February 12, 2014
Thailand is to scrap a contentious rice subsidy scheme that has cost billions of dollars and stoked the country’s deepening political crisis, the government said on Tuesday.
The crisis-hit programme, which has sparked protests from unpaid farmers, will end this month because the nation’s caretaker administration has no authority to extend it, ministers said.
The sudden announcement raises the stakes in the battle for political control of Thailand, although the government refused to rule out reviving an ailing scheme that is central to its appeal to its rural electoral heartland.
The rice programme officially eats up at least $4bn a year but is gripped by a funding crisis, with the administration of Yingluck Shinawatra, prime minister, unable to raise money from banks or bonds to settle debts with farmers dating as far back as September.
Prof Kevin Hewison, director of the Asia Research Centre at Australia’s Murdoch University, said the subsidy’s scrapping was probably required by law but was also “convenient” for embattled ministers.
“Yingluck’s government will no doubt be able to breathe a bit easier if the scheme can be let go or significantly revamped for next year,” he said. “The political cost of the scheme may have turned from positive to negative for them, if the problem of unpaid farmers extends.”
Niwatthamrong Boonsongpaisan, deputy prime minister, said the rice scheme would finish until further notice at the end of the rice season on February 28, as the caretaker government’s limited powers to raise and spend money meant it could not prolong the subsidy.
Anti-government protesters’ sabotage of February 2 elections has made it impossible to declare a result and has left the Yingluck administration limping along with limited powers to raise and spend money.
Mr Niwatthamrong said any fresh rice subsidy programme would have to be “considered carefully” and might need to be sanctioned by the national election commission, which many government supporters see as pro-opposition.
Unpaid farmers who once benefited from the Yingluck administration’s largesse have mounted roadblocks and protests inside and outside Bangkok since the start of February, spurring opposition protest leaders to try to woo them. Demonstrators have collected money for farmers and given them a platform on rally stages to speak about their problems.
But the farmer protester numbers are still relatively small and some of those demonstrating are historically not supporters of Ms Yingluck. While rice-growers loyal to the government have been getting angrier about the payment delays, some also blame the opposition’s blockade of ministries and disruption of the elections.
Farmers attracted by a rice subsidy that paid well above world market rates formed a crucial plank of Ms Yingluck’s 2011 landslide election victory, along with other popular policies such as $1-a-time medical treatment.
But the government’s plan to buy rice and sell it on a rising world market has backfired, with international prices falling and Thailand losing its crown as the world’s top rice exporter amid sharp criticism from the International Monetary Fund and others.
The government has for months been trying to secure bridging funding for a scheme costing more than $7bn a year by some estimates, but bond issues have been patchily supported and banks, which Yingluck supporters say are part of the traditional elite at the opposition’s heart, have refused to make loans.
(By Michael Peel in Bangkok)