BANGKOK (Reuters) - Thailand has so far lost 320 billion baht ($9.9 billion) from a 16-month rice support scheme and the final cost will rise substantially, the state bank that helped manage the scheme said on Wednesday, citing Finance Ministry estimates.
The estimated loss was as at end-May, Bank of Agriculture and Agricultural Cooperatives (BAAC) President Luck Wajananawat told Reuters. The figure would rise as the rice had been bought by the former government at well above market prices, but was now being sold for much less as it was deteriorating in quality, he said.
“The total losses will be estimated later since we need to compare the price the government paid when it bought rice from farmers and the prices the government sells the rice at,” he said.
Luck estimated the government still owed BAAC about 750 billion baht in debt related to the scheme.
“The government plans to set aside money from the central budget and the money it gets from selling rice stocks to repay the bank, but it could take around seven years for the government to pay it all back,” he said.
The 750 billion baht was the money the government had borrowed from the bank to buy rice from farmers at 15,000 baht per tonne, about 60 percent above market rates, from October 2011 to February 2014.
The rice support scheme helped bring former prime minister Yingluck Shinawatra to power in a landslide election in 2011 due to support from farmers mostly in the remote areas of the country’s northeast.
However, the scheme backfired when the government failed to sell rice to pay arrears to angry farmers, leading to months of protests that ended in a military coup in May.
The government has given no official estimate of losses from the scheme, but critics have put the figure at between 300 billion and 500 billion baht.
General Prayuth Chan-ocha, the coup leader and current Prime Minister has ruled out any similar schemes to assist farmers due to the burden on the country’s finances.
The government has offered indirect intervention to support farmers, including cheap fertilizer and soft loans to cut production costs.
However, rice prices are still falling due to weak demand and rising supply, with major rice producing countries preparing to harvest bumper crops.
The Thai government was estimated to have built up as much as 18 million tonnes in rice stocks through the support scheme, about double annual production, although some of the rice has since been sold and some has spoiled.
(1 US dollar = 32.2100 Thai baht)
Editing by Richard Pullin
Our Standards: The Thomson Reuters Trust Principles.