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Rice Scheme Will Hurt Thais And Help Vietnam


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Rice scheme will hurt Thais and help Vietnam

By Petchanet Pratruangkrai,

Achara Pongvutitham

The Nation

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Consumers face prospect of high prices, low quality rice from Burma, Cambodia: TDRI

While consumers and taxpayers will suffer from the government's controversial rice policy, Vietnam will substantially gain, the Thailand Development Research Institute (TDRI) has warned.

Ammar Siamwalla, a prominent economist, yesterday asked the government to answer hard questions on the rice pledging scheme - its cost burden, impact on consumers, and farmers' and government ability to boost global market prices.

"As the government is set to buy paddy at Bt15,000 per tonne from farmers, it has to build up a large stockpile this year - and years later it must accumulate ever larger and larger stockpiles in order to maintain these high prices, which will in the end lead to high costs for taxpayers," Ammar warned at a TDRI press conference yesterday.

When the government releases rice from the stockpile, the price would drop in the global market, which would result in more losses. "It's a dilemma," he said.

High prices would hit consumers and if the government provided a subsidy to consumers, the cost burden to the public would be ever higher, said Ammar, a distinguished scholar at the independent think-tank.

"Thai consumers may have to queue to purchase cheaper rice, subsidised and sold by the government, while rocketing high prices will force Thai rice out of the world market. But rice export rivals, such as Vietnam will gain substantially," he warned.

He was pessimistic about the government's capacity to boost prices in the global market, or that the market price would increase due to an expected high demand. "The government is whistling in the dark," he said.

Responding to Deputy Prime Minister Kittiratt na Ranong who said the government may ask farmers to reduce rice production to keep prices high, Ammar argued that the government could not tell farmers to cut rice production if it faced having too much stock.

"Farmers have the freedom to grow rice. Even in past times of absolute monarchy, the farmers could not be forced to do so," he said.

Although food prices were expected to increase, demand for rice consumption per capita, in particular in emerging economic nations, was likely to drop gradually each year, as affluent consumers shift to spend more on other items, Ammar explained.

TDRI's study said the Thaksin government had faced a loss of Bt19.13 billion from rice pledging in 2005/06 by pledging 5.24 million tonnes of rice, while the income guarantee by the Abhisit regime recorded a loss of only Bt7.38 billion in 2009.

Some 300-500 millers from 2,000 mills, and 10-20 giant exporters would benefit from the pledging scheme. Only 500,000 farmers from a total of four-million households stood to gain from rice pledging, TDRI chairman Nipon Poapongsakorn said. Outstanding costs totalling Bt141 billion from the rice subsidy in 2005 to 2009, included a smaller Bt44.6 billion incurred from the income guarantee scheme.

He said farmers would ignore developing grain quality as the government had set up a high pledging price without regard to rice quality.

The pledging project would draw a flood of rice from Cambodia and Burma. The market mechanism would be destroyed and only millers and a few exporters who joined the pledging scheme would survive, as the state would monopolise rice trading. Past attempts by the Thaksin government to form a rice cartel with Vietnam in order to influence global prices had been a proven failure, he noted.

The new government blames the Democrats' income guarantee scheme for not increasing rice prices, and says that is why it plans to resume the controversial price-pledging scheme.

Sumeth Laomoraphorn, CEO of CP Intertrade, yesterday drew strong support for the government rice pledging policy, saying the vision was in the right direction by foreseeing world's rice stocks at a low level while the price was trending upward.

According to futures stock prices of four key commodities - rice, wheat, maize and soybean - the rice price has not been adjusted in line with those other three crops. Moreover, rice prices have been exported at lower prices than they should have.

Major rice exporters such as the US, Vietnam and Pakistan have low stockpiles while export volumes are rising. Stockpiles in Thailand and Vietnam have reached 8 and 2.1 million tonnes respectively. But Thailand's export share is 30 per cent, and Vietnam 20 per cent, of the average global trade of 31-32 million tonnes of rice a year.

Sumeth urged the government to undertake a policy mix between income guarantee and pledging to shore up Thai rice prices. "The income guarantee scheme will directly pay compensation to farmers while pledging will shore up the price when it goes down," he said.

