Prime Minister's Office Minister Warathep Rattanakorn said government sales of rice it purchased from farmers fell far short of the sum it paid to the farmers under the 2011-12 subsidy program, accounting for the loss. The government had been criticized for refusing to disclose the losses and the amount of rice it has been forced to stockpile.
Under the scheme, the government buys rice from farmers at about $490 a ton, hundreds of dollars more than the market price. Its inability to resell much of it on the international market allowed India and Vietnam to surpass Thailand in the value of their rice exports.
The government's National Rice Policy Committee announced plans on Monday to lower the payments to farmers.
Commerce Minister Boonsong Teriyapirom said the Cabinet is expected to approve the planned change and it is likely to take effect June 30.
"The adjustments will show that even though the government is trying to implement several policies that benefit the people, it is also adhering to fiscal discipline," he said.
Prime Minister Yingluck Shinawatra said the government will attempt to reduce its losses by cutting expenses but also strive to maintain farmers' incomes.
Subsidies for rice farmers were launched in 2004 when Yingluck's brother, Thaksin Shinawatra, was prime minister and implemented a host of populist policies. The scheme was criticized then for alleged graft and high costs, and Thaksin was ousted by a military coup in 2006 after protests in the capital against his alleged corruption and abuse of power.
The scheme was revived by Yingluck as a flagship policy in her 2011 election campaign.
She implemented the program in October 2011, with no limits on the amount of rice the government would purchase. 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, Warathep said.
The project's expenses also include its administration through the government-owned agricultural bank and costs of storing the rice in warehouses, totaling $482 million.
"In terms of accountancy, it might be called losses," Yingluck said. But she said the losses actually meant gains for Thai farmers who have benefited from the scheme.