A simpler way to help farmers?

I cannot help joining my farming compatriots in an early celebration on hearing the "good news", that they will be out of debt in two years – thanks to the government’s generous rice pledging scheme and, in particular, commerce permanent secretary Watcharee Wimuktayon.

The new head of the Commerce Ministry is the first and only person in the government camp to show such confidence in the merits of the controversial scheme, and to pronounce that it will wipe out the debts of our poor farmers if the scheme is continued for another two years.

These is a courageous statement and, as such, she deserves to be commended for having the courage to speak out.

Mrs Watcharee is wholeheartedly in support of the scheme – which is not surprising at all for a top-ranking bureaucrat these days. How could they say otherwise?  She claimed that 15 million farmers in this country stand to benefit from the scheme, people who would otherwise have been taken advantage of by rice millers who would have kept down the price paid for their paddy.

The earnings received by farmers from the scheme, amounting to about 200 billion baht, will push up our Gross Domestic Product by 0.2%, Mrs Watcharee said. 

Dismissing the arguments of a group of academics and students from the National Institute of Development Administration (Nida) who are contesting the constitutionality of the rice pledging scheme, the commerce permanent secretary said the populist policy accords with Article 84(8) of the constitution, which stipulates that the state must protect the interests of farmers. The rice scheme, she insisted, has improved farmers’ livelihoods.

There is no question that the scheme has benefitted farmers, at least in the short run.  But what is so disturbing about this scheme is that it is not the farmers who are the only beneficiaries, there are many others who have benefitted from the scheme – and have probably eaten the largest chunk of the cake. 

The scheme is badly flawed.It is full of holes and loopholes making it possible for corrupt politicians and officials, unscrupulous millers, cheats and rice smugglers to steal from the farmers. Cheap rice from Burma and Cambodia has been smuggled into the country to cash in on the generous scheme. Landlords who did not sweat in the fields but instead rented their land out to farmers have benefitted from the scheme. 

There is no problem if the farmers stand to benefit the most, with the leftovers shared by all the vultures. The fact is that this is not the case.

And if the rice pledging scheme can wipe out all or most of the farmers’ debts in the next two years, as claimed by the commerce permanent secretary, my question is: why bother with the scheme at all; why not just focus on settling farmers’ debts directly?

In which case, the government would not have to allocate as much 400 billion baht to support the scheme, and allow the cheats and the corrupt to cash in on it;  there would not be smuggling of rice from neighbouring countries for sale to the government; there would not be a huge stockpile of unsold rice, and Thailand would still be the world’s biggest rice exporter. So why not opt for the simple approach to settle farmers’ debts? 

It is most probable that the pledging scheme will not solve farmers’ debts. Instead, it will ruin Thailand’s foreign rice market and undermine the domestic rice industry. The worst prospect is that it will substantially increase our public debt,  and so leave everyone of us heavily indebted.

The commerce permanent secretary said she would discuss with rice traders ways to speed up rice exports for the last quarter of the year, in order to make space in the warehouses for the new harvest. 

Without any big government-to-government rice deals being inked, and with exporters reluctant to buy rice at distorted prices as evidenced by the failure of two rice auctions, one may wonder aloud, how will the Commerce Ministry be able to clear out the huge rice stockpile in a short time.

So, again, why not opt for the simple approach and concentrate on settling farmers’ debts directly? 

