Farm subsidies to pass Bt700 bn

Targeted farm subsidiaries, including the rice-pledging scheme, are expected to exceed Bt700 billion by the end of this year, according to Lak Wachananwat, president of the Bank for Agriculture and Agricultural Cooperatives (BAAC).

Lak said the government had already spent Bt660 billion on its rice-pledging project, which started from the harvesting season of 2011, together with similar programmes for other agricultural products, including rubber and tapioca.

Meanwhile, it has seen only Bt120 billion in return from releasing rice from its stockpiles, according to the BAAC, which has advanced between Bt60 billion and Bt70 billion to the pledging scheme.

The government had budgeted no more than Bt500 billion for total farm subsidy in those two years (2011-12). However, the real expenditure is over budget by about Bt100 billion so far.

Lak said the government had purchased rice from farmers at a price 40 per cent higher than the market - paddy rice at Bt15,000 per tonne. That resulted in an export price that was not competitive with those of rival countries such as Vietnam and India. As a result, the Commerce Ministry is facing a serious problem releasing rice into overseas markets.

The government has set aside Bt80 billion in its 2014 fiscal budget for compensation to the BAAC.

This week some panellists at the "Thailand Rice Convention 2013" in Chiang Mai cautioned the government that continuing budgetary losses under the high-subsidy pledging scheme would result in less funding for infrastructure development, and would damage the rice industry's growth in the long run.

Last month the mobile Cabinet approved the rice-pledging scheme for the 2012-13 fiscal year, worth Bt105 billion in total, as proposed by the Commerce Ministry. Under the scheme, about 7 million tonnes of rice will be bought from farmers.

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Source: http://www.news.thethailandlinks.com/2013/06/01/farm-subsidies-to-pass-bt700-bn/