World Grain - October 2011 - 50

FEATURE: THAI RICE PLAN CONTROVERSIAL

loans from government banks. Deputy Prime Minister and Commerce Minister Kittiratt Na-Ranong said mortgaged rice will be sold at an appropriate time to repay loans. “The public should not be concerned about the loans, because rice will enter the market gradually and this will give the government time to manage the loans appropriately,” he told the Bangkok Post. The NRPC has created six sub-committees to monitor production, marketing, mortgage procedures, provincial mortgage processes, the selling of mortgaged rice, and examination and inspection. The Commerce Ministry reported that 651 millers in 50 provinces have applied to participate in the pledging program so far. The government said it will have enough space to stock rice under the program.

POTENTIAL IMPACTS According to the FAS report, about 70% of rice farmers will likely be worse off under the Paddy Pledging Program compared to the previous Price Insurance Program. In past pledging programs, participation amounted to only one-third of total rice farmers, mostly large-scale farmers in the central plain. Small farmers, especially those in the northeast with small 2 to 3 hectare holdings, have limited ability to participate in the program due to liquidity and logistical concerns, FAS said. They will be forced to sell at market prices, which are usually far below the intervention prices. Under the pledging program, farmers will have to wait a few weeks to redeem their sales, FAS said. With the Price Insurance Program, more than 95% of farmers participated and cashed in on their sales at market prices immediately.

This gave farmers liquidity to cover expenses while waiting for compensation. FAS said farmers sold their paddy at 30% above market prices under the Price Insurance Program during the 2009-10 and 2010-11 market years. Rice exports for 2011 are expected to reach 10 million tonnes, an increase of 10.5%, despite a surge in domestic prices driven by speculative activities of millers and traders. Speculation started in June 2011 when the Pheu Thai Party, which won the elections, campaigned on the platform that it would revive the pledging program, FAS said. With the pledging program, the Thai Rice Exporters Association believes the nation will lose a signiﬁcant share of the global market because its prices won’t be competitive. The white rice pledged price will increase the export price to more than $800 a tonne from the current $630, while

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World Grain - October 2011

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