The government is moving ahead with plans to continue buying all grains of paddy for the 2012-13 season despite continued criticism of the government's massive spending to sponsor the populist schemes.

It also managed to sell only 232,596 tonnes worth 3.99 billion baht out of the 750,000 tonnes of rice in an auction held last week.

Of the total amount approved by Commerce Minister Boonsong Teriyapirom yesterday, 229,661 tonnes were milled rice, fetching 3.97 billion baht, and the remaining 2,935 tonnes were paddy worth 15.5 million baht.

The winners were Toumi Intertrade, Chaiyaporn Rice and Food Products, Ponglarp, Asia Golden Rice, Capital Cereals and CP Intertrade.

Manat Soiploy, director-general of the Foreign Trade Department, said the ministry will call a bid over the next two weeks for the remaining 517,404 tonnes.

The National Rice Policy Committee yesterday gave the nod to 405 billion baht worth of working capital to be used for the rice-pledging scheme for the two new crops, which together are forecast to yield 33 million tonnes of paddy.

Some 25.9 million tonnes of paddy are expected to enter the scheme, which is scheduled to run for one year from Oct 1.

Each farmer will be allowed to participate no more than twice during the year.

However, Yanyong Phuangrach, the commerce permanent secretary, said to ensure transparency and head off public concern about corruption, any farmer pledging 20% more paddy than in the previous season or with a value exceeding 500,000 baht will be subject to closer inspection.

Mr Yanyong said of the proposed budget to be proposed for cabinet approval today, 240 billion baht will be allocated for the main crop and 165 billion for the second crop.

The Agriculture Ministry will issue letters of certification to farmers planning to participate in the scheme.
At 3.6 million households, the number of participants is close to last year's level.

The programme will have the same criteria as before, with pledging prices starting from 15,000 baht a tonne for paddy rice, 20,000 baht for Hom Mali in the Northeast, 18,000 baht for provincial fragrant rice and 16,000 baht for long-grain sticky rice and Pathum Thani fragrant rice.

The rice-pledging scheme was one of the Yingluck Shinawatra administration's key promises when it came to office last year.

When the first crop of the year came in, the government replaced the rice-purchase system put in place by the previous Democrat-led government that sought to ensure farmers were paid a fair market price for their paddy.

The now ruling Pheu Thai Party began a new regime to purchase rice at above market prices.

It was estimated Prime Minister Yingluck's government has spent more than 300 billion baht on the farm-pledging scheme for fiscal 2012 ending Sept 30.

Critics have blasted the programme as highly distortionary and costly considering that the pledging prices are as much as 40% over current global prices and losses this year alone could reach 100 billion baht overall.

Indeed, the total losses could have been much higher if not for the fact that the harvest was disrupted by the nationwide flood crisis late last year.

Korbsook Iamsuri, president of the Thai Rice Exporters Association, urged the government to improve the system to release rice stocks if it must proceed with the rice pledging scheme.

The government has so far planned to unload just over 750,000 tonnes of rice from the state's huge stockpile despite acquiring another 16 million tonnes through the price pledging scheme for the 2011-12 season.

"Now the government has to admit it will sell its rice stocks at a loss," said Ms Korbsook.

"For the new crop, once paddy enters the scheme, the government had better speed up discharging its stocks, say once or twice a month, or through the Agricultural Futures Exchange of Thailand. The more the government keeps the rice in its stocks, the more expense and loss it will incur."

Source: Bangkok Post