Mortgage rice scheme is launched

Govt vows to foot bill if disputed plan fails

The National Rice Policy Committee has approved the controversial rice mortgage scheme which will ensure prices for farmers of up to 20,000 baht per tonne - about 5,000 baht a tonne above the current market price.

However, the government promised Friday it would take responsibility if the scheme is a financial disaster, which some experts have said may cost up to 100 billion baht.
NRPC chairwoman Prime Minister Yingluck Shinawatra approved the scheme and it will be implemented from Oct 7 until Feb 29 next year.
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The price for fragrant Hom Mali paddy rice was set at 20,000 baht per tonne, while premium white paddy rice will fetch 15,000 baht.
White paddy rice will fetch between 14,800 baht and 13,800 baht per tonne.
The mortgage price of short-seed glutinous paddy is 16,000 baht per tonne and 18,000 baht for long-seed.
The current market price for Hom Mali rice is about 15,000 baht per tonne and white paddy is between 9,500 and 11,500 baht per tonne.
"It's not true what some are saying, that the scheme will cost the government more than 100 billion baht," said Deputy Prime Minister and Commerce Minister Kittiratt Na-Ranong.
Economist Ammar Siamwalla, from the Thailand Development Research Institute, recently criticised the rice mortgage scheme.
"This government will take responsibility if there is a loss from the scheme," Mr Kittiratt said.
Mr Kittiratt insisted the government is willing to buy all rice production, some 25 million tonnes, and mortgaged rice will be sold at an appropriate time to repay loans from the Agriculture and Agricultural Co-Operatives Bank which will finance the scheme.
He declined to specify the value of the loans that will be granted, or to whom they will go.
"The public should not be concerned about the loans because rice will enter the market gradually and this will give the government time to manage the loans appropriately," he said.
To ensure transparency, the NRPC has established six sub-committees to monitor production, marketing, mortgage procedures, provincial mortgage processes, the selling of mortgaged rice, and examination and inspection.
Mr Kittiratt added the government will work closely with the private sector to allow the normal function of rice traders.
"We will do our best but it does not have to be 100% perfect for the programme to be considered successful. If anything does not go as we had hoped, I'm sure it won't be because of negligence," he said.
He added the programme will help farmers more effectively compared to the rice insurance programme of the previous government.
"There are many good things about the insurance programme but the main issue was the premium payment via the insurance was too little to help farmers," Mr Kittiratt said.
The rice mortgage scheme has raised concerns among Asean consumers.
"This just shows how correct we are in pushing for self-sufficiency," said Proceso Alcala, agriculture secretary for the Philippines, which is the world's top rice importer.
The country's National Food Authority is assessing likely demand for rice from other Southeast Asian countries for 2012 and subsequent years to get a clearer picture of whether Thailand can maintain high prices or if "natural market forces will get them to reconsider the plan", said its administrator Lito Banayo.
Mr Banayo said if local rice growing targets are met, the Philippines would need to import only 1 million tonnes or less for next year - about the same amount bought for this year's stocks.Sutarto Alimoeso, chief of Indonesia's state logistics agency, said the Thai scheme is a challenge to Indonesian farmers to improve their productivity. The agency, known as Bulog, is importing 300,000 tonnes from Thailand and 500,000 tonnes from Vietnam for stockpiles.