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Published: Wednesday March 5, 2014 MYT 4:11:59 PM
Updated: Wednesday March 5, 2014 MYT 4:13:38 PM

Thai government to start paying rice arrears, farmers still not happy

BANGKOK (Reuters) - The Thai government is expected to start paying around 30 billion baht ($923 million) to farmers next week for rice sold in recent months to the state, but some farmers protesting in the capital complained that fell far short of what was owed.

"There should be 20 billion baht from the budget and another 10 billion baht from rice stock sales," said Luck Wajananawat, president of the Bank of Agriculture and Agricultural Cooperatives (BAAC), which manages the scheme.

The rice subsidy scheme run since 2011 by the government of Prime Minister Yingluck Shinawatra has gone disastrously wrong, with hundreds of thousands of farmers left unpaid and big losses for the state budget.

After a disrupted election last month, Yingluck now heads a caretaker government with little authority to borrow money to fund the scheme, and it has struggled to sell rice from stocks to other governments as it hoped.

On Tuesday, the Election Commission gave the government the authority to borrow 20 billion baht from the fiscal budget to pay farmers and the Commerce Ministry is also selling rice through auctions to fund the scheme.

However, hundreds of angry farmers have been protesting at the Commerce Ministry for weeks - separate from anti-government activists elsewhere in Bangkok - and one of their leaders said on Wednesday they saw no reason to stop yet.

"That 30 billion baht is very small compared to the total 130 billion baht the government should have paid us since October," said Kittisak Waraha, one of the farmers' leaders, referring to a sum cited by officials earlier this year.

The BAAC has said that, as of February 27, it had paid farmers 67.5 billion baht for rice bought during the main 2013/14 crop from October, with 112 billion still outstanding.

Commerce Minister Niwatthamrong Boonsongphaisan said on Monday the government aimed to sell around 800,000 tonnes of rice each month to get money to pay the farmers.

The government has sold 131,000 tonnes of rice from stocks via the Agricultural Futures Exchange of Thailand (AFET) and would open a tender to sell another 517,000 tonnes next week, Surasak Riangkrul, director general of the Department of Foreign Trade, said on Wednesday.

The government has signed a deal to sell 400,000 tonnes of rice to China for prompt shipment, he said, confirming a deal signalled by Niwatthamrong last week.

"We are also in talks to sell another 600,000 tonnes to China and the deal is expected to be sealed soon," Surasak told Reuters.

The rice-buying scheme expired on February 28 and the caretaker government has no power to renew it.

(Editing by Alan Raybould and Muralikumar Anantharaman)

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