Thailand rice subsidy hurting economy
(Editor’s Note: The following Reuters article explains what I warned about more than a year ago—the Thailand rice subsidy scheme causing financial woes for the country and the ruling political party. Prime Minister Yingluck Shinawatra came to power with extreme promises of better income to rice growers guaranteed by the government. I wrote that it appeared the subsidy scheme had potential to bankrupt the country because of the huge rice production that is being purchased at prices over world market levels. My two trips to Thailand sponsored by the previous ruling party showed me a lot about developing nations’ struggles and promises by politicians to the poorest people—usually the rural—to win elections. –Richard Keller)
Thailand scrambled on Tuesday to fund a rice subsidy scheme that has not paid out to farmers since Oct. 1, a delay that risks alienating key supporters of Prime Minister Yingluck Shinawatra.
A state bank will issue a 75 billion baht ($2.38 bln) bond to plug the funding gap by early December, as the government tries to head off the prospect of farmers joining protests that are already the biggest since it swept to power in 2011.
Farmers have been a traditional bastion of support for Yingluck, who has been facing escalating street rallies against a government-backed amnesty bill that critics say is an attempt to whitewash the crimes of her brother, former premier Thaksin Shinawatra.
The Commerce Ministry buys rice at 15,000 baht a tonne, well above market prices, but has struggled to sell enough to keep the subsidy scheme afloat. Since October it has taken 2 million tonnes of rice, worth about 30 billion baht, without paying for it, according to the state-backed agricultural bank that funds the scheme.
Thousands have complained that they have not been paid, according to the Rice Farmers Association.
"They are very angry and many of them have already joined a mass rally against the government in Bangkok," Prasit Boonchoey, head of the association, told Reuters.
"Getting the money by early December is very late. But poor farmers can't do anything, except wait."
Some farmers said they would block traffic in their areas to press for payment, an echo of action by rubber farmers in September. Others said they would march to Bangkok.
"My group will go to Bangkok to ask the commerce minister why we're not paid," said Vichien Phuanlamjiak, head of a farmers' group in Ayutthaya province, a major rice area north of Bangkok.
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