Share your thoughts

Discussion 1 : 04/10/2012 at 02:26 AM
Unless the scheme works in the export market, competing with rice from various countries, especially, during this on-going severe global economic downturn, we are destroying the markets of our biggest exporting product. So, will the people who see their income falling steeply in the last 4 years will spend more of their hard-earned money to buy Thai rice, instead of switching to cheaper alternatives from elsewhere? I don' think so, especially, when the current global economic crisis shows no sign of coming to an end anytime soon!
Discussion 2 : 03/10/2012 at 11:25 PM
The author is right that directly paying off farmer debt is much better of an idea. Loan sharks, credit companies, farm equipment manufacturers, land owners, and officials who distribute cash would never ever be tempted to pocket the money, manipulate the system by way of corruption, or in any way benefit from the money. In no way would his debt forgiveness idea encourage farmers to take on even more debt. And the author wouldn't accuse PTP of buying votes with this system, because . . . I think the author just doesn't like the mortgage scheme because Thaksin thought of it. I'm against the rice scheme, too, but for entirely different reasons.
Discussion 3 : 03/10/2012 at 09:58 PM
If the rice is being subsidised by taxpayers' money, then sell it to taxpayers at discounted prices.That way the taxpayer recovers his losses and the farmer (plus all the parasites in the chain) get their money. Just make the discount per kilo equal to the subsidy per kilo.
Discussion 4 : 03/10/2012 at 07:31 PM
D8 : When was the last time you were in the South? Last year,the highway from Phattalung to Hat Yai and further down to Sadao was renewed/repaired. They were also working on Hat Yai to Pattani. Hat Yai to Satun is brand new as well so what are you going on about???
Discussion 5 : 03/10/2012 at 07:27 PM
Simple answer, with large stockpiles government to government rice deals could emerge. Settling farmers debts directly, while helping farmers would not increase government stockpiles. Overall there’s nothing wrong with the rice pledging scheme in general.
Discussion 6 : 03/10/2012 at 07:20 PM
D3 wrote : "The farmers are in dept from previous government schemes that robbed the farmers". I agree. Before it was TRT x 2,then PPP and now PTP. The well-meaning and wise policies Khun Abhisit and Khun Korn initiated,in their genuinely felt compassion for poor/landless farmers,was immediately shelved by Yingluck after her criminal brother won the election. Take into account,that Thaksin and his many political parties have had control over the northern and north-eastern provinces for some 15 years now,with massive budgets being allocated to them yearly,still these farmers are not better off than they were before. Food for thought,isn't it?
Discussion 7 : 03/10/2012 at 06:00 PM
The scheme is to raise the quality of life of farmers. It encourages the farmers to stay on farming - the world is facing food shortage. Of course greater the scheme, challenges also greater. Law breakers related to this scheme should face severe penalties because they are sabotaging the economy. With the scheme, rice farmers should be able to clear their debts related to rice farming. Opponents of the scheme are short sighted because they cannot see the benefits for the other sectors of economy. The problem is not the scheme, but the law breakers and short sightedness.
Discussion 8 : 03/10/2012 at 05:44 PM
I thought the farmers credit card was to help them get out of debt.
Discussion 9 : 03/10/2012 at 05:27 PM
She has learned from Kittiratt that it is OK to tell white (rice) lies along with the always present government big whoppers if the intent is to cast the government in a good light for the fleeting moment. The statement that farmers will be debt free in 2 short years is as moronic and believable as the claim by the government that they are fighting corruption and put the nation first over self-interests.
Discussion 10 : 03/10/2012 at 05:17 PM
Mogy71 dis#10, so now you are saying that Dr. Virabongsa is a top economic adviser and is brilliant. Back when he proposed to the government to creat a sovereign wealth fund, he was condemned by the same minded people like you.
Discussion 11 : 03/10/2012 at 03:59 PM
Central bank chairman Virabongsa Ramangkura had a few words to say yesterday on the whole scheme. Google it and see. Anyone in the Anti-you-know-who camp couldn't ask for anything better than this from their top economic advisor. Brilliant !
Discussion 12 : 03/10/2012 at 03:52 PM
#3 genii, lighten up. K Veera is being a bit tongue in cheek at the top of his column. His message is quite clear. Too much of the money is going to the wrong people and directly addressing the problem of clearing up, even paying off, farmers' debts would be better for the farmers and cheaper in the long run - and deny the corrupt vultures their huge slice of the cake, which is just wasted taxpayers' money and doesn't help the farmers at all - and also salvage Thailand's reputation as a rice exporter.
Discussion 13 : 03/10/2012 at 03:21 PM
ref: dis 4 This person, Khun Abhisit, somehow connecting to anything bright is strange. If this person would have anything bright and care for the Thai people south of Hua Hin which are his main supporter he would have already started 5 years ago to get the main highway into the south repaired or renewed. It is a shame when one can see this total neglect which comes slowly over the infrastructure outside Bangkok. All cars, buses trucks etc. have to do a rodeo every day when heading south. Only a couple of kilometers behind the Malaysian border there the highway starts again to be a highway / motorway. They Malaysians care about their people, what are Thai politicians doing?
Discussion 14 : 03/10/2012 at 03:12 PM
So many people say that the rice scheme is good and so many people say the rice scam is bad. Simple, have a legitimate audit of the whole program. How many farmers has the program helped. Are the farmers paying off debt or creating new debt with purchases. Is there rice being smuggled from outside Thailand? Is rice being sold low only to have the government repurchase at the scheme price? The government had said that it has sold tons of rice. To whom and for how much? The government is writing checks, but to whom? I guess in many ways maybe the real question is, 'Is there an accounting firm in Thailand willing to take on an audit project and tell the truth?'
Discussion 15 : 03/10/2012 at 03:07 PM
If Thai government can sell rice at level of their pledging price without losing our taxpayers money, let them continue the rice pledging scheme. If not, Thai government should adjust the pledging price to be fair to both farmers and taxpayers. There is no need to subsidise foreign buyers with our taxpayers money whenever we made a loss deal with them. from iPhone application.
Discussion 16 : 03/10/2012 at 03:01 PM
If these rice farmers really have a legitimate debt problem or the price of rice was too low, why are they still in the same business? Grow something else or get another job.
Discussion 17 : 03/10/2012 at 01:40 PM
"So, again, why not opt for the simple approach and concentrate on settling farmers’ debts directly"? The answer is obvious. The PTP/UDD amart and their unusually wealthy allies would not be able to exploit the farmers and would not be able to illegally enrich themselves further at the expense of the tax-payer. Khun Abhisit and Khun Korn,two of the brightest politicians/economists in this country for ages,was implementing a policy of self-sufficiency and added "economical doctors" to help farmers understand economics and improve their livelihood,in an attempt to make them less dependent of politician's hand-outs up to the elections,but that was quickly dropped by the Shin Corp government.
Discussion 18 : 03/10/2012 at 01:25 PM
What am I missing here. The government is helping the farmers get out of dept with this scheme but the article author wants the government to help the farmers out of dept. Duh!!!!!! The farmers are in dept from previous government schemes that robbed the farmers.
Discussion 19 : 03/10/2012 at 01:14 PM
If you think the rice scheme is about helping farmers I feel sorry for you .Its just a vote buying scam paid for by the minority tax payers who now have to fund Thaksins populist schemes so he can stay popular with the poor by giving them handouts each rice crop .Farmers dont care because its free money .Thaksin doesnt care because it isnt his money .Taxpayers and anyone who cares about the country care but their votes aren't significant enough to make Thaksin worry about the fall out of the biggest vote buy in Thai history .
Discussion 20 : 03/10/2012 at 01:10 PM
If this is what comes to be, then let it self corrupt, as only with a national failure and huge monetary loses will people in government start to take notice...you reap what you sow and in this case the farmer still looses to those who toil the least.

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