Stop hiding the truth about the rice buying scheme

Stop hiding the truth about the rice buying scheme

Apparently uncomfortable with Moody’s latest unfavourable credit rating for Thailand, due to the higher than expected losses in the government’s rice "buying" scheme, commerce permanent secretary Vatchari Vimooktayon wondered aloud what information the credible credit rating agency used in making its assessment.

She did not believe that the actual losses from the scheme for the 2011-2012 harvest season would be as high as 200 billion baht or more, as stated in the Moody’s report, which quoted press reports.

The real extent of the losses is yet to be determined, as it will have to take into account the amount of rice that the government will sell, she said.

Well, what are the real figures of the losses or anticipated losses?  Is it 70 billion to 100 billion baht as forecast by the Finance Ministry. Or 260 billion baht as estimated by the chief auditor of the scheme, Supha Piyajittii, who was abruptly moved from being finance deputy permanent secretary to the position of inspector because her damaging report was leaked to the media?

For the sake of transparency and honesty, would Ms Vatchari please be kind enough to stop beating around the bush and actually tell us, the taxpayers who are paying for it, all the facts about the rice pledging scheme.

A rice mill worker in Ratchaburi unloads rice in a government warehouse. (Photo by Tawatchai Kemgumnerd)

For example, the acts about how much rice has already been sold through government-to-government deals, to which countries and at what prices, and how much more rice the government expects to be sold by the end of the year; the true story about the allegations that rice has been sold in under-the-table deals to domestic buyers who made hefty profits from the price differences; facts about how much rice has actually been exported and how much rice is still held in stockpiles; and the facts about how much more money is needed to enable the cash-strapped Bank of Agriculture and Agricultural Cooperative to carry on with this most costly populist scheme.

Like most of us in this country who have been treated like fools by the Commerce and Finance ministries as far as the rice pledging scheme is concerned, Moody’s Investor Service has to rely on press reports it deems are credible to assess the state of Thailand’s economy and to give the credit rating, because it cannot get the information it needs from these two ministries - which have done their very best to hide the facts.

Moody’s warned that the massive losses incurred from an unmodified rice buying scheme would make achieving a balanced budget by 2017 “more challenging” and poses a credit-negative for Thailand.

Which is more credible and reliable, Moody’s on the one hand or the Commerce and Finance ministries on the other hand? 

Moody’s also hit the nail on the head when it called the populist policy the "rice buying scheme" instead of pledging scheme, because there has not been a single case of a farmer redeeming the paddy pawned to the government.

Since the scheme started in 2011, the rice pledging scheme has increased the public debt by 400 billion baht.  The cabinet recently endorsed a new injection of funds, 500 billion baht, so the BAAC can buy the 2012-13 harvest season crop.  But it appears this will not be enough and more is needed, because the Commerce ministry is unable to sell more rice and so cannot pay back the bank fast enough.

There is slim chance that Thailand will be able to export more rice, the world is awash with a rice surplus, unless the grain is dumped onto the world market at cut-throat prices – an option too embarrassing for the government to accept as that would be proof of the fallacy of the grand scheme and a huge loss of face for the Man in Dubai.

Veera Prateepchaikul

Former Editor

Former Bangkok Post Editor, political commentator and a regular columnist at Post Publishing.

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