Pheu Thai rice policy 'ripe for corruption'
29/06/2011
The Pheu Thai Party's proposal of reverting to a previous rice mortgage policy with a high premium from existing rice price guarantees could incur huge fiscal damage and open opportunities for corruption by millers, says academics.
Pheu Thai said it would set rice mortgages at 20,000 baht for premium-graded jasmine rice and and 15,000 baht for ordinary paddy for all harvested amounts.
The Democrats introduced a rice price guarantee last year at 11,000 baht per tonne for farmers registered with the Bank for Agriculture and Agricultural Co-operatives, with an aim to cut leakage to millers who acted as middlemen.
Somporn Isvilanonda, an economics professor at Kasetsart University, said both systems could stymie farmers' enthusiasm to reduce costs and improve yields. But the mortgage system is vulnerable to various types of corruption by millers, such as faking rice stocks, mortgaging low-quality rice and collecting premiums from farmers. It could also subdue rice prices as traders would anticipate the sale of huge rice stocks.
Assoc Prof Somporn said the rice mortgage system used to be a good tool to assist farmers who have an oversupply of rice, as it offered market price or slightly above. But the expansion of premiums and amount of mortgages by previous governments resulted in widespread corruption. The government later sold rice in the stock at a low price to millers.
The role of the millers as middlemen resulted in just 1 million out of 4.7 million agricultural households receiving benefits from the state, he said.
Assoc Prof Somporn, who sits in the rice committee, said that both systems used a similar amount of money, but the fiscal money went directly to all registered farmers for the price guarantee programme. The rice mortgage with a high price would decrease competitiveness for rice exports, he said.
The Abhisit Vejjajiva government, however, failed to encourage farmers to reduce costs due to its promotion of weather insurance and agricultural futures transactions. The insurance programmes encouraged farmers to grow more rice and harvest more quickly, thus the quality of rice tended to decline, he said.
The National Anti-Corruption Commission is investigating fiscal damages from the sales of crop stocks under the government's mortgage programme. It might pick up the issue as a priority if the mortgage is reintroduced, Assoc Prof Somporn said.
Ammar Siamwalla, an honorary scholar of the Thailand Development Research Institute who advised the previous government on the rice price guarantee, said Pheu Thai would fail in its attempt to push up the rice price, as it would be depressed by huge stockpiles and increase new rice supplies.
Unlike shares, the rice price could not be propped up by buying big lots.
Pheu Thai's policy may prove a success over the first four months of the administration, but the government would have to spend unlimited fiscal funds in trying to achieve this, Dr Ammar said.
He also said the country would be put at risk of fiscal instability if Pheu Thai party implemented all campaign promises.
He said the Democrats should focus their campaign on the likely impact of Pheu Thai's economic plan, rather than defending state officials' role in the crackdown of last year's red-shirt protests.
Nguồn: Bangkok Post,
http://www.bangkokpost.com/news/politics/244475/pheu-thai-rice-policy-ripe-for-corruption
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