Thai Rice Farmers Threaten Protest if Intervention Price Cut | The Irrawaddy Magazine

Thai Rice Farmers Threaten Protest if Intervention Price Cut | The Irrawaddy Magazine
APORNRATH PHOONPHONGPHIPHAT / REUTERS WRITER, March 5, 2013

 
BANGKOK — Thai farmers vowed on Monday to stage a major protest after the government signaled it was weighing a plan to cut rice intervention prices by a tenth, in another sign that the state could be running short of funds for the scheme.

Thailand’s generous rice subsidy scheme has won the support of millions of rural voters, but has generated huge grain stockpiles, sparked graft allegations and unnerved markets.

“We have sent our letter to Prime Minister Yingluck Shinawatra that we don’t agree to cut the intervention price,” said Vichien Phuanglamjiak, vice-president of the Thai Rice Farmers Association, which represents 700 to 800 farmers.

“And if we don’t get an appropriate response, we will stage a protest and it would be a big one.”

The remarks came in response to comments last week by permanent commerce secretary Vatchari Vimooktayon, that the government was considering cutting the price it pays farmers to 13,000 baht from 15,000 baht (US $500) per tonne.

The scheme has cost Thailand its ranking as the world’s top rice exporter and built up stockpiles of around 17 million tonnes of milled rice, or nearly twice the exports of a normal year, leaving authorities struggling to find warehouse space, and the threat of rice being dumped on world markets at a loss.

Last month officials and bankers said the government had paid less than a sixth of what it owed a state bank funding the intervention program.

With storage space running out, Thai rice exporters have said it will only be a matter of time before the government is forced to sell the grain. It will almost certainly have to sell at a big loss, which will ultimately be covered by the taxpayer.

Although Vatchari made a quick U-turn on Monday, saying the government had made no change to the rice scheme, traders and industry officials said his comments could be a signal from the government, implying it was struggling to fund the scheme.

“The truth must be revealed one day or another that the government could not go further with this aggressive intervention,” said Vichai Sriprasert, an honorary president of the Thai Rice Exporters Association.

Prime Minister Yingluck Shinawatra took power in 2011 on a promise to pay farmers well above what was then the market rate for their rice, and the intervention has gone on even though it has priced Thai rice out of the international market.

The intervention price drove the export price of Thai rice to $565 per tonne, making it uncompetitive with the range of $390 to $410 at which Vietnam and India offer the same grade.

The government has declined to give further details about rice stocks and has stopped publishing trade data for the grain.

It reiterated that it had sold up to 7.3 million tonnes of rice from stocks via government deals and would gradually repay the state bank.

But loading activity at ports does not suggest large volumes of rice were shipped, industry officials have said.