Commerce Minister reaffirms rice mortgage scheme a success

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BANGKOK, Aug 18 – Commerce Minister Boonsong Teriyapirom reaffirmed that the government is still pressing ahead with the rice mortgage scheme because of its success in shoring up rice prices.

Under this controversial scheme, the government fixes the price of paddy to be mortgaged at Bt15,000 per ton and jasmine rice at Bt20,000 per ton.

Mr Boonsong said with the scheme in force since late last year, market price for paddy during January to August averaged at Bt11,000 per ton, in comparison with the price range of Bt7,000-8,000 per ton under the “price guarantee scheme” implemented by the previous government.

He said the government tasked the Ministry of Agriculture and Cooperatives to identify measures to help farmers reduce production costs per acreage because the “price guarantee scheme” is not needed if that problem is solved.

Until now the government has received 16.9 million tons of paddy pledged, and spent Bt260 billion to date under the scheme. The budget for this scheme was partially funded by the Bank of Agriculture and Agricultural Co-operatives (BAAC) and the government, which lent to BAAC, so that BAAC to extend credit to farmers, said the Minister.

Regarding the paddy in stock, Mr Boonsong said once processed the stock would be equivalent to 10 million tons of rice. The government has been making efforts to sell the stock, either through government-to-government agreements or open bidding to private traders.

Regarding criticism that the government risked wasting Bt260 billion in case it could not sell such massive stockpile, the Commerce Minister said he is optimistic that the government will manage to sell it off to earn cash to offset the cost of operating the scheme.

On criticism that the scheme might be abused by importers of cheaper foreign rice to mortgage, Mr Boonsong denied such criticism. He conceded that there might be small-scale cross-border smuggling operations of rice but affirmed that any significant import for this purpose was highly unlikely.

Amid criticisms of corruption, Mr Boonsong said the next round of rice mortgage scheme to start from October 1 will introduce measures such as deploying officers and farmers’ representatives to monitor inputs into rice mills participating in the scheme. Such details, among others, are expected to be approved by the cabinet in early September.

The Commerce Minister said he believed that Thailand will remain the world’s number one rice exporter this year, with overall export volume projected at 8 million tons.