There are better ways to help the poor

What are the other options to help low-income farmers, if not rice-pledging schemes?” That was a question raised at a seminar at Thammasat University last week.
The Supreme Court is today due to deliver its verdict on former premier Yingluck Shinawatra’s alleged negligence of official duty while implementing the biggest rice-pledging scheme in history during her years in office. According to public prosecutors, Yingluck’s alleged wrongdoing led to corruption and caused a massive financial damage to the state.
However, the Yingluck rice-pledging scheme  was widely popular among farmers, who benefited from a hugely generous programme in which they got as much as Bt15,000 per tonne for the rice they grew – nearly double the then-prevailing market price.
Nearly 20 million tonnes of rice went into warehouses leased by the government under the unlimited rice-pledging scheme. In the end, the government had to set aside a multiple-year budget of as much as Bt500,000 to cover losses and other expenses resulting from this undertaking.
While Thailand’s farming population has been shrinking over the past several decades, the country still has an estimated 15 million farmers. They and their families account for 23 per cent of the total population.
Therefore, along with other low-income groups, it is not only legitimate but politically mandatory for every government to lend a helping hand to low-income people, including farmers and their families, especially in terms of keeping their earnings above the poverty line.
However, rice and other crops are subject to uncontrollable natural factors, so it is not economically sound for any government to manipulate the market for rice and other farm produce in the hope of gaining an upper hand.
Thailand’s rice acreage should be reduced while ensuring that productivity continues to increase so the country stays competitive, as opposed to the government trying to encourage more farmers to grow more rice with similarly generous pledging schemes.
Such schemes are always vulnerable to corruption and inefficiencies.
As evidenced in the Yingluck rice-pledging programme, major rice traders joined hands with politicians to reap personal benefit. Fake government-to-government (G-to-G) export deals announced during Yingluck’s tenure were obvious examples. 
In return for huge profits, dishonest traders colluded with Commerce Ministry officials to arrange bogus G-to-G deals for rice exports to China that never happened, resulting in more damage to the state.
To boost farmers’ and other poor people’s income, it is worthwhile considering adopting the so-called negative income tax (NIT) concept, in which people earning an income less than a certain amount get a supplementary income from the government via the income tax system. This could be implemented after the government has a credible and comprehensive database on low-income people.
Fourteen million people recently registered as low-income earners to be eligible for supplementary welfare from the government, which is expected to start the programme with a small pay-out each month.
The programme could be further developed to take advantage of the NIT concept, which would help reduce corruption and inefficiencies in welfare and other populist policies using the taxpayers’ money, such as rice-pledging and similar schemes.