Idea to revive rice mortgage plan blasted

Idea to revive rice mortgage plan blasted

Democrats warn of big losses, Vietnam rivalry

The Democrats fiercely criticised the government's plan to revive the rice mortgage scheme during the second day of the parliamentary debate on government policies yesterday.

The opposition said the scheme was ineffective, favouring rich exporters rather than poor farmers, would expose the state to possible huge losses and possibly violate a regulation of the World Trade Organisation (WTO).

Democrat list MP Kiat Sittheeamorn expressed doubts the rice mortgage scheme would be successful.

He said the Somchai Wongsawat government had implemented the scheme back in 2008 which caused a massive loss of 16 billion baht to the state.

It also led to a quota system that benefited large-scale exporters.

Mr Kiat cited a study by the Thailand Development Research Institute which concluded the previous mortgage scheme helped only one-third of Thai rice farmers and around 500,000-600,000 tonnes of rice from neighbouring countries was used to fraudulently claim privilege prices from the government.

Mr Kiat also warned the government its rice mortgage scheme might violate a WTO regulation which he said limited member states' subsidies to 10% of their products.

He wondered if the government's plan to spend 472 billion baht on the mortgage scheme would breach the limit. If it did violate the regulation, Thailand could face international lawsuits and trade partners might impose trade barriers.

Consequently, Thailand's other export-oriented industries would be affected and workers would be at risk of losing their jobs, Mr Kiat said.

He said the mortgage scheme could further widen the price gap between Thai rice and Vietnamese rice, encouraging local consumers to switch.

Democrat list MP Trairong Suwannakhiri said the previous rice mortgage scheme had benefited just 15% of Thai farmers and officials had casually spent government money on it.

He pointed out the scheme with high rice prices set by the government would not encourage farmers to cut their production costs. In the meantime Vietnam, which is an arch-rival of Thailand in rice exports, is researching cost reduction and its rice is now cheaper than Thai rice.

Vietnam is researching and developing irrigation, fertilisers and rice strains to cut costs. Vietnam sells its rice at US$570 a tonne while Thailand prices its product at $625 a tonne. This would pose marketing problems for Thai rice.

Mr Trairong warned Thailand could no longer be proud of its premium rice because the quality of Vietnamese fragrant rice almost matches that of Thai rice. Vietnamese rice has 70% of the Asian market.

The Democrat said when he became deputy prime minister in the last government, rice stocks resulting from the previous mortgage scheme amounted to 5.6 million tonnes. The government had to pay 10 billion baht a year for rice warehouse storage, as well as interest, and some lots of rice had been kept for as long as eight years as they could not be sold.

The storage of Thai rice under the mortgage scheme also raised the price of rice in global markets because Thai rice did not get there, he added.