Rice boils over as Thai election issue as subsidies dried up since Oct

December 19, 2013 5:04 am

Rice boils over as Thai election issue

By Michael Peel in Bangkok

Mana Nutchyoo has already paid down half a $30,000 purchase of ploughing and pumping equipment for his paddy fields, thanks toThailand’s official rice subsidy

– but the cash has dried up since October.He’s annoyed the government had not handed over the money before the countrystumbled this month into its latest political crisis – and even more angry with Suthep Thaugsuban, leader of mass protests that temporarily occupied the finance ministry and have forced an election due February 2.

“The government is slow, but we will get the money finally because it’s in the system,” said Mr Mana, 49, who claims he is owed 180,000 baht ($5,580) for a crop from his 9.6 hectare holding in Ayutthaya province north of Bangkok. “But Suthep’s mob has interrupted the process.”

As the Thai capital roils with Mr Suthep’s campaign to oust Yingluck Shinawatra, the prime minister, a less noticed but crucial conflict is playing out in the paddies of Ayutthaya and other regions of southeast Asia’s second–largest economy.

The rice subsidy story is the narrative of the Yingluck administration in microcosm, the policy’s popularity with the country’s millions of farmers and their dependants set against opposition allegations that it is wasteful, corrupt and a form of vote-buying.

Already under pressure from slowing economic growth, the government must now fund a flagship initiative that has already soaked up more than $8bn. The politics and economics of rice thus promise to be pivotal to Thailand’s political future – both during the elections, if they take place, and beyond.

Farmers from across the country could soon mount roadblocks and other protests if the Yingluck administration doesn’t fulfil its pledge to pay them quickly, said Wichien Phuanglamjiak, an Ayutthaya-based rice farmers leader. “We have to do something to let whoever is in government know the farmers have this serious problem,” he said.

Just 90 minutes drive from Bangkok, the muddy Ayutthaya paddies tilled by farmers in traditional broadbrimmed hats and pecked at by white egrets immediately summon a world far from the overbuilt metropole and its demonstrations well populated by the urban middle class and their south Thailand allies.

Here, on the plains around the capital of the ancient kingdom of Siam, is a hint of the rice growing north Thai heartland that has delivered every election since 2001 to Ms Yingluck’s older brother, Thaksin Shinawatra, or his allies.

Under a scheme begun shortly after Ms Yingluck’s landslide July 2011 election victory, the government has been buying rice at a guaranteed price of as much as $500 a ton fresh from the paddy, even though international rates for milled rice have fallen well under $450 and are expected to dip further next year.

Amid growing criticism of the policy from the International Monetary Fund and other observers, huge rice stockpiles have built up and the government has lost $4bn a year officially – and perhaps almost double that, according to other estimates.

Many farmers in Ayutthaya and elsewhere in Thailand say they have not been paid for their autumn harvest, amid signs the government has been having trouble funding the scheme. A bond issue in November aimed at raising 75bn bhat struggled to generate half that amount.

While Ms Yingluck’s Puea Thai party can count on some residual loyalty from farmers who have done well out of the policy over the past two years, a combination of payment delays and less generous terms introduced by her government will test their support.

Saneh Khodsuwan, 59, says the $5,000 he earned from selling his last harvest to the state was at least 50 per cent more than he would have got from dealing directly with private millers – and he expects Puea Thai to commit to similar generosity before he backs it again.

“We will have to see their policies,” said Mr Saneh, who lived in Australia for 10 years and says he was struck by how farmers there are “rich”. “I voted for Puea Thai only because of the rice pledging scheme.”

Besides, any rural disenchantment with the Yingluck government will not necessarily translate into the opposition democrats making up the 4.3m votes by which they trailed Puea Thai’s 15.7m at the last election. Many Ayutthaya farmers dislike the rice price top-up scheme of the 2008-11 Democrat government that preceded Ms Yingluck, saying landowners pocketed money meant for their rice-growing tenants.

“Some landlords said ‘If you don’t give me the subsidy, then I won’t rent you the land’,” said Prasert Poompoung, 46, wearing a pink smock streaked with colours from the casual house-painting he does off-season for about $15 a day. “I felt powerless.”

One of the many contradictions of Thailand’s rough yet nuanced politics is that Mr Suthep’s push to oust the government may inadvertently have done Ms Yingluck a favour, triggering an election before the rice policy has the chance to run into greater financial trouble and further alienate the farmers’ vote.

Mr Mana recalls how the ploughing truck and other machinery he bought with the help of the Yingluck-era subsidy replaced equipment he was forced to sell when he was squeezed financially under the Democrat government – in which Mr Suthep was deputy premier.

“I was almost bankrupt,” Mr Mana said. “So if Suthep becomes prime minister, I will prepare to get rid of my truck again.”