BANGKOK – Thailand may need to raise new funds for a rice buying scheme in the crop year from October as it has fallen behind schedule in repaying the state bank that runs the scheme, bank officials say, showing the government’s failure to sell down stockpiles.
The government has been buying rice at prices way above the market since October 2011. The policy, aimed at helping poor farmers, has priced Thai grain out of export markets and cost Thailand its crown as the world’s top rice exporter.
Luck Wajananawat, president of the Bank for Agriculture and Agricultural Cooperatives (BAAC), which funds the scheme, said the government had spent 667 billion baht ($21.3 billion) on buying rice since the scheme began.
The Commerce Ministry, which manages the rice scheme, has repaid only 139 billion baht to the BAAC, Luck was quoted as telling Thai newspapers on Wednesday, well short of the 220 billion the government aims to pay back by the end of the year.
“We are to finalise plans to borrow money to fund the scheme in the next few days,” Luck was quoted as saying on the website of business newspaper Krungthep Thurakij, referring to the authorities’ need to renew funding.
A senior official at the BAAC, who asked not to be named, confirmed the figures. “If the government wants to continue the scheme, it will have to borrow billions of baht more as its budget to run the scheme has run out,” he told Reuters.
There was no immediate response from the government.
Prime Minister Yingluck Shinawatra has said the government was not considering further loans because it would have enough money from selling rice from its stocks to fund the scheme.
The cabinet has said it would spend no more than 270 billion baht for the scheme in the year from October 2013 to September 2014.
Early this month, Commerce Minister Niwatthamrong Boonsongphaisan said, “Since the cabinet has approved the budget of 270 billion baht for the scheme, it is the duty of the Finance Ministry to figure out how to get the money.”
The BAAC source, who declined to be identified because of the sensitivity of the issue, said, “The Finance Ministry will need to guarantee another loan (from the BAAC) by the end of this month.”
By the government’s own admission, the scheme incurred losses of 136 billion baht in the 2011/12 crop year. Total losses depend on the prices paid for the grain, the volumes bought and sold and the price differentials. The government has published minimal data on all these aspects.