Premier’s order
Prayut tells ministries to work more closely together to stabilise farm product prices
Prime Minister Prayut Chan-o-cha has told the Commerce, Interior and Agriculture ministries to work more closely together and map out an advanced comprehensive plan to stabilise farm prices.
Boonyarit Kalayanamit, director-general of the Internal Trade Department, quoted the premier as saying the plan would help prevent farmers from suffering volatile crop price swings.
Mr Boonyarit said the Commerce Ministry is scheduled to host the first joint meeting of the three ministries on June 28 to discuss agricultural zoning, promotion of factory processing in each area and cooperation with the private sector to help connect buyers with producers and add value to farm products.
“One of the chronic factors for sluggish crop prices is mass production, whereby farmers are lured by short-term price hikes to produce the same crops en masse,” he said. “This eventually leads to oversupply and a price slump. Underlined and integrated cooperation among related ministries will help address the problems in a comprehensive manner, whether for rice, tapioca, corn, pineapples or garlic.”
Mr Boonyarit said the government should promote contract farming between processing factories and farmers to ensure the certainty of raw material supplies and price stability, especially for farm products that rely heavily on foreign markets.
“For pineapples, some 90% of which are exported, contract farming is necessary to ensure price stability,” he said. “Processing factory development also needs promotion, particularly in areas still short of factories, such as the northern region.”
In a related development, Mr Boonyarit said the Commerce Ministry plans to ask the Rice Policy and Management Committee to consider extending the loan scheme for farmers who agree to delay selling their stocks under the rice barn pledging programme for the 2018-19 season.
The government via the state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) has set aside more than 80 billion baht in loans and grants for rice farmers who delay selling their paddy to stabilise prices for the 2017-18 harvest.
Under the 83.7-billion-baht loan and grant scheme, 21 billion baht has been offered to those who delay selling paddy, 3 billion is earmarked for cash handouts to farmers who store their paddy in barns for a designated period, 12.5 billion has been allocated for agricultural institutions that buy paddy from members to increase product value, and 47.3 billion in grants is available to 3.9 million rice growers who have signed up with the Agricultural Extension Department to subsidise harvesting costs.
Under the lending scheme, the BAAC has offered credit based on average rice prices for the past three years: 10,800 baht a tonne for hom mali and glutinous paddy, 7,200 a tonne for white rice paddy and 8,500 a tonne for Pathum Thani fragrant paddy.
Retail rice farmers are each limited to 300,000 baht in loans, while agriculture cooperatives, farmer clusters and community enterprises are capped at 300 million, 20 million and 5 million baht, respectively.
The government subsidises interest of 453 million baht, but borrowers who fail to repay loans from the BAAC within five months of taking them out must shoulder the remaining interest payments.
The programme is intended to delay the sale of 2 million tonnes of paddy during the annual harvest season.
Participating farmers who agree to hold their paddy receive 1,500 baht a tonne, while all rice farmers are granted 1,200 baht per rai for harvesting and rice-quality improvement costs, capped at 12,000 baht per family.
Thailand’s rice production for the 201819 season is expected to reach 30 million tonnes of paddy, down 1-2 million tonnes from the 2017-18 season.
The drop is largely because of an anticipated drought.