Cabinet ministers will consider final details of the rice pledging programme for the 2012-13 harvest tomorrow, with costs projected at over 400 billion baht.

The cabinet had been scheduled to approve the programme at last week's cabinet meeting, but it delayed the review due to differences in figures between the Agriculture Ministry and the Bank for Agriculture and Agricultural Cooperatives (BAAC).

The BAAC, a state bank responsible for implementing the rice pledging programme, estimates that 26 million tonnes of paddy rice will be pledged overall, compared with an estimate of 23.5 million by the Agriculture Ministry.

Under the programme, farmers receive up to 15,000 baht per tonne for white rice paddy and up to 20,000 baht per tonne for jasmine Hom Mali rice.

Production has jumped in recent months as farmers have increased their plantings to take advantage of the pledging prices, which were intentionally set at 40% above past market prices.

The Yingluck Shinawatra government has essentially become the sole buyer of rice in the country under the programme, with 270 billion baht spent in the first year alone and 17.8 million tonnes pledged.

The total amount of rice pledged during the 2011-12 harvest was below initial estimates of 400 billion baht, as production was severely hampered by last year's floods.

Including price support schemes for other crops, total state costs for the upcoming harvest are estimated at 405 billion baht.

The government has agreed to make one modification to the pledging programme, allowing farmers to store pledged rice at their own barns in exchange for storage fees paid by the government.

Over the past year, farmers taking part in pledging had to bring their paddy to registered rice mills, which offered pledging documents to be redeemed for funds from the BAAC.

Pledged rice was then stored on behalf of the government in private silos, which received storage remuneration from the state.

Funding for the 2012-13 programme will come from the BAAC, which must borrow the funds from the local markets using debt guaranteed in turn by the Finance Ministry.

The government ultimately must service the debt owed by the BAAC, either by using proceeds from the government rice auctions or through direct allocations from the central government budget.

Source: Bangkok Post