BANGKOK - Thailand's caretaker government has approved the transfer of 20 billion baht (S$787 million) from the 2014 budget to pay farmers who have been waiting months to be paid for rice sold to the state, a farm bank official said on Wednesday.
The government has been struggling to pay farmers for stocks of the grain that rose to record levels last year because of the high price promised under a subsidy scheme that made Thai rice uncompetitive on world markets.
The government has recently been stepping up efforts to sell the rice to foreign governments and via market auctions to raise the funds, even if it has to sell at big losses. "The 20 billion baht disbursement will be paid to around 180,000 farmers," said Supat Eauchai, vice-president of the Bank of Agriculture and Agricultural Cooperatives.
Payments will start on Thursday, and afterwards there will be about 97 billion baht still owed, he said.
The announcement of the payment plan comes after the government managed last week to sell 730,000 tonnes of rice to get around 9 billion baht to pay farmers.
The transfer from the budget will have to be approved by the Election Commission since no new government has been elected since parliament was dissolved on Dec. 9.
Prime Minister Yingluck Shinawatra has led a caretaker administration since then with limited powers. The snap election she called for Feb. 2 was disrupted by protesters, and Thailand could be without a full government for some months yet.
The government does not specify how much grain it has in its stockpiles, but industry officials have put the inventories at around 13 million-14 million tonnes of milled rice.
The government's efforts to sell the stocks "could drag prices down further at a time when farmers are harvesting again and the government has no power to start any plan to help support prices," said a Bangkok-based trader.
Thai prices have fallen by 9 per cent since the rice-buying scheme expired on Feb. 28, and the caretaker government has no authority to renew it.
Thai 5 per cent broken white rice was at $410 per tonne on Wednesday versus $410-$415 last week.
Commerce Minister Niwatthamrong Boonsongphaisan has said he aimed to sell around 500,000 tonnes of rice a month to get money to pay farmers.