Thai Prime Minister dismisses Commerce Minister.

On June 30, Thai Prime Minister Yingluck Shinawatra decided to dismiss Commerce Minister Boonsong Teriyapirom amid public criticism of his rice stockpiling program – a program that has caused significant losses to the state budget and cost the Southeast Asian nation its position as the world's largest rice exporter.

Thai Commerce Minister Boonsong Teriyapirom. (Photo: Bangkok Post)

Niwatthamrong Bunsongphaisan, who previously led the now-defunct iTV television channel owned by the Shinawatra family, will replace Boonsong as Minister of Commerce.

In addition, Mr. Niwatthamrong also holds the position of Deputy Prime Minister.

Despite dismissing Boonsong, Prime Minister Yingluck retained Kittirat Na Ranong as Finance Minister and Nattawut Saikua, who had recently been a vocal defender of the rice stockpiling program, as Vice Minister of Commerce.

The Thai government began implementing a rice stockpiling program in October 2011, with a fixed purchase price of 15,000 baht per ton, aimed at increasing farmers' income. However, this program is causing controversy in Thai public opinion, with some arguing that it is wasteful and only facilitates corruption and rice smuggling.

On June 18th, the Bangkok Post reported that the Thai government spent approximately 352 billion baht to purchase 21.7 million tons of rice during the 2011/12 crop year. They have sold a portion of this rice, totaling approximately 59.2 billion baht.

The value of the remaining rice in stock (based on rice prices as of January 31st) is 156 billion baht. The Thai government acknowledges a temporary loss of 136 billion baht from the program.

Along with the aforementioned losses, this program caused the price of Thai exported rice to skyrocket, reducing the competitiveness of Thai rice in the international market. This was the main reason why Thailand lost its position as the world's leading rice exporter to India last year, exporting only 6.9 million tons of rice, a sharp decrease from the 10.6 million tons of 2011.

On June 3, Moody's Investors Service Inc. warned that this situation could hinder Bangkok's ability to achieve its budget balance target by 2017 and negatively impact its credit rating.

Against this backdrop, on June 19th, the Thai government decided to reduce the subsidy for rice farmers under the rice stockpiling program. Accordingly, from July 1st, 2013, the Thai government will only pay 12,000 baht (US$390) per ton of paddy rice, a 20% reduction from the purchase price that had been in effect since the program began (15,000 baht/ton). However, this decision has met with strong opposition from many farmers.

According to (VNA) - DT