Who are the real winners in govt's rice price scheme?

The price guarantee policy has caused damage to farmers and exports and is riddled with irregularities and likely corruption; time to call it quits

The government's controversial rice price pledging scheme has not only drawn criticism because of its inefficiency and the squandering of a huge amount of money to finance it. Now public attention is beginning to focus on how the government will unload the massive amount of paddy that was stockpiled in the first round of the programme.

The government is now desperately trying to find ways to release a massive 17 million tonnes of rice it has accumulated in its warehouses - at above-market prices. This has become all the more urgent because the government, via the Bank for Agriculture and Agricultural Cooperatives, now needs even more money to finance the next round of the scheme. Money is not the only issue, though. The government is running out of space to store the paddy that keeps coming into the warehouses.

The government will now likely have to hastily release rice from the stockpiles at much lower prices than it paid.

The government must therefore ensure that the bidding process for this rice will be fair and transparent, not least to ensure that it loses the least amount of money. After all, it is taxpayers' money that has financed this dubious scheme that the Pheu Thai Party promised to rural voters in order to win the election last year.

In fact, some critics are saying that the government should not proceed with the next round of the pledging scheme because there have been many complaints regarding its inefficiency, irregularities and possible corruption.

The private sector's anti-corruption network has said it wants both the government and private concerns involved in the pledging scheme to provide detailed information about what's been going on - by August 9 - to prevent any further corruption, if indeed there has been some.

The anti-corruption network, initiated by the Thai Chamber of Commerce, says it has received information from various sources over alleged inappropriate dealing in rice that is part of the pledging scheme.

Pramon Suthiwong, chairman of the network, said, "We have to inspect the pledging scheme because it involves huge damage. It has caused Thailand to lose its position as the world's biggest rice exporter and has reduced the quality of Thai rice. Now we have information from the members and we plan to submit this information to the Office of the National Anti-Corruption Commission."

This warning from the private sector came shortly after the Commerce Ministry announced it is preparing to seek approval from the National Rice Policy Committee to launch the second round of the scheme for the 2012-2013 crop season. The ministry plans to ask for another Bt200 billion to finance the scheme. Commerce Minister Boonsong Teriyapirom said the new round of pay-outs will likely start on October 1 at Bt15,000 per tonne for rice paddy and Bt20,000 per tonne for Hommali fragrant rice. These prices are at least 25 per cent higher than the market price.

It is estimated that the government will lose more than Bt100 billion from the first round of the price-pledging programme. Although the government is trying to cite benefits that will go to grassroots farmers, it remains to be seen who will be the real beneficiaries of all this taxpayers' money.

That Thailand has lost its standing as the world's biggest rice exporter is not as critical as the fact that the programme has affected the country's long-term fiscal discipline. Eventually, those who lose most from this scheme will be poor farmers themselves because ongoing subsidies and handouts do not promote productivity, competitiveness or self-reliance. How can they expect to stand on their own feet when they can simply rely on the government for the next populist handout? In addition, it seems likely that big-time investors are more likely to benefit from this expensive scheme than farmers or the public.