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Today, I would like to raise the issue of financial loss in a particular programme implemented by the previous cabinet, which must finally be compensated by taxpayers' money. Worse is the fact that the current Cabinet is prepared to implement the same programme, with a bigger potential loss, an amount too high to be ignored; not billions of baht but tens of billions of baht. I hope by raising this issue, the facts of this issue may embarrass the involved people and prompt them to consider halting or modifying the project.

This is about rice pledging at a price much higher than the market price. Rice pledging is normally implemented during the harvest period when the supply of rice surpasses demand and puts pressure on the price of rice. Rice pledging does pull some of the supply out of the market and prevents the price from falling too low. After that, when demand increases both for domestic consumption and for exports, the market price will gradually increase and the rice owner can redeem the pledge and sell that volume of rice in the market at a higher price than the pledging price and earn a higher income. Normally, the pledging of rice from the main crop around the end of the year is done at a high volume of 2 million to 3 million tonnes while the pledging of rice from the second crop in the middle of year would only be in hundreds of thousands of tonnes. This is the first year when the previous cabinet approved implementing rice pledging from the second crop for a quantity as high as 3.5 million tonnes, which is absolutely unnecessary as the market price at that time was, in fact, very high. The average market price of rice in May (when the second crop came out) was as high as Bt13,297 per tonne, 110 per cent higher than during the same month in 2007 (Bt.6,230/ tonne).

With such a high market price, rice pledging is absolutely not necessary, especially for the second crop whose output is much lower than that of the main crop and there was enough export demand at the time. However, the previous cabinet did force it on in spite of opposition from concerned government officials. More suspicious is the fact that the former prime minister and the former finance minister approved the Bank for Agriculture and Agricultural Corporation (BAAC) as the sole operator of the rice-pledging scheme without any involvement of the Commerce Ministry as was the practice in the past. Furthermore, the pledging price was determined at the record high price of Bt14,000 per tonne, while the pledging price for the main crop at the end of 2007 was only Bt6,600 per tonne, citing an intention to maintain the market price at the Bt.14,000/tonne level, which is not possible as the market price of rice is also governed by the world price. The cost of white rice, milled from the paddy at the cost of Bt 14,000/tonne is higher than the world price and cannot be exported without any loss. Besides, the market price of rice paddy has decreased from an average of Bt13,297/tonne in May to only Bt11,800 to Bt12,000 per tonne in September and is likely to go down along with the world price as the upcoming harvest around the world is likely to yield a more abundant supply of rice in response to a very high price this year. Such abundant supply would naturally push the market price down.

It was not surprising that the pledging price at the level higher than the market price did attract stock pledges of up to 3.5 million tonnes, and it is natural that this amount of the stock will not be redeemed and be left in the hands of the state agency. The total volume of 3.5 million tonnes lying with the BAAC, if sold immediately at the current price of Bt11,800 to Bt11,900 per tonne, would result in a loss of at least Bt7,350 million. However, selling rice stocks of this size will take some time. Rushing to do it will further push down market price. Besides, the main crop, which is coming out in two months, will also push the price down. It is quite conclusive that the financial loss from the sale of this stock of 3.5 million tonnes would be higher than Bt7,350 million and is likely to be at least Bt 10,000 million finally.

It is truly a mistake of the former prime minister and the former finance minister to have approved the rice scheme without heeding the opposition of the concerned government officials. Actually, it was not difficult to see that the rice-pledging scheme for the second crop in the middle of this year was not at all necessary and it is not difficult to foresee that the market price could not be maintained at the level of the pledging price when it is much higher than the world price. It is fair to say that a loss from such an operation is clearly foreseeable. Besides, the two previously mentioned gentlemen are known to be wise and smart. They should have easily foreseen all the consequences as explained above. Then why did they decide on such a programme even though it was opposed by concerned officials? Was there any hidden agenda?

The financial loss of not less than Bt10,000 million, when compared to the market price, implies that there must have been people gaining benefit from this amount. Did the programme benefit only the farmers? Or did it also benefit middlemen and rice mills, as the facilitator for access to BAAC, or the provider of stocking facilities needed for the pledging, or the ones who purchased the rice from the farmers for pledging at a profit from price difference? There is also the last question about the connection between politicians and those middlemen and rice millers in this rice-pledging programme. These are questions I would leave to the readers to find out the answers.

