Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong has admitted that corruption is rife in the government's rice price mortgage scheme, as a Democrat MP slams the policy and demands accountability for the huge debt being incurred.
Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong (Photo by Thiti Wannaomontha)
"The corruption in the rice scheme has been brought up by the opposition to attack the government, but the government has never said that the scheme is free of corruption," Mr Kittirat said on Friday.
"It's a good thing that police have arrested people for allegedly taking advantage of the rice pledging programme in the Northeast but I believe corruption is still widespread in this programme."
The government has assigned Deputy Prime Minister Chalerm Yubamrung to help suppress graft in the scheme, he said.
The minister also rejected suggestions the pledging scheme violates the regulations of the World Trade Organisation.
Many academics have criticised the government's rice pledging scheme, saying it would cost up to one billion baht in damage to the industry. They said it would hurt Thai rice exporters, affect rice quality and fuel corruption.
At a dinner hosted by the Federation of Thai Capital Market Organisations on Thursday, Democrat Party core member and former finance minister Korn Chatijkavanij said the Pheu Thai-led government's rice price pledging scheme for farmers is plagued with corruption and has caused serious damage to the country.
Mr Kittiratt rejected Mr Korn's criticism, saying the rice price guarantee scheme introduced during the Democrat-led government only helped farmers sell their paddy at market price, whereas Pheu Thai's scheme has enabled farmers to earn more by selling at above the market benchmark price.
Mr Kittiratt said he was ready to go on any stage to debate with any academic and counter their criticism.
Meanwhile, Democrat Party list MP Kiat Sittheeamorn said on Friday the paddy mortgage programme could cause over 100 billion baht in damage to the fiscal budget, with just 9,000 out of the 20,000 baht per tonne spent by the government actually reaching farmers.
He said the government could eventually spend as much as 400 billion baht per year to keep afloat its policy of pledging to buy every single grain of paddy, and stands to suffer an annual 150 billion baht loss.
Even then, it would fail to meet the desired outcome as the scheme had failed to push up the market price to 15,000 baht per tonne for ordinary white paddy and 20,000 baht per tonne for Hom Mali paddy.
Democrat Party list MP Kiat Sittheeamorn (Photo by Thiti Wannamontha)
"The government's whole premise for this project has been proven wrong and it will cause significant damage to the national budget.
"The government has ended up stockpiling all paddy production, but failing to push up the market price of rice. The situation is a self-fulfilling prophecy as the more paddy the government stores, the farther the price tends to fall," Mr Kiat said.
The world market price of rice was depressed. India had stockpiled 30 million tonnes of rice and the Thai government's stockpile had increased rapidly because of the pledging project. This would plunge the government into loss-making if it unloads the stockpile, the opposition MP said.
Domestic sellers of packed rice had to increase prices because paddy that they bought to process was more expensive than the world market price. This meant Thais had to pay more for the rice they eat, but farmers' incomes had hardly increased at all, he said.
Mr Kiat said the scheme also caused Thailand to lose its position as the world's top rice exporter to India and Vietnam, because of the state’s price intervention. Pledging to buy rice at a price much higher than the market price was a populist policy which had caused Thai exporters to lose price competitiveness.
According to the Thai Rice Exporters Association, Thai traders exported 330,000 tonnes of rice in the period July 1 to 23 -- 56 per cent less that July in 2011, when they exported 769,000 tonnes. In the first seven months of this year, the country exported 3.7 million tonnes of rice compared to 7.1 million tonnes last year.
"Thailand has been criticised in the the media worldwide. The rice pledging scheme has allowed only one fifth of the money spent by the government to reach the farmers.
"The Yingluck-government cannot remain silent on this. It must answer the question - whose pockets are being lined by the other four-fifths of the money?" Mr Kiat said.
"The large stocks of rice that the government has acquired will prove problematic. The government had to hire private firms to improve the quality of paddy kept in the warehouses.
"Whenever governments sell paddy from warehouses, there have always been suspicions and criticism about lack of transparency, collusion and fraud. All of these have put the state at a disadvantage and dampened the country’s export potential."
The Democrat lawmaker said the government now had outside the budget borrowing of more than 200 billion baht through the Bank for Agriculture and Agricultural Cooperatives (BAAC) and the Government Savings Bank (GSB), but this money was being spent to help just 1.7 million out of a total 5.6 million rice farm households.
"The government should seriously consider if it wants the BAAC and GSB to continue shouldering the burden deriving from this project, and who will be accountable for the incurred damage. It cannot claim that this is state policy and that, therefore, no one needs to take responsibility," Mr Kiat said.