The government will raise 320 billion baht from domestic financial institutions to help finance the rice mortgage scheme from December to February 2012.

The state-owned Bank for Agriculture and Agricultural Co-operatives will use 90 billion baht of its own funds and borrow from other banks to help finance the purchase of up to 8 million tonnes of paddy rice over the next two months.

The programme, set to be launched today, will offer farmers 15,000 baht a tonne for pledges of paddy, or unhusked, white rice and 20,000 baht a tonne for jasmine hom mali rice.

Prime Minister Yingluck Shinawatra asked authorities and local organisations to monitor the programme closely to prevent corruption. She told officials to ensure that the estimated 20 million farmers nationwide will be able to participate in the programme.

Assuming pledges are made for the entire first rice crop which normally reaches 25 million tonnes, government costs for the programme could be as high as 435 billion baht, including 410 billion for the mortgage scheme itself and 25 billion for management expenses.

Whether the government _ and taxpayers _ incur a profit or loss depends on the success of the government in boosting domestic rice prices and at what price authorities can sell their stocks to packers and exporters.

BAAC president Luck Wajananawat said the bank will lend 8 billion baht to the Public Warehouse Organisation and the Marketing Organisation for Farmers to start the programme, as disbursement of funds from the 2012 budget could be delayed until February. The two agencies are required to draft a plan on how they will manage the mortgage programme and repay funds to the state bank.

Mr Luck said to prevent corruption, the government should allow local organisations to participate in the registration process. Inventory checks are also necessary at local rice millers before and during the pledging process.

The rice mortgage programme was scrapped by the Abhisit Vejjajiva government in favour of a price insurance programme that compensated farmers if prices fell below benchmark prices.

The Yingluck government has restarted the mortgage scheme as part of its plans to help boost rural income.

According to the BAAC, outstanding debt owed to the BAAC for past mortgage programmes was 140.33 billion baht as of Aug 31. If other crops are included, outstanding debt was 155.68 billion baht as of Aug 31.

Pranai Suwanarat, the interior permanent secretary, said provincial governors would be held accountable for any corruption occurring within their provinces.

The Agriculture Ministry reported 3.2 million households have registered for the programme, with 700,000 pledging documents issued to date. The ministry expects 6 million tonnes of paddy to be pledged this month.

More than 200 rice millers have also registered for the scheme, with certifications issued to 93 to date. Of these, 30 are expected to be ready to implement the plan starting today.

Source: Bangkok Post