Thailand’s rice subsidy scheme rotting away

Thailand’s rice subsidy scheme has turned into a political and economic disaster. The problem could have been avoided if the government had listened to its own advisors. Raising the price of rice received by Thailand’s rice farmers was a key promise of the ruling Pheu Thai Party at the 2011 election, targeted at the party’s rural power base in the poorest northern and northeastern regions of the country. The rice subsidy policy, known domestically as the rice-pledging scheme, had two objectives. First, the price offered to Thai rice farmers was to be raised through direct government purchase to levels about 50 per cent above the prevailing market price. Second, the international price was to be raised by reducing Thai exports. Roughly one half of Thailand’s annual rice crop of 20 million tonnes is normally exported.When the scheme was outlined in the Pheu Thai Party’s 2011 election platform economists inside and outside the Thai public service pointed to serious flaws.