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-- The Nation 2011-09-05

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Yesterday I talked with a Thai rice farmer/trader/ricemillowner, he wasn't worried at all that the business would go down, he said that if the Thai rice price goes up, so will the Vietnamese, it's been going like that for the past 100 years. Besides that the demand for Thai rice will stay high because it's better quality then rice from other countries.

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Yesterday I talked with a Thai rice farmer/trader/ricemillowner, he wasn't worried at all that the business would go down, he said that if the Thai rice price goes up, so will the Vietnamese, it's been going like that for the past 100 years. Besides that the demand for Thai rice will stay high because it's better quality then rice from other countries.

That is exact how it is. We've seen this trick before, just a few years ago.

I think the ThaiVisa news is rather colored instead of well thought-out and objective.

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I've been to several large rice milling places in northernmost Thailand, and they all seem to be owned by Chinese or Chinese Thais.

In a general sense, this bit of news sounds like a others bits we've been hearing - and is setting a pattern for Ms Yinglucks leadership style.

She gets direction from her brother from afar. She delegates its implementation to her inner circle. A short while later, the policy gets looked at closely by experts and is found to be seriously flawed. However, the policy shift is already in motion, so there's no possibility of adjusting it for reason or fiscal sanity. This is happening with the campaign promises of 'tablets for all schoolkids' and for 'minimum wages and guaranteed starting salaries.'

Sit back and get ready for an avalanche of ill-thought out policies from Yingluck and her minders, all trying to comply with their motto "Thaksin Thinks, Puea Thai Acts". Then, after the policies are announced, will come the inevitable scrutiny by experts and common folk, and the policies will likely be shown to be seriously flawed. Over and over.

Perhaps we can call it the "Aircraft Carrier For Thailand" way of doing business.

Edited by maidu
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Some people (including many Thai) have the idea that Thaksin is a terrific businessman and so therefore he must have good business ideas.

However Thaksin made his millions/billions in very nefarious ways ... mostly by using his connections, beginning with his police colleagues, to use the "law" to either do away with his competitors and/or create monopolies for his various activities and operations. As he climbed the "hiso" ladder he learned how to manipulate the law in more sophisticated ways. And then he learned how to manipulate people and sections of society with his PR and spin machine.

Take a critical look at Thaksin's business enterprises. Are there any successful examples where he competed with legit business on a level playing field? Are there any examples of his businesses actually creating anything or providing a service or product that people need/want? He can use his connections to buy Govt land cheap and sell it for expensive prices, (and rip off the Thai people in the process and amazingly be respected for it ), or when he's PM make a deal with Burma's junta to have a phone monopoly in Burma, etc etc etc ... and fiddle around with his various companies and stock holdings to escape paying taxes so he can make more millions when he sells them.

These kinds of monopolistic and exploitative business operations are really bad for any economy. When he had a monopoly over the mobile phone business in Thailand, he made hand over fist at the expense of Thai people who were paying extraordinary prices for mobile phones and their usage. The Govt and pressure finally brought an end to his monopoly but his legacy lives on in the realities of the Thai mobile phone (and IT) industry. It takes a while to correct the distortions. Yet Thaksin seems to be admired by so many Thai people because he amassed such a fortune ripping them off.

Why anyone other than mafiosa would seriously listen to any business, not to mention economic, advice from him is hard to understand. But then again ... "TIT" .... so I am no longer shocked at what I read in the headlines.

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Some people are making a lot of money out of rice,but it isn't the farmer.

Just heard on the news today there are 150 rice export companies in Thailand. Of that 150 two companies export over 60% of all Thai rice and the other 148 share 40%. Would love to know which 2 families are sharing 60%

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Yesterday I talked with a Thai rice farmer/trader/ricemillowner, he wasn't worried at all that the business would go down, he said that if the Thai rice price goes up, so will the Vietnamese, it's been going like that for the past 100 years. Besides that the demand for Thai rice will stay high because it's better quality then rice from other countries.

That is exact how it is. We've seen this trick before, just a few years ago.

I think the ThaiVisa news is rather colored instead of well thought-out and objective.

