Thailand approves $2.2 billion in help for rice farmers

BANGKOK (Reuters) - Thailand’s government on Friday announced $2.2 billion in loans and handouts to help stabilize prices for rice farmers, a politically influential group whose heartland is in regions where opposition to the military junta is strongest.

FILE PHOTO: A woman works in a rice field in Khon Kaen, Thailand July 13, 2017. REUTERS/Panu Wongcha-um

Thailand’s staple food has long been a factor in its politics.

The announcement by the commerce ministry came a week after former prime minister Yingluck Shinawatra fled into exile ahead of a court verdict in a criminal negligence case over a rice subsidy scheme that cost billions of dollars.

The ministry said it would provide $1.57 billion in handouts to farmers and $633 million in loans that will cover 3.7 million households. The program will span the seasonal harvest from the start of November this year to the end of February 2018.

“This is to help take 2 million tonnes of rice from the market,” Nuntawan Sakuntanaga, head of the commerce ministry’s department of internal trade, told reporters.

The government introduced similar short-term loans and cash handouts for rice farmers last year that cost the state $2.3 billion to cover 4 million households during the same period.

“This subsidy program is essentially similar to past rice subsidies introduced by previous governments,” said Somporn Isvilanonda, a senior fellow at the Knowledge Network Institute of Thailand who is critical of subsidies.

“The bottom line is these cash handouts create more debt for farmers,” Somporn said.

After hitting a four-year high earlier this year, the price of benchmark Thai 5-percent broken white rice has tumbled by nearly 20 percent over the last two months to $372.50 per tonne, its lowest since April.

Thailand’s main rice-growing areas are the northeastern and central regions, which have traditionally been strongholds of support for the populist Shinawatra movement of Yingluck and her brother Thaksin, who was overthrown in a 2006 coup.

Reporting by Aukkarapon Niyomyat, Panarat Thepgumpanat and Panu Wongcha-um; Writing by Patpicha Tanakasempipat and Panu Wongcha-um; Editing by Matthew Tostevin and Dale Hudson