Under the “rice-mortgage scheme”, introduced last September, the government buys rice direct from farmers at about twice the normal market price; 15,000 baht (about $500) a tonne for ordinary white rice and 20,000 baht for Hom Mali. This benefits mostly small-scale rice farmers in Thailand’s poor rural north-east and central plains, a constituency fiercely loyal to the ruling Pheu Thai party of Ms Yingluck and the former prime minister, her elder brother Thaksin Shinawatra.
According to Vichai Sriprasert, head of Riceland International, a family-run company that has been selling abroad since the 1930s, only twice, in 1974 and 2008, have rice prices on the open market reached the levels now being paid by the Thai government; the normal range is $200-300. Not surprisingly, Thai farmers are eagerly selling their rice at the newly inflated price to the government, which is stockpiling it.
However, what may be a bounty (at least in the short term) for farmers is proving disastrous for rice exporters, who tend to support the opposition Democrat Party and its rival policy of income support for rice farmers. The stockpiling leaves little for the private exporters such as Mr Vichai to sell abroad. What rice he can get his hands on costs over $100 more a tonne than the same rice from India or Vietnam—partly because India is also benefiting from a weakening currency. Customers are therefore turning to those countries instead. Mr Vichai says that, like other exporters, he could go out of business unless the scheme is changed.