Colour is strong yellow

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Billions upon billions of baht spent to prop up an industry (sadly in need of reform) because it is inherently labour intensive, and those labourers vote.

Now the smaller (but accurately directed to the farmer) will be replaced by a huge handout most of which will never reach its nominated recipients. What will happen when farmers realise the B15,000/tonne is going to the millers and not to them?

Sumeth Laomoraphorn, CEO of CP Intertrade would like a mix of the 2 schemes. Being one head of a rice-milling company, I suppose he would. But I would like him to explain why " rice prices have been exported at lower prices than they should have." Strange thing to happen on an international free market. He notes that Pakistan and Vietnam have "low" stockpiles of 30% of annual world demand, just enough to satisfy the market if Thailand exports NO / ZERO / NADA rice for a year. Of course they won't completely price themselves out of the market, but they may increase the move to other basic foods - Australia looks to have a bumper wheat crop with no El Nino effect.

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Yesterday I talked with a Thai rice farmer/trader/ricemillowner, he wasn't worried at all that the business would go down, he said that if the Thai rice price goes up, so will the Vietnamese, it's been going like that for the past 100 years. Besides that the demand for Thai rice will stay high because it's better quality then rice from other countries.

That is exact how it is. We've seen this trick before, just a few years ago.

I think the ThaiVisa news is rather colored instead of well thought-out and objective.

Could you please explain your concept of a "trick" which manipulates an international free market?

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Billions upon billions of baht spent to prop up an industry (sadly in need of reform) because it is inherently labour intensive, and those labourers vote.

Now the smaller (but accurately directed to the farmer) will be replaced by a huge handout most of which will never reach its nominated recipients. What will happen when farmers realise the B15,000/tonne is going to the millers and not to them?

Sumeth Laomoraphorn, CEO of CP Intertrade would like a mix of the 2 schemes. Being one head of a rice-milling company, I suppose he would. But I would like him to explain why " rice prices have been exported at lower prices than they should have." Strange thing to happen on an international free market. He notes that Pakistan and Vietnam have "low" stockpiles of 30% of annual world demand, just enough to satisfy the market if Thailand exports NO / ZERO / NADA rice for a year. Of course they won't completely price themselves out of the market, but they may increase the move to other basic foods - Australia looks to have a bumper wheat crop with no El Nino effect.

Well said Mick, and it pays to remember what the Australian Wool Corporation did to that commodity. At one stage it was suggested they burn the stock pile as releasing it onto the world market would have decimated the industry. And the Australian Wheat Board have been in the papers for all the wrong reasons lately.

History has proven that market forces are the best regulator and Thailand is a very efficient rice producer. The exisiting system isn't perfect, but this proposal doesn't sound like it will make things any better from the hapless farmer's perspective.

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Any Europeans here remember the "Milk Lake" and "Butter Mount" a few years ago in the EU, which were off-loaded at knock down rates to clear stock when storage ran out, while the shop prices soared, due to Government Subsidies to pay the farmer more. OK, some went to Eastern Bloc countries as Governmental food help, but even they could not consume enough.

How do you tell a farmer to grow less, when you cannot predict the weather in 6 months and may suffer a crop failure. He fights NATURE more than GOVERNMENTS !

Edited by grahamhc
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I'm still surprised that people go over the moon over such issues. None of the Thaivisa members is involved in rice growing/trading (as this is prohibited for "Aliens"). So we all know that the more the government screws around in the private industry the more can go wrong (and always goes wrong). Hence the answer is:- a fair law appicable to all (maybe a challenging outlook for our host country)- implementation of the law, which must be above the government (another challenge waiting around the corner for Thailand)- let markets push/drop prices in accordance with market needs and quality outputs (woaw, another challenge for Thailand)As an elder fart in this part of the world I remember Burma and Vietnam IMPORTING rice to satisy their local needs some 20+ years ago while the Thais always had a top quality rice without professionally keeping this rice above board. A quarter of a century later it is proved, that the Burmese and Vietnamese made their homework and are exporting again (as the Indonesians too, by the way). The only ones still standing around not knowing what had happened are the Thai buffalos in the Northeastern rice fields as they are being - as mentioned earlieron - screwed around by the never ending chain of "governments". Miracle Thailand indeed!