What I have written about so far is on a programme that has been completely implemented and about which nothing can be done. The two policymakers would not take responsibility for the more than Bt10,000 million loss anyway. But, there are two more similar programmes that the current government plans to implement. The first one is the proposal of the commerce minister to expand the rice-pledging scheme for the second crop from 3.5 million tonnes to 4.5 million tonnes. This is really strange as the second crop has been out since May, almost 5 months up to now. There should not be rice left in the farmers' possession beyond that for household consumption. The remaining rice should now be in the possession of the middlemen or rice mills. What worries me is the fact that the Cabinet in September approved the pledging price of Bt14,000/tonne even though the market price in September was not more than Bt 12,000/tonne. It actually benefited the middlemen and rice millers who had purchased rice from the farmers at the market price, to pledge at the higher price of Bt14,000 - and made easy profit of around Bt2,000/tonne. It is noticed that the approval to expand the pledging target from 3.5 million tonnes to 4.5 million tonnes was done in a hasty manner. The proposal was put before the Cabinet on September 16 after the former prime minister was unseated by the Constitution Court, and was pending for the new prime minister. The September 16 Cabinet meeting was attended by the caretaker prime minister. Up until now, additional hundreds of thousands of tonnes have been pledged and it is believed that the pledging stock would reach 4.5 million tonnes in a very short period of time. This additional one million tonnes, pledged at Bt2,000/tonne, if sold out right away, above market price would make a loss of more than Bt2,000 million. However, it actually takes time to sell them, and as the market price is going down with the world price, the loss could finally be as high as Bt3,000 million. The question here is whether or not the commerce minister and the acting prime minister, who approved the programme, would take responsibility for such financial loss as it could be foreseen clearly on the day of the approval. It is not difficult to find out who would benefit from this programme.

Another programme in the pipeline is even bigger and could possibly end up making an even higher financial loss. This is the pledging of the main crop at the end of this year, which the National Rice Policy Committee approved with a target of 8 million tonnes, the highest volume ever implemented in a single harvest, and again at the high price of Bt14,000/tonne for rice paddy (and Bt16,000/tonne for Hommali paddy, which from now on, will not be further mentioned in the calculation of potential loss as it bears the same price structure as that of the rice paddy). It is not beyond expectation to foresee that the market price for rice paddy at the time of the implementation would be around Bt10,000 to Bt11,000 per tonne, which is higher than the price in all previous years and is the price which generates good enough profit for farmers. I agree with the implementation of the rice-pledging programme in order to reduce pressure on price so that it would not go below Bt 10,000/tonner. However, to set the pledging price as high as Bt14,000/tonne, which is higher than the world price, would benefit only those who pledge the 8 million tonnes of stock. However, the total output of the main crop is more than 21 million tonnes. The remaining rice paddy may have to be sold at less than Bt10,000 per tonne because the 8 million tonnes of stock in the possession of the state agency will naturally prevent the price from going up, or even going down, as traders can wait to buy from the government agency instead of the market.

It is quite clear that this stock of 8 million tonnes has to be sold finally and it would generate a financial loss of as high as Bt24,000 million to Bt30,000 million, which would have to be compensated with tax payers' money later on. There are rumours in the rice-trading circle that middlemen and rice millers have started to purchase the future output of the main crop at the current price, which farmers found profitable, in preparation for further pledging with the state agency at Bt14,000/tonne, which would generate easy profit of at least Bt2,000/tonne. The additional benefit from the 8-million-tonne pledging programme is excessively large. Who would be the beneficiaries? I do not want to make a guess.

However, the programme as approved by the National Rice Policy Committee is yet to be approved by the Cabinet. I hope that when this matter is discussed in the Cabinet, the deputy prime minister on economics and the finance minister, who are scholars and understand the issue quite well, would oppose the programme that would obviously lead to a huge financial loss like this one. I hope that both of them are independent enough to stand for righteousness.

Finally, I would like to hear from the administrative court and eminent legal experts that, in the case that politicians take actions or make decisions that can be seen from the beginning that it could lead to a financial loss and finally end up in a real loss, is there anyway to make them responsible for such loss, be it civil or criminal. If that is possible, it may be another tool to prevent such losses.

Until next Monday