Thai Broken Rice
Bangkok's splashy, costly subsidy scheme has been ineffective at helping poor farmers.
By
DAVID WALTER
July 25, 2013 12:34 p.m. ET
Ubon Ratchathani, Thailand
Ask farmers in the village of Ban Laitung what they think of the Thai government's rice subsidy scheme, and they tell you that actually, please, they'd prefer it if Prime MinisterYingluck Shinawatra stopped buying up rice harvests at prices 50% above market levels. In this corner of Isaan—Thailand's poor northeastern region—Ms. Yingluck's "rural development" scheme has not significantly improved residents' lives.
"The debt should have been used to help Isaan," says villager Kamlai Thongsou of the $4.4 billion the Thai government spent last crop year on the subsidy scheme. "We need water systems, irrigation." His friend Kongsoon Chamram agrees. "Grassroots farmers get nothing from this scheme. Middle and rich farmers benefit."
The discontent in Ban Laitung hints at an overlooked dimension of Ms. Yingluck's contentious rice subsidy: its spotty record of helping Thailand's poorest farmers.
So far most criticism of Thailand's rice scheme has focused on its flawed economic logic. Ms. Yingluck originally said that Thailand would recoup the cost of its above-market rice purchases by engineering a global supply crunch. By holding the government's rice stocks back from the world export market, she said, Thailand could jack up world rice prices to the desired break-even level.
Instead, and inevitably, rice dealers from other countries ramped up their exports. Thai exports fell 44% last year, while world rice prices remained flat. The Thai government now holds 17 million tons of moldering rice that it cannot sell except at a steep loss.