'Govt won't budge much on rice price'

Committee chaired by Kittiratt unlikely to raise pledging amount a lot, says source

Despite increasing pressure from farmers, the National Rice Policy Committee is unlikely to budge on the new rice-pledging price of Bt12,000 per tonne, due to financial burdens, a government source has revealed.

Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong will chair the committee's meeting today at which petitions by farmers will be discussed, along with the financial cost of the pledging scheme, which during the 2011/2012 harvest amounted to over Bt130 billion.

The source said the committee was not likely to give in to demands by farmers that the new price take effect in the next harvest year, as the price already covered the main crop, while only 2 million tonnes were expected from the excluded second crop.

"It remains to be seen how the committee will resolve the problem," the source said. "If the new pledging price is maintained, the committee will also draw up measures to minimise the negative impact on farmers."

Kittiratt said last week that the price could not remain at Bt15,000 given the current state of the global rice market. Thailand's white rice is now quoted below US$500 per tonne (Bt15,000), inclusive of all export costs involved.

At best, the price may be raised slightly but not to the old Bt15,000 level. The pledging sum limit of Bt500,000 for each household may be lowered in that case, as over 80 per cent of farmers under the programme have earned no more than Bt300,000 per household.

Focus on four elements

Meanwhile, the committee's secretary, Viboonluck Rumraksa, director-general of the Internal Trade Department, said that the committee would consider the government's approach for the 2013/2014-harvest year with a focus on four elements. The scheme must not destroy fiscal disciplines such as the annual loss limit at Bt70-Bt80 billion.

The price is also set accordingly to global levels, with the domestic price slightly above. In addition, the price reflects the production cost, while benefits for farmers are compared to gains from other economic crops like sugar, oil palm and rubber.

"The department will present the overall plan and estimated losses at the meeting," she said. "We will also propose a cut in the pledging sum per household limit, or a limit on household outputs, to ensure a larger number of households - as well as honour the fiscal disciplines."

She explained that the output limit on, for example, 25 tonnes per household, would discourage farmers from focusing on quantity while ignoring quality. In previous harvest years, losses were found to have stemmed from low-quality rice.

The huge loss in revenue from the rice-pledging scheme is the main reason behind the government's decision to reduce the pledging price from Bt 15,000 to Bt 12,000 per tonne, an academic said yesterday.

Nipon Poapongsakorn, a senior fellow at the Thailand Development Research Institute, said the reduction of the pledging price would also affect the price of rice on world markets. He was speaking at a seminar organised by Social Venture Network Asia (Thailand) entitled, "The Facts About Rice in Thailand: Who Will Become Rich and Who Poor?"

Nipon said he was also concerned that a reduction in the price would have a negative impact on rice prices in the local Thai market.

For the 2012/2013harvest year, the gov

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Article source: http://www.thethailandlinks.com/2013/07/01/govt-wont-budge-much-on-rice-price/