purchased rice from local farmers until the program expired in February this year. This has left the state with 19.2 million metric tons of rice, Rungson Sriworasat, the ministry’s permanent secretary, told reporters.
Mr. Rungson said the ministry’s rice audit committee will have to check with another set of government data to conclude the actual stocks. Earlier, the Commerce Ministry reported 18.6 million tons of rice.
“If the rice quality degradation and the missing stocks are worse than we thought, and if the price of rice sold is lower than the benchmark rate we used, then the loss figure is going to increase,” Mr. Rungson said.
The committee used a quotation as of May 22 as a benchmark price, he said.
The export price of Thai rice has declined since the beginning of this year when Ms. Yingluck’s administration started dumping state rice stocks in the market to generate cash to fund the program. Thai 5% broken white rice, a benchmark grade, is quoted at about $415 per ton, down $35-$40 from January, according to the Thai Rice Exporters Association.
Thai rice exporters are hopeful that Thailand will be able to export some 10 million tons thanks to the competitive price. Yet, the price decline is partly blamed for sluggish domestic spending by the Thai rural population, much of which works in agriculture. That poses a challenge to the junta’s effort to boost the fragile economic recovery.
Thai Finance Ministry recently cut the country’s growth forecast this year to 1.4% from a previous projection of 2%.
Gen. Prayuth’s interim government last month approved a one-time cash handout worth a total of $1.2 billion to support 3.4 million farmers. The government also encouraged farmers to delay the sale of some rice from the coming harvest to try to support price. Supplies of fresh, newly harvested rice tend to pressure the price of older grain.