ASEAN KEY DESTINATIONS
Taxpayers could be hit with rice bill
Taxpayers could be hit with a 250 billion baht (US$7.95 billion) bill under the government's return to a loophole-ridden rice mortgage subsidy programme, MR Pridiyathorn Devakula, a former deputy prime minister says.
The program could also result in Thailand losing its status as the world's top rice exporting nation, he charged.
The Yingluck Shinawatra government next month will launch the rice mortgage programme offering 15,000 baht per tonne for paddy _ or unhusked _ white rice, and 20,000 baht per ton for jasmine hom mali rice.
The prices are about 5,000 baht per ton over current market prices. Under the Abhisit Vejjajiva government, the mortgage program was scrapped in favor of an insurance program that compensated farmers if market prices dipped below benchmark prices.
Under the mortgage scheme, rice is pledged as collateral against loans from the state-owned Bank for Agriculture and Agricultural Co-operatives (BAAC). If rice prices exceed the pledging price, a farmer can sell the rice in the market, repay the loan and pocket the difference as profit. But if market prices are under the pledging price, the BAAC essentially buys the rice, which is then held in government stockpiles and sold at auction to mills and exporters.
MR Pridiyathorn, a finance minister and deputy premier under the Surayud Chulanont government, said the high pledging price set by the current government would lead to farmers defaulting on their bank loans.
If 27 million tons, or 90 percent of the country's estimated 30 million tons of paddy harvested in the 2011/2012 season, was left in government hands, it would result in a loss of 135 billion baht (US$4.35 billion), based on the difference between the pledging price and current prices.
Further losses could be expected, based on spoilage, declining global prices and a lack of bargaining power on the behalf of the government with local traders as it has held large stocks.
MR Pridiyathorn said the program is also vulnerable to corruption and manipulation.
The project could be the "most damaging in history", he said, with potential losses including interest ranging from 135 billion to 250 billion baht.
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