May 26, 2009

Thailand's Commerce Ministry is likely to suggest to the government to end its costly price subsidy scheme for agricultural products, as the measure creates only short term benefits for farmers and allows middlemen to take advantage of the subsidies, according to The Nation.

Commerce Minister Porntiva Nakasai said a majority of committee members had voiced concern over the sustainability of the subsidy programme, as guaranteed prices were higher than market prices.

The government has postponed the corn-pledging programme because of concerns over potential losses.

Farmers' representative, Ubolsak Bualuanggnam, said the government should end its price-guarantee strategy as soon as possible because it solved only short-term problems.

The pledging projects have not fulfilled their objectives in benefiting only farmers, but have instead benefited middlemen or politicians who have intervened in the pledging schemes, said Ubolsak.

Porntiva said the ministry had instructed officials to seek other measures to help farmers rather than focusing on price subsidies.

As a result, the ministry is unlikely to implement a price intervention programme for shrimp, but is considering other measures such as support through soft loans and promoting contract farming.

The ministry on Tuesday will report to the Cabinet that recent auctions for corn and tapioca have collapsed, as bid-winners refused to follow through the contracts.

The three winners for a total of 450,000 tonnes of corn have refused to act on their contracts because the Cabinet has delayed its approval for the Commerce Ministry to go ahead and sell the stockpile.

Porntiva said corn prices had decreased gradually since auction, and traders now do not wish to purchase the corn stockpile from the government due to deteriorating quality and the lower market price.