Scholars rebut colleague's defence of rice scheme

The Nation

November 26, 2012 1:00 am

Distinguished Thailand Development Research Institute (TDRI) scholars Nipon Puapongsakorn and Ammar Siamwalla have strongly rebutted another scholar's claim that the government's rice-pledging scheme has benefits for the economy, despite causing huge losses.

Nithi Iawsriwong wrote in an article in Matichon newspaper that the benefits from the scheme go directly to farmers, and that the "intentional" losses sustained in return for social reforms were not an issue. He also believed that the scheme would strengthen farmers' political voice, paving the way for change in Thailand.

Nipon and Ammar said in response that most beneficiaries are upper middle-income farmers and rice millers, based on government data and research. Their research showed that in 2011, poor farmers - those in the bottom 30 per cent - reaped only 18 per cent of the differential between pledging and market rice prices. Rich farmers in the top 30 per cent earned 39 per cent. Those in the middle earned 42 per cent, they said.

"To his argument that the intended loss is small and manageable, we view that loss [of about Bt173 billion] is not small and this starts to affect fiscal spending on other government projects such as the universal health project, of which the budget [has been] frozen for three years," they said in an open letter.

They also said that Nithi assumed farmers' incomes would rise. "This scheme is drawing labour back to the agricultural sector and it would be difficult to abolish the project. This will cause a higher fiscal burden."

Moreover, they said, the government is facing troubles in releasing the stockpiles in order to minimise the loss. Intervention has also discouraged learning and adjustment to new conditions among farmers.

Nipon and Ammar noted that rice consumption in Asia is showing a declining trend due to higher incomes and more demand for meat. Consu-mers still spend the same amount on rice, but look for higher-quality products. Thailand itself has witnessed higher demand for jasmine rice and it should focus more on producing higher quality rice, but this scheme is jeopardising the process as it encourages farmers to focus more on volume. The intervention also distorts the efficiency of the market mechanism.

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Article source: http://www.thethailandlinks.com/2012/11/26/scholars-rebut-colleagues-defence-of-rice-scheme/