Thai Group Makes Constitutional Challenge To Rice Pledging

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RICE

Group makes constitutional challenge to rice

Pranee Muenphangwaree,

Suphannee Pootpisut

The Nation

BANGKOK: -- A group of 127 academics, members of the public, university students and some rice farmers yesterday submitted a written complaint to the Constitution Court over seven key points of the government's higher-than-market price-subsidy policy that they claim breaches the charter.

"We don't want to overturn the [rice pledging] project but really need the government to lower such a high subsidy price to Bt9,000-Bt10,000 per tonne, with volume limited to 25 tonnes per household to reduce damage to the country," Adis Israngkura, dean of the School of Development Economics at the National Institute of Development Administration, said yesterday.

They claim the pledging policy violates Article 84 (1) of the Constitution by causing market distortion and the disruption of normal trading practices.

The group pointed out seven key concerns that have a big impact on the country's rice farming and export.

First, the scheme fails to develop good-quality rice because its focus is not on quality but on quantity, allowing all rice grains to be pledged at the high prices.

Second, farmers lack incentives to concentrate on the lengthy development of high-quality rice. They are occupied with rapid rice cultivation to catch up with the scheme's time frame.

Third, Thailand will face falling rice quality, as the government has to manage a huge rice stockpile for a long time without a way to release the inventory to the market.

Fourth, the higher-than-market price subsidy has sent the wrong signal, as farmers will rapidly expand paddy fields beyond their capacity. It will also distort the planting of other crops.

Fifth, the policy has destroyed Thailand's rice growing and trading system, which has been gradually developed for centuries.

Sixth, the high subsidy prices have undermined Thailand's export competitiveness. Rice exports have dropped 46 per cent from 7.4 million tonnes in the same period last year to 3.9 million tonnes now.

Seventh, the government's policy to release its huge rice stocks is set for only government-to-government contracts, which means Thailand will lose money from any export lot as the price will be quoted lower than the subsidy prices. In this way, the government is spending Thai taxpayers' money to subsidise consumers overseas who can buy cheap rice.

Led by Adis, the group is asking for a court inquiry to stop or cancel the pledging scheme.

The policy contravenes the Constitution, which encourages a free and fair economy using the market mechanism to achieve sustainable development, the group claims.

The government should avoid any practice to control a business that obstructs the country's economic development and should not manage any business that will directly compete with the private sector, except if is to protect the country's interest or to ensure security of the state and mutual benefits, Adis said.

The scheme will also push up production costs, he said.

The government offers a high price of Bt15,000 a tonne for 100-per-cent white rice and Bt20,000 for jasmine rice.

According the Bank for Agriculture and Agricultural Cooperatives (BAAC), the subsidy costs the government Bt290 billion annually, of which 90 per cent is for the rice price and the rest for management and maintenance expenses. However, the programme is estimated to generate income of Bt193 billion, cutting the loss to a net Bt98 billion.

"If the submission is out of the court's jurisdiction, we will look for a new channel to move on this case," Adis said.

The BAAC said yesterday that the Commerce Ministry would return to the bank the Bt50 billion earned from the rice-stock releases. This payment will allow the bank to continue the price-pledging programme for two more months for the harvest season starting early next month.

-- The Nation 2012-09-28

[asiawatcher]

Populist policies without any forethought. The petition is totally correct. And the rest of the country is supposed to support the rice subsidies. No skin off the governments nose, they promise all they want and the country pays for it. Gross fiscal irresponsibility.

[fareastguy]

This was never supposed to be a tool to help rice production or a marketing ploy in Thailand.

It was a vote buying scheme dreamt up by Thaksin to ensure his sisters stay in office, long enough until he could return & therefore continue his influence within the country.

Due to an unforeseen "hiccup" he's not back yet so the pledging scam will continue for a bit longer.

[belg]

thai economics 101... what you want, the politicians are only there to fill their pockets in the terms they have...they don't worry about the poor or the taxpayers, never have, never will

[OzMick]

Challenge Thaksin's baby - how dare they! If this ever gets close to court there will be 3 million redshirts (their count) outside to protest, with some germ handing out the names addresses and phone numbers of the judges and plaintiffs.