Thai Rice Farmers Fret About Free Trade

[webfact]

Thai rice farmers fret about free trade

by Newley Purnell

PATHUM THANI (AFP) -- For many farmers in Thailand's rice belt, agreements between Asian countries to reduce trade barriers have not brought all the benefits that national leaders promised.

"We are afraid of the free trade area," says Chatree Radomlek, a 37-year-old farmer in Pathum Thani, about an hour’s drive north of Bangkok but a world away from the capital's glitzy hotels and restaurants.

A rural community where local people boast of the nutritional benefits of eating field mice, its green paddies help make Thailand the world’s biggest rice exporter.

But where humid weather and new farming technologies used to dominate local farmers' conversations, free trade is now the hot topic.

A free trade area between the Association of Southeast Asian Nations (ASEAN), of which Thailand is a member, and China took full effect on January 1, liberalising billions of dollars in trade and investments in a market of 1.7 billion consumers.

It is the world's largest free trade area by population, eliminating barriers to investment and tariffs on 90 percent of products.

"If cheap rice comes to Thailand from other countries, it might make our prices go down. I think the government should set up measures to protect us," says Chatree, looking out from under a wide-brimmed hat.

He says that rice from neighbouring Cambodia and Laos is "inferior" but that it could flood the Thai market, possibly leading Thai consumers to buy imported rice instead and lowering domestic prices for his grains.

Another fear is that middlemen could mix Thai rice with lesser varieties of the imported grain, hurting the quality of Thailand’s product.

Bangon Radomlek, 57, says she has worked the rice fields since she was ten and adds, with a grin, that although the work is tough, "it’s a life with freedom."

"But I don’t like free trade," she says. "We only want to export. We don’t want to import. We want to be the sole producer."

Rice is big business in Thailand. The country’s Foreign Trade Department says that the nation exported 8.57 million tons of rice in 2009, worth five billion dollars.

It expects that the country will ship more than nine million tons in 2010.

The importance of rice to the economy led to a spat in recent months with fellow ASEAN member the Philippines, one of the world's biggest rice importers.

Bangkok wanted Manila to lower import tariffs on Thai rice to comply with the ASEAN free trade area but the Philippines said it could not afford to, fearing that freer trade would undercut its own rice industry.

Thailand's Commerce Ministry said the two countries had now struck a deal for the Philippines to buy 376,000 tons of Thai rice until 2014 without applying any of the usual 40 percent tariff.

The Philippines has the option, however, of not buying the rice if it produces enough for domestic consumption or finds a better price elsewhere. Manila will lower its tariff to 35 percent in 2015.

Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said the issue of rice underlines the sensitive nature of agricultural products and international trade.

He said "there are pros and cons" to free trade, meaning that while lower trade barriers could open more markets for Thailand, it also raises the prospect of cheaper rice entering the market from its neighbours.

-- ©Copyright AFP 2010-03-07

Published with written approval from AFP.

[newsfooter][/newsfooter]

[henryalleman]

"But I don’t like free trade," she says. "We only want to export. We don’t want to import. We want to be the sole producer."

no further comment.

[mahtin]

A rural community where local people boast of the nutritional benefits of eating field mice

aka rice rats

[brahmburgers]

I don't reliably understand the article, but I get the gist of bits of it. It seems to me that Thai farmers can continue to grow as much of, and as high quality as they can, and the marketplace will react accordingly. I'm probably naive, but when consumers realize there's a better quality product, they will pay a bit more for it.

Perhaps 'branding' would be helpful. Rather than saying their product is; 'Jasmine rice grown in Thailand' (which may be ok, in itself), they could get a snazzy label designed and call it something like 'Little Pearls of Siam, Grown in the _______ valley.' A good distribution network is also essential. If the consumers or middle men can't readily get hold of (or know about) your product, then it's as if the product doesn't exist.

It's weird how consumers often take the lowest common denominator in food items - even those who could afford the better stuff, often buy the cheaper stuff. Take bread, for example. Most consumers know that whole wheat is better than pure white, but they'll often pick the white starchy stuff because it's a few baht cheaper and/or it's the only type on hand where they're shopping. Then there's really good bread, but that's a rare find in Thailand, and impossible to find outside of touristy areas.

Edited March 7, 2010 by brahmburgers

[retarius]

A lightweight article with what seem to be a few silly quotes BUT it deals with an extremely important issue...our farmers and farm workers are very poor already...but the benefits of free trade will not come anywhere near them, but will go instead to the industrial sector...they are right to be very concerned.

As a reminder: 50 % of the population works on the land but agriculture is only 12% of GDP...14% of population work in the factories, which is 47% of GDP ie the GDP per capita in industrial sector is about 13 fold higher than the agricultural sector...the free trade agreement, which may well benefit the economy overall, will help only a select few, whilst a majority, or, at least, a plurality, will suffer.

Thus like other free trade agreements before, this free trade will result in the usual already rich getting richer and already poor getting poorer...this is yet another transfer of wealth from the poorest ie the farmers to the richest ie those that own the factories

[animatic]

Sadly Lao and Viet Nam rice are imported clandestinely and mixed with thai rice to

increase yield for the MILLERS AND BROKERS and then the average somchai farmer gets squat.

