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BANGKOK - Thailand will pay farmers 20 per cent less for rice to stem losses from a much-criticized subsidy program that dislodged the country from its spot as the world's No. 1 exporter of the grain, a government minister said Wednesday.
Cabinet minister Warathep Rattanakorn said the government will pay 12,000 baht ($389) per ton of rice, compared to the current price of 15,000 baht ($486), to reduce the losses from the 2011-12 subsidy program.
The government also set a new limit on the amount of rice it will purchase to 500,000 tons per farmer.
The amendments, proposed by the National Rice Policy Committee, were approved Wednesday at a special Cabinet meeting.
Warathep said the changes were in response to public criticism of the $4.4 billion loss incurred by the subsidy program, a flagship policy of Prime Minister Yingluck Shinawatra's government to win support from Thai farmers.
The government had been criticized for refusing to disclose the losses and the amount of rice it has been forced to stockpile.
Under the original plan, the government paid farmers higher-than-market prices for their rice. Sales, however, fell short due to the government's inability to resell much of the grain on international markets. That allowed India and Vietnam to surpass Thailand in the value of rice exports.
Rice, Thailand's staple grain, is one of the country's main exports. Thai governments have intervened in the price of rice through a variety of means since the early 1960s to help farmers, including buying up rice to sell to foreign countries and price guarantees.
Yingluck implemented the purchase program in October 2011. So far, the government has bought 35.2 million tons of rice, paying farmers more than $11 billion, while earning $1.9 billion by reselling some, according to figures released this week by the rice committee.
The new price will take effect July 1.
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