The Commerce Ministry is likely to suggest that the government soon end its vast price-subsidy schemes for agricultural products, after finding they create only short-term benefits for farmers and pave the way for middlemen to take advantage of the subsidies.

Speaking after a meeting of the subcommittee for assisting agricultural products and prices, Commerce Minister Porntiva Nakasai yesterday said a majority of the committee members had voiced concern over the sustainability of the subsidy measures.

Exporters expect that the current rice-pledging programme could incur a loss of nearly Bt20 billion for the government, as the guaranteed price is much higher than the market price.

Meanwhile, the government has delayed the maize-pledging programme because of concerns over potential losses.
Ubolsak Bualuanggnam, a farmers' representative, said at the meeting that the government should end its price-guarantee strategy for agricultural goods as soon as possible, as it had only solved short-term problems.

The pledging projects have not fulfilled their objective in terms of benefiting solely farmers. On the contrary, most of the benefits have fallen into the hands of middlemen or politicians, as they have intervened in the pledging schemes, said Ubolsak.

Porntiva said the ministry had instructed officials to seek other measures to help farmers, rather than focusing on price subsidies.

For instance, the ministry is unlikely to open this year's price-intervention programme for shrimp. It is considering other measures such as support through soft loans and promoting contract farming.

The ministry will on Tuesday report to the Cabinet that the recent auctions for maize and tapioca have collapsed, as the bid-winners refused to follow through on the contracts.

The three winners for a total of 450,000 tonnes of maize have refused to act on their contracts, because the Cabinet has delayed its approval for the Commerce Ministry to go ahead and sell the stockpile.

Porntiva said the maize price had fallen gradually since the day of the auction. Traders now do not wish to purchase the maize stockpile from the government, citing a deterioration in quality and the lower market price.

The sole winner in the auction of 2.2 million tonnes of tapioca, meanwhile, has refused to act in accordance with the bidding contract, citing the strict regulations concerning the deadline for moving the tapioca from the warehouses.

Porntiva said the ministry would ask the Cabinet to decide how to manage these two commodities' stockpiles, given the falling prices and drop in quality.

To increase understanding of the government's standards for approval bidding projects, the ministry will on Tuesday also ask for a clear Cabinet decision on the sale of rice and other agricultural goods via auction.

Porntiva is confident that the Cabinet will agree to the ministry's recent approval of the sale of 2.6 million tonnes of rice to 17 bid-winners, as it has already reported the bidding procedure to Prime Minister Abhisit Vejjajiva.

The ministry insists it has reached a fair price in order to minimise losses from the rice bidding, said Porntiva. However, it is inevitable that the government will have to shoulder some losses from the auction, as the market price has fallen and the regulations that bid-winners must follow have been tightened.

If the ministry tried to force traders to buy rice at the current market price, they would refuse to do so as it would add to their operating costs besides leaving them with rice whose quality had deteriorated, the minister said.

Source: The Nation