Rice insurance delayed on eligibility concerns

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AGRICULTURE

Rice insurance delayed on eligibility concerns
Published: 10/10/2009 at 12:00 AM
Bangkok Post: Newspaper section: Business

The government's first rice insurance scheme hit a snag, as many farmers are concerned over their eligibility and have yet to fully understand the process.

A joint meeting between Commerce Minister Porntiva Nakasai and representatives of farmers, millers and exporters decided yesterday to put off the scheme until Nov 1 instead of this month.

"Most farmers are not confident they will be entitled to the new rice price insurance scheme, particularly the requirement that calls for farmers' paddy to contain a ceiling of 15% moisture," said Prasit Boonchoey, president of the Thai Farmers Association.

"Most farmers' paddy contains more than 15% moisture, so we want the government to ease this requirement."

Most farmers exceeded the moisture limit because of an overly rainy season and a lack of equipment to dry the rice.According to Mr Prasit, a majority of farmers are concerned over their eligibility for the scheme, as up to 70-75% of Thai farmers rent farmland to grow rice. At the meeting, Mrs Porntiva was non-committal about the farmers' proposal, but instead asked the millers to buy rice from the farmers at a fair price with the government pledging to compensate them for interest rates of up to 3% on their loans.

For the country's 2009-10 main crop season starting in November, insurance prices under the scheme for Hom Mali paddy have been set at 15,300 baht per tonne. Prices for general provincial fragrant rice were set at 14,300 baht, glutinous paddy at 9,500 baht and second-crop paddy at 10,000 baht.

The benchmark is 10,000 baht per tonne for 15%-moisture white rice paddy. Farmers' production costs are estimated at 6,000 to 7,000 baht per rai for white rice and 11,096 baht for Thai Hom Mali. The buying price covers all costs and allows around a 30-40% profit.

The government will guarantee the prices quoted. If farmers sell to millers or exporters for less, the government will pay them the difference.

The Commerce Ministry will announce reference prices every 15 days to allow farmers to evaluate whether to sell their products.

Under the scheme, Hom Mali paddy would be capped at 14 tonnes per family, with other fragrant paddy rice at 16 tonnes, and white rice paddy and Pathum Thani rice, a cheaper strain of fragrant jasmine rice, at 25 tonnes. Glutinous paddy is 16 tonnes per family.

Yanyong Phuangrach, acting permanent secretary of the Commerce Ministry, said the government will buy paddy from farmers if local prices fall 1,000 baht per tonne below the insurance prices.