The Thai authority has decided to cut the price for paddy it purchases from farmers after it lost over 4.4 billion U.S. dollars in a much-criticized scheme to support rice prices.
The cabinet on Wednesday gave the green light to the decision by the National Rice Policy Committee (NRPC) under the Commerce Ministry to cut the fixed price paid to farmers for their rice from 15,000 baht (486 U.S. dollars) per ton to 12,000 (390 U.S. dollars), Thai Rath online reported.
The price cut will be effective July 1.
In the latest policy adjustment, the government also set the subsidy ceiling at 100 billion baht (3.24 billion U.S. dollars) a year, while allow farmers to sell their paddy for a maximum 500, 000 baht (16,000 U.S. dollars) per household.
Moreover, the government will try to limit the losses from the scheme at not more than 100 billion baht (3.24 billion dollars) a year, the report added.
The measure was taken after official figures, released Monday, showed 136 billion baht (4.4 billion U.S. dollars) in losses from the government's so-called rice pledging scheme in the 2011-2012 harvest season.
However, the Thai Farmers Association has called on the NRPC to review its decision and asked the government to continue the subsidy scheme in the next five years.
Vichien Puanglamchiak, president of the Thai Farmers and Agriculturists Association, said on Wednesday that the price cut is unacceptable and will affect farmers across the country.
The association will submit a letter of protest to the government and may organize a demonstration if the government stands firm on reducing the price, he added.
Meanwhile, the Thai Chamber of Commerce (TCC) on Wednesday called on the government to set the rice price at a level that really reflects global market prices and in a more transparent way.
Though the fixed price has been reduced, it has not yet really reflected the prices in the global market, said TCC Chairman Issara Wongkusolkit.
The TCC also set up a special body to closely monitor and assess the government's controversial scheme.
The TCC has suggested that in order to improve quality of lives of farmers, the government should allocate budget to support rice farming productivity such as finding fertilizer, seed, water sources and collective farming so that farmers are self-support in the long run.