The cabinet has approved a total budget of 270 billion baht for the government’s rice pledging scheme, Deputy Commerce Minister Yanyong Puangraj said on Tuesday.

Despite opposition party criticism that corruption is blighting the scheme, the Pheu Thai-led government opted to carry on its vote-winning populist policy for the 2013/14 harvest season, albeit a toned down version, as proposed by the National Rice Policy Committee.

The pledging price for in-season normal paddy has been set at 15,000 baht a tonne for white rice and 20,000 baht a tonne for Hom Mali, or Jasmine rice, capped at 350,000 baht per farming household. The rice programme for in-season paddy runs from Oct 1, 2013 to Feb 28, 2014, said Mr Yanyong.

The price for off-season paddy has meanwhile been set at 13,000 baht per tonne, with the value capped at 300,000 baht per household, he said. The off-season programme will run between March 1, 2014 to Sep 30, 2014.

Varathep Rattanakorn, PM’s Office Minister, said the government plans to purchase 16.5 million tonnes of rice in the 2013/14 harvest season, with an expectation that losses will not exceed 100 billion baht.

When Yingluck Shinawatra took office in 2011, the government vowed to accept all grains into the scheme, which pays farmers as much as 40 per cent above market prices for their rice.

After the first two years of the rice pledging scheme, the government had bought more than 18 million tonnes of unmilled rice. The exact amount of rice sold has not been confirmed, but government figures indicate around 10 million tonnes are still held in stock.

When government launched the programme, ministers said it was necessary to improve the living standards of farmers and predicted that the scheme would push up the price of rice on the global market.

But the global rice price has not increased because major rice producing countries India and Vietnam have had good harvest years and a surplus of rice to offload. The price of Thai five per cent white rice now is around US$442 a tonne, much lower than $700 expected by the government.

The scheme has incurred huge losses, but there are currently no precise figures on the deficit. Supa Piyajitti, deputy finance permanent secretary has been appointed to chair a committee tasked with accounting for the scheme.

The government admitted losses of 136 billion baht from the first year of the scheme. However, total losses to date could be closer to 220 billion baht, if the main 2013 crop is taken into account.

Since government took control of rice trading, exports of Thai rice have dropped continuously from 10.71 million tonnes in 2011 to 6.73 million tonnes in 2012. For the first seven months of 2013, the country shipped a total of 3.61 million tonnes of rice, compared to 3.8 million tonnes in the same period of 2012, according to the Thai Rice Exporters Association.

Source: Bangkok Post