Thai government today reduced the price paid to rice farmers by 20 per cent, a day after it admitted losing over USD 4.46 billion in a controversial scheme to support rice prices that saw the country loose its position to India as the grain's top exporter in the world.
The cabinet of Prime Minister Yingluck Shinawatra held an emergency meeting today and agreed to reduce the price paid under the rice-pledging scheme effective with the second crop beginning on July 1.
The decision has upset the farmers but made exporters happy.
The decision cuts the rice-pledging price from 15,000 baht (USD 486) to 12,000 baht (USD 389) per tonne, as proposed by the National Rice Policy Committee, Prime Minister's Office Minister Varathep Rattanakorn said.
In addition to the 20 per cent cut, the amount paid to each farming family will be capped under the new rules at 500,000 baht, he said.
Varathep said the decision was based on the changing price of rice on the world market, the baht's appreciation, and the increase in global rice supply.
The price cut is also aimed at reaching a balanced budget in 2017, he added.
He said the changes were in response to public criticism over the USD 4.4 billion loss incurred by the subsidy program, a policy implemented to woo support from Thai farmers.
Under the previous scheme, the government buys rice from farmers at about 15,000 baht (USD 490) a tonne, which is significantly higher than the market price.
Failing to sell at such high prices, Thailand lost the rice crown to India.
Prasit Boonchoey, chairman of the Thai Farmers Association, said his group will petition Prime Minister Yingluck asking her to review the cabinet's decision.
He said rice farmers, particularly those in the central plains, disagreed with the reduction.
