Farmers' fund size may be doubled

The farmers' fund may be doubled in size to 40 billion baht to accommodate local administrations which have been allowed to park their cash there in search of a higher interest rate than bank deposits.

The fund will likely reach its original target size of 20 billion baht in May, a month ahead of the target, said caretaker Deputy Finance Minister Tanusak Lek-uthai on Wednesday.

The sharp increase of inflows into the fund has been seen after the Comptroller General's Office confirmed in writing that local administrations could deposit their cash in the fund to enjoy an interest rate slightly higher than savings deposit rates.

Local administrations are estimated to have cash flow of around 200 billion baht.

From its inception date of March 3 to April 30, the fund had 8.42 billion baht, said Luck Wajananawat, president of the Bank of Agriculture and Agricultural Cooperatives (BAAC), the executor of the rice-pledging scheme.

Of the total, 24.59 million baht was donations, 869.20 million zero-interest deposits and 7.52 billion was 0.63%-interest deposits.

Around 4.5 billion of the fund has been used to repay 30,000 farmers.

For the 2014/15 rice pledging programme ending Feb 28, 1.53 farmers pledged 11.61 million tonnes of paddy for 190.77 billion baht.

As of April 29, the BAAC paid 96.05 billion baht out of the allocated budget of 99.5 billion baht.

Of the allocated budget, 75 billion baht came from the central budget and rice sales by the Commerce Ministry, 4.5 billion from the Farmers' Fund and 20 billion an additional central budget the Election Commission allowed the government to use for the purpose.

Since late last year, farmers who sold their rice to the rice-pledging scheme have yet to be paid for the grain because the caretaker government lacks the mandate to borrow or shift funds.

A new government cannot be formed because the Feb 2 general election was nullified and a new one has yet to be scheduled due to the political conflict.  

To help the farmers, the BAAC set up the farmers' fund in early March. It consists of three bank accounts to accept deposits from people wishing to help the farmers during the government transition period. 

The first account is for direct donations. The second account gives no interest and the principal can be withdrawn on Dec 31, 2014, when the project ends. The third account gives a 0.63% interest rate and the principal can be withdrawn on the same date.

All of the money in these accounts, except for the donations account, will be returned to the depositors on the due date. A new government with a full mandate to borrow is expected to be formed before then to approve a budget.

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