November 4, 2015 / 6:19 AM / in 2 years

Thai junta turns to populist subsidies to ease farmer tensions

A man works inside a rubber factory at Raman district in the southern province of Yala, Thailand, November 4, 2015. REUTERS/Surapan Boonthanom

BANGKOK (Reuters) - Thailand’s junta has approved $1.3 billion in rural subsidies, akin to the populist policies of the government it ousted, to appease disgruntled and politically powerful farmers who are struggling with record low commodity prices and weak exports.

The rural heartland of Thailand’s deposed leader Yingluck Shinawatra and her exiled billionaire brother Thaksin is hurting as a result of the military government’s economic policies, stirring discontent and the threat of protests.

The military government had pledged to wean farmers off expensive subsidies used by the previous government which it ousted in a 2014 coup.

But last week it approved measures worth around $1 billion to help rice farmers and on Tuesday gave the greenlight to $365 million to help rubber farmers who had threatened to rally in defiance of a ban on political gatherings.

“In a situation of economic difficulty they have to stimulate consumption and what they think is: give grassroots people money and it will circulate,” said Gothom Arya, an advisor to the Institute of Human Rights and Peace Studies at Bangkok’s Mahidol University.

“Though the junta’s action is exactly the same as previous governments, they claim that this time money will not leak,” said Arya.

Such measures would have been unthinkable immediately after the coup which ushered in a junta pledging to “clean up” Thailand and move the country away from corruption associated with politicians and their populist policies.

But seventeen months on, incomes in rural areas, where more than 34 million Thais live, have collapsed and farmers in the world’s second-biggest rice exporter and top rubber exporter have been calling for the re-introduction of subsidies.

JUNTA FALLING TO SOOTHE TENSIONS

Thailand’s farmers have been at the center of a decade of political turmoil. Military attempts to disperse 10 weeks of protests by Thaksin’s “red shirt” supporters in 2010 left scores dead and sparked the worst violence in modern Thai history.

The subsidies are the latest in a raft of measures, including soft loans through village funds, by Deputy Prime Minister Somkid Jatusripitak, one of the architects of Shinawatra’s populist policies, to appease farmers and boost the economy.

But while aid is rising, farmers remain critical of the junta, which has not guaranteed crop prices as farmers demand, and their measures are far from the scale of Yingluck’s schemes.

“Rubber prices drop. We make less money. I would rather see the government help raise rubber prices,” said Samai Sribang, 58, a rubber farmer.

A Yingluck rice program which paid almost 50 percent above global market prices, cost around $14 billion, and fueled criticism of vote-buying. She also spent $620 million building rubber stockpiles under a price support program.

In January, a military-appointed legislature impeached Yingluck for negligence over the rice scheme that distorted markets and built up massive rice stockpiles.

($1 = 35.5200 baht)

(The story was refiled to correct the title of the minister in paragraph 10)

Additional reporting by Patpicha Tanakasempipat and Aukkarapon Niyomat; Editing by Michael Perry

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