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Both Australia and the USA are rice producers and without bothering to do any research, I can tell you that they are broad-acre enterprises with huge tonnage output per man-hour compared to Thailand. The US may offer some farmer assistance, in Australia there will be none.

To modernise the Thai rice industry would cause massive social upheaval. Hundreds of farmers currently scraping a living will be put out of work and their villages will be abandoned, along with their support services (shops, schools, clinics, trucking and bus services), and urbanisation will cause more huge problems. But it needs to be done.

Why? because it is completely irrational to subsidise the income of a large part of the population because inefficient farming methods keeps them poor. The income subsidies drain the treasury of the funds to improve the education system (and all other govt services) which will allow them to improve their lifestyle. It will take a long-view government to start farm amalgamation with a population who looks no further ahead than who is offering the biggest subsidy. Don't expect it to start soon.

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Both Australia and the USA are rice producers and without bothering to do any research, I can tell you that they are broad-acre enterprises with huge tonnage output per man-hour compared to Thailand. The US may offer some farmer assistance, in Australia there will be none.

To modernise the Thai rice industry would cause massive social upheaval. Hundreds of farmers currently scraping a living will be put out of work and their villages will be abandoned, along with their support services (shops, schools, clinics, trucking and bus services), and urbanisation will cause more huge problems. But it needs to be done.

Why? because it is completely irrational to subsidise the income of a large part of the population because inefficient farming methods keeps them poor. The income subsidies drain the treasury of the funds to improve the education system (and all other govt services) which will allow them to improve their lifestyle. It will take a long-view government to start farm amalgamation with a population who looks no further ahead than who is offering the biggest subsidy. Don't expect it to start soon.

Basically the writing is on the wall for small agricultural producers, they have to improve their competitiveness. One way the small guys can survive is to form collectives where they can get better deals and some economies of scale. Subsidies are the worst thing you can do, apart from being politically very difficult to get rid of, it just props up inefficient practices making the inevitable hard landing a lot worse when it finally comes.

At least the government is backtracking on this one, saying its just a "trial for a year". Don't expect it to be continued, because it obviously unsustainable and they know it.

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Both Australia and the USA are rice producers and without bothering to do any research, I can tell you that they are broad-acre enterprises with huge tonnage output per man-hour compared to Thailand. The US may offer some farmer assistance, in Australia there will be none.

To modernise the Thai rice industry would cause massive social upheaval. Hundreds of farmers currently scraping a living will be put out of work and their villages will be abandoned, along with their support services (shops, schools, clinics, trucking and bus services), and urbanisation will cause more huge problems. But it needs to be done.

Why? because it is completely irrational to subsidise the income of a large part of the population because inefficient farming methods keeps them poor. The income subsidies drain the treasury of the funds to improve the education system (and all other govt services) which will allow them to improve their lifestyle. It will take a long-view government to start farm amalgamation with a population who looks no further ahead than who is offering the biggest subsidy. Don't expect it to start soon.

Many (most?) small rice farmers can't make ends meet anyway. Many still harvest by hand, partly because it gives a better yield, but also because they can't afford to rent machinery, and in reality, they have nothing else to spend their time on anyway. The money for basic household goods comes from the daughter working in a bar in Pattaya. It's a very sad situation indeed, and one can only guess what the real unemployment rate in Thailand is.

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Some people are making a lot of money out of rice,but it isn't the farmer.

Just heard on the news today there are 150 rice export companies in Thailand. Of that 150 two companies export over 60% of all Thai rice and the other 148 share 40%. Would love to know which 2 families are sharing 60%

Sumeth Laomoraphorn, CEO of CP Intertrade, yesterday drew strong support for the government rice pledging policy, saying the vision was in the right direction by foreseeing world's rice stocks at a low level while the price was trending upward.

