When considering the rival farm-goods policies being put forward during the election campaign, income guarantees versus a pledging scheme, it can be seen that the first method would sustain Thailand's competitiveness while the second would monopolise the rice business chain in the hands of the government.

Under the Pheu Thai Party's pledging scheme, all rice seed would enter the government stockpile. Farmers would be left to sell their production only to the government.

As promoted, the pledged price for white paddy rice would be Bt15,000 per tonne. This means the export price of this rice type would soar to US$850 (about Bt26,000) a tonne, compared with Vietnamese rice at $450-$500. Down the road, Thailand would lose its position as the chief rice exporter to Vietnam, currently the second-biggest rice exporter.

During a debate on rice policies last Thursday, all concerned rice associations, involving exporters, farmers and millers, spoke against the proposed pledging programme, sharing the view that it would distort the market mechanism from upstream to downstream. At least for the time being, they would prefer income guarantees supported by cash subsidies.

The Bank for Agriculture and Agricultural Cooperatives, which would provide the financing for either scheme, said in a study that the government would have to manage huge rice stockpiles under the pledging programme. The practice would also create a monopoly in the rice market with the government as the sole buyer.

Questions about this programme include how the government could release its stockpile at a competitive price given its high cost.

Millers would be unable to sell rice to exporters as their stocks come under government contracts. In the end, Thailand would have no rice for export, leaving the government to manage the whole industry.

In addition, the government would need to focus on how to prevent rice smuggling from neighbouring countries to benefit from the high price subsidy. All in all, Thailand's image as the world's premium rice exporter would be downgraded.

Source: The Nation