KHON KAEN – As the Pheu Thai government launches its rice mortgage scheme today in 31 provinces, experts fear that the new policy will offer little benefit to small-scale farmers and instead invite increased graft and corruption among millers and national politicians. Many of Thailand’s rural rice farmers, on the other hand, commend the policy as one that actually helps discourage corruption at the village level.

“Abhisit’s rice price guarantee policy—it’s the same as teaching farmers how to be corrupt,” said Mr. Udom Phanphrasee, a jasmine and sticky rice farmer in Ban Yan Yong village in Khon Kaen Province. “I sometimes only planted five rai on my 18 rai of land, and I would get the price guarantee for all 18 rai,” he said with a smirk. (One rai is roughly equivalent to two-fifths of an acre.)

Today, these farmers welcome not only a promised salary increase, but also a pro-business policy that they believe rewards hardworking farmers and enables the informal labor market to reap more benefits.

The campaign promise of Prime Minister Yingluck Shinawatra won the hearts and votes of the rural constituency much as it had for former Prime Minister Thaksin Shinawatra, Ms. Yingluck’s older brother. Ms. Yingluck’s policy raises the price of rice nearly 50%, offering farmers mortgages of 20,000 baht for one ton of unmilled jasmine rice and 15,000 baht for one ton of unmilled white and sticky rice.

Under Abhisit’s price guarantee policy, landowning farmers could register with the local office of the Agriculture Bank (BAAC) as soon as they had planted their rice. Government representatives from the bank would calculate the landowners’ expected rice production and later pay the landowners the difference between the market value and the government-guaranteed price. Though representatives of the Agriculture Bank claim that farmers’ paddies were frequently monitored, the farmers of Ban Yan Yong village talk openly about how trickery and corruption at the village level were par for the course.

Ms. Jongkolrat Kanruensri, the manager of the Khon Kaen branch of the Agriculture Bank, recognized this tendency. “Under Abhisit’s plan, people with mortgages often didn’t have as much rice as they claimed they did,” she said in an interview.

Many villagers complain that landowners would bribe or beg neighbors to falsely vouch for how much rice they had planted. With signatures of witnesses, the landowners could trick government representatives by under-planting on their fields, poorly tending to their rice plants, or claiming floods ruined land that had never even been seeded. Ultimately, landowners were often rewarded for the number of rai they owned and not for the amount of rice they actually harvested.

“I thought Abhisit’s policy was good because the government subsidized us just for being rice farmers. But it was bad when people started taking advantage of that,” said Mrs. Nongyao Reuthaphrom, a 27-year-old sticky rice farmer.

Under Pheu Thai’s new mortgage policy, farmers are rewarded with a loan only after they have harvested their rice. This way, villagers argue, landowners cannot lie about how much rice they are producing.

Prof. Somporn Isvilanonda of the Knowledge Network Institute of Thailand (KNIT) explained in an e-mail interview that he, like most academics, is more concerned with the opportunities for corruption in Ms. Yingluck’s plan than he was in Mr. Abhisit’s. “[Under Abhisit,] there could be minor corruption at the cultivated-area registration process,” wrote Prof. Somporn. “But I consider it to be very small.”

Instead, Prof. Somporn focuses on how poorly regulated rice millers, for example, now have more incentive to replace good quality rice with poor quality rice. In addition, national politicians who are assigned to specific mills are each asked to meet a certain quota of rice. This mandated relationship between the millers and the politicians, the National Rice Committee member argues, can often lead to increased corruption.

Ban Yan Yong farmers, however, are less concerned about corruption that occurs at the mills and more concerned with the ways in which this policy brings fairer pay to its community members.

With the launch of Pheu Thai’s rice mortgage policy, some farmers are also glad to see a return to a system that helps support those who informally rent land from their wealthier neighbors. According to a 2011 World Bank report, Thailand’s informal agriculture workforce stands at 14.4 million people, a large percentage of which farms rice. Under Abhisit’s price guarantee policy, landlords could exploit millions of these farmers because it was the landlords, and not their tenants, who directly received the price difference between the market value and the guaranteed price. Now, it is hoped that the renters will have more leverage since the rice is what is valued and not the land.

One farmer from Ban Nong Ngu Leuam village said that in her community most landowners with over 20 rai of land typically have renters. “Those who are renting the land will pay the landowner a rental fee and then try to sell their harvested rice commercially. But under Abhisit, the landowner received the price difference and never had to pay it over to the renter.”

“If people were honest all of the time, Abhisit’s policy would work. But people aren’t honest,” said Mr. Somjai Reuthaphrom who rents five rai of land from one of his neighbors in Ban Yan Yong village. Mr. Somjai has seen many of his renter friends weather plummeting incomes under Abhisit’s administration. Greedy landlords chose not to pay their renters the difference between the market price and the guaranteed price that the they had received from the government.

With Pheu Thai’s policy in place, Mr. Somjai and others believe that the informal agriculture sector will see far greater rewards. As the price of rice increases nearly 50%, now land renters’ salaries should increase as well.

“Many people cheat,” griped a Ban Nong Ngu Leuam farmer who asked to remain anonymous. “But the Pheu Thai policy prevents rice field owners from taking advantage of the government and the people working on their fields,” she concluded.

Pheu Thai’s rice mortgage policy is scheduled to end on February 29, 2012.