Mortgage scheme offered to rice farmers to delay supply to market

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The Rice Policy and Management Committee is launching a short-term mortgage program for rice farmers in some areas in an effort to reduce the amount of paddies entering the market and prevent the price from falling.

Following a meeting of the Rice Policy and Management Committee, chaired by Prime Minister Prayut Chan-o-cha, Permanent Secretary for Commerce Chutima Boonyaprapatsorn revealed that the committee had approved the implementation of a paddy pledging program for farmers within the northern and northeastern regions. The objective is to absorb up to 2 million tons of paddies from the total supply being delivered to the market during the upcoming period.

Under the program, the Bank for Agriculture and Agricultural Cooperatives (BAAC) will pay participating farmers 90 percent of their grains’ market value, or 11,700 baht a ton for sticky rice and 15,400 baht a ton for jasmine rice. Each household is allowed to receive no more than 300,000 baht and pledge no more than 20 tons of paddies. The interest, meanwhile, will be subsidized by the government.

The pledging period will run for four months, from November 1 this year until February 28 next year. If any of the farmers do not redeem their pledged paddies by the deadline, the grains will be kept in the government’s stock and be put up for auction later on. The quality of the rice entered into the program will also be checked thoroughly by the BAAC before their acceptance.

According to Ms Chutima, the market is expected to see around 5-6 million tons of paddies in the months to come, half of which will be for domestic consumption. The amount indicates that price increases are still possible.