These protesers ask that protections be put inplace vs other countries,

without realizing there ARE protections in place now, but that those they sell their rice to

are the ones most likely to want free access to cheaper stock and bigger profits.

And this goes a ways to explain why the up country millers brokers are up in arms against

Abhisit / Korn's new rice plan, which helps the farmers prepare for the future and get a fairer deal NOW,

but cuts the profits for the middle men puyais.

[kennalder]

As a reminder: 50 % of the population works on the land but agriculture is only 12% of GDP...14% of population work in the factories, which is 47% of GDP ie the GDP per capita in industrial sector is about 13 fold higher than the agricultural sector...the free trade agreement, which may well benefit the economy overall, will help only a select few, whilst a majority, or, at least, a plurality, will suffer.

Perhaps that is because the agricultural sector is being protected. If this rice is so vastly superior, then it shouldn't be a problem getting a premium price for it. If you have a superior product, the last thing you fear is competition...UNLESS your "superior product" isn't that superior!

Here's the problem. If you protect an industry with tariffs, then the industry becomes lazy and produces a product which is inferior to it's capabilities. On top of that the industry becomes inefficient.

Now Thailand is not the only victim here. Where is that cheaper better beer that was supposed to hit the market after the first of the year? How do you say "Glass houses" and "throwing stones" in Thai?

[TerryLH]

"...when consumers realize there's a better quality product, they will pay a bit more for it."

"...even those who could afford the better stuff, often buy the cheaper stuff."

???

Edited March 7, 2010 by TerryLH

[gotlost]

A rural community where local people boast of the nutritional benefits of eating field mice

aka rice rats

Hel-l I rank rice rat up there with KFC any day.

[Ricardo]

Who was the Thai PM, when this free-trade agreement with China was signed, I wonder ? Hope these poor Thai farmers do their research, so they blame the right government, for their current troubles !

[gotlost]

Who was the Thai PM, when this free-trade agreement with China was signed, I wonder ? Hope these poor Thai farmers do their research, so they blame the right government, for their current troubles !

They won't they worship the ground he walks on.

[Soi Sauce]

Thais do not like any type of competition. You only have to look at the price of cars to be aware of this fact.

Edited March 7, 2010 by Soi Sauce

[Ricardo]

Who was the Thai PM, when this free-trade agreement with China was signed, I wonder ? Hope these poor Thai farmers do their research, so they blame the right government, for their current troubles !

They won't they worship the ground he walks on.

Quite.

There was already a problem, a couple of years back, with cheap imported-garlic replacing stronger Thai-grown varieties, I recall then-PM Samak being reported as saying how much more tasty the Thai garlic was !

Wasn't there also a minor-scandal with longan-exports to China, where a certain important local-family got first chance, at using the export-quota to get rid of their stocks at the best price ? All totally-unrelated to any hero-of-the-poor of course.

On this current problem with rice, the government might perhaps help protect local farmers, by investing more in supporting the quality-image overseas of 'Thai Jasmine-Rice', especially within ASEAN/China ? Alternatively if the consumers demand cheaper/poorer-grades, then should they be promoting the growing of these, instead ? Perhaps be encouraging use of higher-yield or less-thirsty varieties ?

It would also be good to see their recent 'windfall' invested in small dams/irrigation-schemes, to assist farmers in growing a second annual crop, raising rural-incomes in rice-growing areas. Might also be beneficial come election-time !

[Spee]

Thew news item quoted an individual as saying .....

" 'If cheap rice comes to Thailand from other countries, it might make our prices go down. I think the government should set up measures to protect us,' says Chatree, looking out from under a wide-brimmed hat. "

Unfortunately, this person is misguided and misinformed. This is precisely what happened in Japan and as a result, the Japanese people pay premium prices for both locally grown and imported rice.

Any time that governments establish tariffs and laws to "protect" producers, they end up causing major increases in local consumer prices. This is also known as the law of unintended consequences.

The price of rice has been increasing enough on its own, because of the cost of fuel. Government protectionist tariffs will do nothing but compound the problem.

What I would hope for is the Thai government to continue to recognize the strength of the natural resources that Thailand has to produce massive amounts of high quality rice for both export and local consumption.

Despite all of its internal strife and poverty, starvation has never been a problem in Thailand because of the abundance of inexpensive sources of food staples, including fruit and rice.

Put tariffs into place? Cause the price of rice to increase to the point that people can't afford it? Then there will be problems, serious problems far beyond the scope of today's political squabbles. People can do without a lot of things, but inexpensive plentiful food isn't one of them.

What Thailand should be doing is implementing policies intended to remove the costs of doing business with rice. Help with reducing the cost of getting goods to market, such as tax credits for fuel and farm machinery. Improve the roads and rails to make it easier for farmers to shop around to get the best price for their product. Sell more government owned land to the public so they can put more acreage into production. Let farmers form cooperatives to pool resources for production and sales.