BANGKOK – Thailand’s state-backed farm bank will start book building for a 20 billion baht ($604.96 million) bond next week to help meet payments to rice farmers, but with terms unchanged from a similar issue in November, appetite may be limited.
The government needs the money to pay farmers under a scheme where it buys rice at above market prices, a subsidy that boosted its popularity and helped it win a landslide in 2011 elections.
But the government has struggled to sell the rice, making it difficult to fund the scheme. Farmers who have not been paid since the subsidy was renewed in October have threatened to join anti-government protests.
Farmers blocked a highway in the northern province of Phichit on Tuesday to protest at late payments under the scheme. Some in neighboring Phitsanulok have also protested.
The marketing of the bond from Jan. 16 to Jan. 23 coincides with protesters’ plans to shut down Bangkok as part of an attempt to oust Prime Minister Yingluck Shinawatra, adding to political uncertainty that is likely to put off investors.
A source at an arranging bank for the bond said the terms would be unchanged from November when the Bank of Agriculture and Agricultural Cooperatives, which funds the scheme, raised only half the 75 billion Thai baht ($2.27 billion) it wanted.
“We bought some last time. But we are not so keen this time unless the price is good,” said Chajchai Sarit-apirak, first senior vice president at Kasikorn Asset Management.
Around 1 million tons of rice-selling certificates that the government issued to farmers since October are still unpaid, a senior official at BAAC said.
“Those unpaid certificates are worth around 100 billion baht and the BAAC needs to pay to farmers within January,” BAAC executive vice-president Supat Eauchai said.