Don't suppose that he has a vested interest (on the supplier side of things) by any chance!!! I'm sure that he thinks it's a good thing because of all the extra money he will be able to make!!! He couldn't care less about what will happen to "Joe average" farmer as they will be the ones making him a fortune whilst they suffer more so than they are doing now, thank you very much!!!:blink:

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Rice farming should be a smaller portion of what Thai farmers produce. Every year we hear of droughts - throughout Thailand. Rice is a water guzzler and entails large amounts of chemi spray. Whether it needs so much chemi is debatable, but every time I drive around they countryside I see heavy spraying. Think about that when your Thai g.f./ wife or child eats rice for each of their 3 meals a day.

If the talking heads in Bkk were smart, they would assist Thai farmers in growing better crops - which yield higher value returns and don't demand lots of water. Instead of the trillion+ baht plan to pump billions of liters of water to Issan (won't work, btw), spend a small portion of that to help the farmers.

Thais like to do things ensemble. A half hour's drive from me, there are pineapple vendors by the hwy. You might think some vendors would offer a different item - in case some consumers might want an alternative fruit. But no, it's 20 miles of only pineapple vendors - not one other fruit, until you hit the 5 mile stretch of strawberry vendors - then it's only strawberries (fields) forever. Anyone familiar with Thailand has seen the same sorts of repetition in the marketplace: with clothes, prepared food, you name it. Thais need to learn to buck the trend, rather than stay safe and fixated in the herd mentality.

Just a few drought resistant crops that have a better market value than rice: hemp (outlawed in Thailand), Brazil Noi nut trees , agave (for tequila or for ethanol), jojoba (oil for cosmetics), avocado (food and cosmetic oil), aloe (drink and cosmetics, shampoo), jatropha (its untreated oil can replace diesel), spineless opuntia (animal fodder), .....the list goes on.

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It was not too long ago i read that Thailand was trying to introduce genetically modified Rice

If anyone has seen the documentary Food.inc - A GM crop of rice would certainly have total control...

Somee is fuc_king the farmers and you call it " Genetically Modified ? ""

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This is from the Pheu Thai election campaign period, so I guess it''s really unfair to quote from it :D

""City dwellers may ask if the rice price would then climb up? From data, we produce 30 million tonnes of paddy rice per year, or 20 million tonnes of polished rice. Thais consume 10 million tonnes and the rest is exported. We will have a mechanism in place to ensure that domestic price is not too expensive while exports are carried out in a thorough way," he said.*"

http://www.nationmultimedia.com/2011/05/23/business/Pheu-Thai-proposes-new-income-distribution-method-30155993.html

(*) chief economic strategist Olarn Chaipravat

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Yesterday I talked with a Thai rice farmer/trader/ricemillowner, he wasn't worried at all that the business would go down, he said that if the Thai rice price goes up, so will the Vietnamese, it's been going like that for the past 100 years. Besides that the demand for Thai rice will stay high because it's better quality then rice from other countries.

That is exact how it is. We've seen this trick before, just a few years ago.

I think the ThaiVisa news is rather colored instead of well thought-out and objective.

Colour is strong yellow

And your glasses are red.

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Some people (including many Thai) have the idea that Thaksin is a terrific businessman and so therefore he must have good business ideas.

However Thaksin made his millions/billions in very nefarious ways ... mostly by using his connections, beginning with his police colleagues, to use the "law" to either do away with his competitors and/or create monopolies for his various activities and operations. As he climbed the "hiso" ladder he learned how to manipulate the law in more sophisticated ways. And then he learned how to manipulate people and sections of society with his PR and spin machine.

Take a critical look at Thaksin's business enterprises. Are there any successful examples where he competed with legit business on a level playing field? Are there any examples of his businesses actually creating anything or providing a service or product that people need/want? He can use his connections to buy Govt land cheap and sell it for expensive prices, (and rip off the Thai people in the process and amazingly be respected for it ), or when he's PM make a deal with Burma's junta to have a phone monopoly in Burma, etc etc etc ... and fiddle around with his various companies and stock holdings to escape paying taxes so he can make more millions when he sells them.

