Thailand has run one of the world’s most expensive and inefficient subsidy programs with its rice purchasing program, which guaranteed farmers high prices for their rice. With the rice program set to expire this month and Prime Minister Yingluck having no power to re-institute them, however, many farmers may quickly find themselves facing financial difficulty.

And as peoples’ living standards decline, the risk of pushback only increases. After the rice programs stop, many farmers will be unable to meet their own ends and could target the ruling government. Already, hundreds of farmers have taken to the streets to protest backed payments and one group of farmers has actually filed a legal suit.

Rice Subsidies

Government’s hands are tied

In a bid to end the crippling protests that have all but shut down the government, Prime Minister Yingluck called for snap elections earlier this month. For better or worse, however, the elections did little to soothe tensions and so far no effective government has been formed.

Instead, Yingluck has been left in charge of a caretaker government that has only limited power. Lacking the ability to control the government, Yingluck is finding it nearly impossible to either extend the rice program or to end the protests being staged by the opposition.

As such, the rice program will almost certainly expire this month. This could lead to outrage among rice farmers and be the final nail in the coffice for Yingluck’s administration. Given the high costs of the program, this might be for the best in the long run, but in the short run it could lead to instability.

Rice subsidies: YIngluck may be out of luck

Prime Minister Yingluck is now finding herself between a rock and a hard place. Thailand’s farmers have been among her biggest and most numerous supporters, but with many farmers no longer being paid and her cornerstone program about to expire, that support could quickly dry up.

Without the support from the agrarian farmers, Yingluck may be forced to resign from the government, or the military may be spurred into action. This would mark a stunning defeat for a prime minister who only a year ago enjoyed a tremendous amount of support.

So far the king and the military have refused to get involved. However, as protests continue and the national economy is affected, the risk of an intervention will only increase.  And should the military or King decide to get involved, Yingluck would have essentially no choice but to abide by their demands.