Dhanin Chearavanont, chairman and chief executive of agro-industrial conglomerate Charoen Pokphand Group, said Saturday the government had failed to keep up with the changing global rice market, leading to excessive rice stocks and massive financial losses.
To turn the situation around, he said the government needed to encourage farmers to reduce their rice plantations by 30%, especially in low productivity areas, and offer compensation.
Mr Dhanin said the government had not reacted fast enough to the changing rice market, making Thai grain uncompetitive. According to Mr Dhanin, stocks of rice in India and Vietnam had increased after bountiful harvests while their currencies have depreciated. Meanwhile, the price of Thai rice had gone up because of the rice-pledging policy, while the baht had strengthened.
He suggested the government urge farmers to cut down their rice planting and grow other crops by offering a subsidy of 1,500 baht per rai. Supply would shrink and that should drive up prices.
Based on the Agriculture Ministry's records, rice farming covers 70 million rai. Of this, only 43 million rai is suitable for growing rice, but some farmers still attempt to grow on unsuitable land.
He said rice farmers should switch to cash crops like rubber, palm, sugarcane and coconut.
Mr Dhanin warned the government against exporting broken rice as that would only drive prices down. Broken rice should be used in animal feed production, which would help boost prices.
"The government needs to release its stocks by selling to countries with high demand, such as China, which also uses rice in ethanol production. If China buys more Thai rice, prices will go up," he said.
Mr Dhanin expressed confidence that China would buy one million tonnes of rice per year from Thailand, as claimed by the government, because talks on the matter had been conducted between the leaders of the two countries.
The CP boss also gave his backing to the 2-trillion-baht investment scheme and urged the parliament to pass the borrowing bill. He said a high-speed train _ part of the investment plan _ would bring prosperity to the country's economy.
"There is no country that has gone bust because of a [high-speed] train project. Thailand will get back several times more than the investment cost of 2 trillion baht."
Meanwhile, newly-appointed finance permanent secretary Rungson Sriworasat said he would review the rice-pledging scheme loss figures calculated by a Finance Ministry sub-committee headed by deputy permanent secretary Supa Piyajitti. Mr Rungson did not believe 200 billion baht was being lost each year, as the sub-committee reported.
"I haven't seen the accounts and the loss figures proposed by Ms Supa and approved by the former permanent secretary [Areepong Bhoocha-oom]. It needs to be reviewed as to whether annual losses of 200 billion baht loss are true," he said.
"As an experienced accountant and a director at the Bank for Agriculture and Agricultural Cooperatives for eight years, I think the losses should not be as much."
Ms Supa recently suggested the government had lost 200 billion baht a year through the scheme over the past two harvest years. The Commerce Ministry rejected the Finance Ministry's accounting procedures and said the losses could be less than 100 billion baht per harvest year.
Mr Rungson gave a rough estimate of 36 billion baht in losses, assuming that the government could sell 12 million tonnes of rice at 12,000 baht per tonne.
Should the price of rice in the stockpile be appraised correctly, the estimated loss could be lower than suggested by Ms Supa's panel, he said, adding that the government should hire middle parties to conduct an appraisal.
The government's rice-pledging scheme was a good programme, but tighter procedures were needed to ensure that money went directly to farmers, he said.