These kinds of monopolistic and exploitative business operations are really bad for any economy. When he had a monopoly over the mobile phone business in Thailand, he made hand over fist at the expense of Thai people who were paying extraordinary prices for mobile phones and their usage. The Govt and pressure finally brought an end to his monopoly but his legacy lives on in the realities of the Thai mobile phone (and IT) industry. It takes a while to correct the distortions. Yet Thaksin seems to be admired by so many Thai people because he amassed such a fortune ripping them off.

Why anyone other than mafiosa would seriously listen to any business, not to mention economic, advice from him is hard to understand. But then again ... "TIT" .... so I am no longer shocked at what I read in the headlines.

I 100% agree, Khun T. is not a real antrepreneur but he is a mainpulateur.

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Thai rice subsidy scheme to push up world prices

Thailand's plan to pay its rice growers far above market rates is expected to push up prices for the staple that feeds almost half the world's people as rice importing nations look to other countries for tightened supplies. A new government in Thailand, the world's biggest rice exporter, has promised growers higher prices for rice in a scheme that will take effect Oct. 7. It's putting no limit on the amount of rice it will buy.

Thailand's rice exporters say they will ship less overseas because they will be unable to compete with the price the government pays. That in turn will tighten the global rice market, forcing up the staple's price in other countries. The U.S. Department of Agriculture forecasts that Thailand's rice exports will drop 20 percent to 8 million metric tons in 2012 because of the rice buying scheme.

That could see Vietnam overtake Thailand as the No. 1 exporter.

Thailand first introduced a rice subsidy scheme in 2004 during the government of Thaksin Shinawatra. The scheme was criticized for graft and its high cost. A 2010 study by Thailand Develop Research Institute found that the earlier rice buying program caused losses of 19.1 billion baht for the government in 2005. It said the program was "plagued with corruption at all stages" and that most of the benefits did not go to the farmers.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2011/09/09/financial/f032509D60.DTL#ixzz1XSaL3zMj

San Francisco Chronicle - 27 minutes ago

.

Edited by Buchholz
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Apparently conventional economics doesn't apply in Thailand.

For sure, Mrs.Ricardo recently informed me that her weekly housekeeping-money was to be increased, "I am Demand and you are Supply". :rolleyes:

I bow (or kow-tow) to her superior knowledge of economic-theory ! :lol:

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Likewise , Ricardo.

" 'Er what spends the money also told 'im as earns the money, '' everything up no money no honey.''

The three boys plaintive wail, " money for school and pocket Papa not enough now."

Let's face it, Thaksin and the P.T.P ( Personal Thaksin Property ) are giving Thailand and its people the one thing money cannot buy, "POVERTY"

9918.jpg

P.T.P. financial adviser, lifestyle untouched by reality and the modern world.

Edited by siampolee
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Rice farming should be a smaller portion of what Thai farmers produce. Every year we hear of droughts - throughout Thailand. Rice is a water guzzler and entails large amounts of chemi spray. Whether it needs so much chemi is debatable, but every time I drive around they countryside I see heavy spraying. Think about that when your Thai g.f./ wife or child eats rice for each of their 3 meals a day.

If the talking heads in Bkk were smart, they would assist Thai farmers in growing better crops - which yield higher value returns and don't demand lots of water. Instead of the trillion+ baht plan to pump billions of liters of water to Issan (won't work, btw), spend a small portion of that to help the farmers.

Thais like to do things ensemble. A half hour's drive from me, there are pineapple vendors by the hwy. You might think some vendors would offer a different item - in case some consumers might want an alternative fruit. But no, it's 20 miles of only pineapple vendors - not one other fruit, until you hit the 5 mile stretch of strawberry vendors - then it's only strawberries (fields) forever. Anyone familiar with Thailand has seen the same sorts of repetition in the marketplace: with clothes, prepared food, you name it. Thais need to learn to buck the trend, rather than stay safe and fixated in the herd mentality.

Just a few drought resistant crops that have a better market value than rice: hemp (outlawed in Thailand), Brazil Noi nut trees , agave (for tequila or for ethanol), jojoba (oil for cosmetics), avocado (food and cosmetic oil), aloe (drink and cosmetics, shampoo), jatropha (its untreated oil can replace diesel), spineless opuntia (animal fodder), .....the list goes on.

Another thoughtul post from maidu

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