The caretaker government still has some viable options to raise money for long-overdue payments to rice farmers but it must act decisively, say experts.
The priority, they believe, is to expedite spending of money already approved in the central budget to help the Bank for Agriculture and Agricultural Cooperatives (BAAC) pay for pledged crops.
This approach would be better than issuing bonds, which might face legal complications, scholars taking part in a forum at Kasetsart University suggested on Saturday.
Caretaker Finance Minister Kittiratt Na-Ranong on Friday floated the idea of selling bonds to the general public at attractive interest rates to fund the rice payments, which are about 130 billion baht in arrears. He said it would take seven or eight weeks to work out the details.
Government has three "legally viable" ways to raise the money it needs, says former BAAC chief Ennoo Suesuwan.
He said the bonds would not be offered to big institutions or banks, which in any case are not interested in lending to the government because of the high political risk at present.
Ennoo Suesuwan, a former acting managing director of the BACC, said that issuing bonds could expose BACC executives to lawsuits if the legal authority of a caretaker administration to do so were challenged, which it almost certainly would be.
The caretaker government has also proposed that the state-run BACC issue 100 billion baht worth of promissory notes as part of the effort to raise the 130 billion baht needed.
But the more direct and viable option would to expedite the central budget approved long before the dissolution of the House, said Mr Ennoo, currently the president of the Chamnian Saranaka Foundation.
"Secondly, the caretaker government actually could shift related budgets away from various ministries to urgently help make the delayed payments," he said at a forum organised by the Reforms Now Network and the National Farmers' Council (NFC).
The retired banker said this practice was common among all governments in the weeks before the end of the fiscal year in order to use up remaining funds. Thailand's fiscal year ends on Sept 30.
Lastly, he said, the government needed to quickly sell the rice from its stockpiles to get money to pay up farmers.
"These are the three main possible and legally viable options the Yingluck caretaker cabinet should take," he said.
Rice sales, however, are proving increasingly difficult as supplies pile up worldwide and prices are falling. As well, some countries are starting to question the quality of Thai rice because so many million tonnes have been stockpiled for so long and not all of the grain has been properly maintained.
It has been estimated that about 800,000 farmers are owed 114 billion baht but Mr Ennoo estimated that up to 1.4 million farmers would be entitled to 181 billion baht under the 2013-14 crop pledging scheme.
To date, only 67 billion baht has been paid, he added.
He said BAAC executives and staff needed to go out to meet farmers and talk with them, explaining the reasons for the delay and offering other options to help them, such as postponing debt repayments.
"February-March is usually the time for the regular BACC visit to farms but this time other agencies, including education and health authorities, should go into the field to help relieve farmers' anxieties, help their children and address mental health issues too," he said.
He believes the BACC could allow debt payment delays for up to six months to help farmers until the next government is formed. "Or even if a government cannot yet be formed, the BACC could still extend the payment postponement for another six months."
Thawatchai Yongkittikul, secretary-general of the Thai Bankers Association, agreed that issuing a bond would be against the law at this stage, so the caretaker government would be better advised to secure funds for the BACC through the miscellaneous budget.
Panelists discuss ways to solve problems in the rice industry at a forum at Kasetsart University on Saturday. (Photo by Achara Ashayagachat)
"The solutions require a quick decision and earnest responsibility by the politicians," said Mr Thawatchai, also an executive of the Anti-Corruption Organisation of Thailand (ACT).
"Releasing rice stocks should be done gradually. Of course, there might be some losses as we've stockpiled a lot of rice, but it remains understandable as long as we ensure there is no corruption."
Praphat Panyachatrak, the NFC chairman, contended that the non-payment problem stemmed from cowardice and/or ignorance by the caretaker government because it failed to approve an increase in the ceiling of rice loans at 100 billion baht for the BACC before the parliamentary dissolution.
Economist Somporn Isawilanont said that while the immediate problem of payment delays needed quick resolution, authorities and politicians now needed to solve problems for future crops because the current scheme was bleeding the national coffers.
"The current scheme has only created a monopoly on the rice trade and goes against the market mechanism," he said. "Officials could not act as shrewd exporters but have to stockpile the rice for at least three to four years before being able to sell it. That requires a huge budget."
Thai rice stocks now total 17 million to 18 million tonnes or around 17% of global stocks following China and India, he said. Each year additional stocks build up as the government lacks the expertise to release rice onto export markets efficiently.
"We will also face the problems of price cutting as we have old rice and also quality problems," said the economist, adding that it should be a wake-up call for Thailand to seriously address the higher cost of rice production.
The cost in Thailand of processing paddy to polished rice averages 9,266 baht a tonne, he said, compared with 5,615 baht in Vietnam and 4,353 baht in Myanmar.
Mr Somporn said the government also needed to develop the struggling Agricultural Futures Exchange of Thailand as part of the hedging mechanisms to manage rice pricing better.
Sirilaksana Khoman, a former Thammasat University dean of economics, agreed that some costly lessons had been learned.
"It has proved that apart from distorting the market mechanism, there has been collusion involving many parties from farmers to rice millers and surveyors," said Ms Sirilaksana, a member of a National Anti-Corruption Commission (NACC) subcommittee that investigated the rice scheme.
As for the opinions of farmers themselves, tempers at the forum ran high in an exchange between Prasit Boonchuey, the president of the Thai Farmers Association, and members of the NFC.
Some provincial NFC chairmen say Mr Prasit has "hijacked" the NFC's role in addressing farmers' debt problems which have led to 12 suicides in recent weeks.
Charin Sindee of Sing Buri said the NFC had approached the Law Society of Thailand to help provide legal counsel for unpaid farmers but Mr Prasit snatched the spotlight and claimed he was the only one helping the farmers.
"We are the real farmers' representative from each province and we've not siding with either the protesters or the government," said Mr Charin.
"We've only agreed to allow a week for the authorities to pay up and if they won't, we will come back to Bangkok again."
Songphol Poonsawat, the NFC's Angthong chair, said his province had 2,500 farmers who were owed 600 million baht, most of them since October.
"We are looking forward to quick response by the BAAC. Currently, over a hundred have sought legal advice on lawsuits against the BAAC," he said.