Experts Worry Over Fiscal Impact Of Rice-Subsidy: Thailand

[webfact]

RICE SUBSIDY

Experts worry over fiscal impact of rice-subsidy

By Wichit Chaitrong

The Nation

The cost of the rice-subsidy scheme threatens fiscal sustainability and may leave the government with little money for much-needed investment in infrastructure projects, experts have warned.

The cost of populist policies such as tax breaks for first-time buyers of vehicles and homes, and a guaranteed monthly income of Bt15,000 for newly graduated civil servants, will not be very high, said Narongchai Akrasanee, economist and former commerce minister.

"But we are worried about the rice-pledging scheme, as we don't know how much it will cost," he said yesterday on the sidelines of a seminar on fiscal sustainability hosted by the Fiscal Policy Research Institute, which is part of the Finance Ministry.

The Pheu Thai-led government will start to implement the rice-pledging project next month, with the party having promised during its election campaign to buy rice from farmers at the high prices of Bt15,000 per tonne for white rice and Bt25,000 per tonne for fragrance rice.

Olarn Chaipravat, adviser to Prime Minister Yingluk Shinawatra, earlier said the government would buy up to 25 million tonnes of rice from farmers at a cost of about Bt400 billion in the first year.

Kanit Sangsubhan, director of the Fiscal Policy Research Institute, shared Narongchai's concern, saying that the damage caused by the cost of the rice-pledging scheme was difficult to estimate.

"Populist policies implemented by governments have drawn money away from much-needed investment in infrastructure projects,"he said.

For example, the farmers' income-guarantee scheme implemented by the Abhisit Vejjajiva administration cost as much as Bt55 billion.

"If the damage from the new government's rice-subsidy programme is not great, then we will have a cushion, but we don't know how much of a negative impact [on the fiscal position] there will be," he added.

Kanit said the country over the next five years needed to invest about Bt4.4 trillion in water management, railroads, port facilities, energy and healthcare in order to improve its competitiveness. Water management alone, including measures to prevent flooding, requires an investment of about Bt300 billion over the period.

Gross investment, public and private, has declined sharply since the 1997 financial crisis to 25 per cent of gross domestic product from 1997 to 2010, against 39 per cent of GDP between 1993 and1997.

Public investment should be about 25 per cent of the annual budget, but it has not yet met the target, currently standing at just 19 per cent, he said.

Ticking time bomb

The rising cost of the Social Security Fund, the universal healthcare scheme and student loans will also pose a greater risk to government finances, Kanit warned.

He said the social-security burden would rise to Bt430 billion over the next 40 years, if there is no reform. Reform is therefore needed to lower the fiscal burden in order to support universal healthcare and student loans.

He said the government may need to increase value-added tax from 7 per cent to 10 per cent in 2014, as the plan to cut corporate income tax to 20 per cent will result in a revenue loss of Bt160 billion annually.

Tax reform could help the government to balance the budget in 2016, he added.

-- The Nation 2011-09-22

[webfact]

Thai Rice Exporter Association voices concern over govt policy

BANGKOK, 22 September 2011 (NNT) - Thai Rice Exporter Association has voiced concern over the government’s rice pledging scheme, which it fears, will boost competitive edge of other exporting countries.

The Association explained that the well-meant scheme, which the government expects to push up Thai rice prices in the world market, was likely to cause customers to turn to cheaper products from Vietnam.

The Yingluck government plans to buy jasmine rice at 20,000 THB per ton. Other kinds of rice are offered at 13,800 to 18,000 THB per ton. It is estimated that the rice pledging program will push Thai white rice on the world market currently sold at about US$600 per ton to a new high of $800-$850 per ton.

The Association disclosed that the neighboring country had begun to hoard rice in order to adjust prices upwards. Despite the price increase, Vietnamese rice will still be US$ 250-300 cheaper than Thai rice per ton.

Most importers of Vietnamese rice are ASEAN countries while African countries are major customers of Thai rice.

-- NNT 2011-09-22

[SICHONSTEVE]

Numbers has never been the strongest point of Thaksin oriented governments!!!!:jap:.

[TheWhiteFella]

Numbers has never been the strongest point of Thaksin oriented governments!!!!:jap:.

But numbers buy votes... a politician makes promisses the counrty can not afford and the people vote themselves a raise seems to work every time ,,,, of course the western world is suffereing the consiquences of such politics,,

[puipuitom]

But numbers buy votes... a politician makes promisses the counrty can not afford and the people vote themselves a raise seems to work every time ,,,, of course the western world is suffereing the consiquences of such politics,,

During WW 1 Mr Lloyd George won the elections in UK with the promise to get 300 billion Rechsmark from Germany. His financial specialist, Keynes, calculated, 10 billion could be the absolute max, was.. nobody listened. The end result was a few billion.

In Greece every government promised more, tax forgotten, and.. the country now banckrupt, with risk - seen about the same atitude in Italy- bringing the entire EU into danger.

In Thailand even, nobody asks the question: why a politician is willing to pay me and my fellows, if we vote for him/her. Why so eager to get this job ? Does it bring more in as all these vote buying ? In fact government's = tax = MY money ?

[houseinbkk]

The current price of white rice is 600 USD = 18423 BHT.

If the govt are buying this for between 13-18k BHT and they only put a few% mark up, to cover admin and bribery costs how will this mean rice will go up in price to 800-850USD per ton.

[rubl]

Kanit Sangsubhan, director of the Fiscal Policy Research Institute, said the government may need to increase value-added tax from 7 per cent to 10 per cent in 2014, as the plan to cut corporate income tax to 20 per cent will result in a revenue loss of Bt160 billion annually.

Companies and especially large companies will get their tax burden lightened and who pays the bill? Who but the normal people. A VAT increase from 7% to 10% would be a heavy burden on the poor especially. 'Eating away' the daily wage increase to 300 Baht

[djlest]

Its not about the country - its about the vote!

And Rice is all about the Rural Vote

Putting the country into a hole in the future doesn't matter - they can always smokescreen figures cos the rural never care about politics anyway - they are only motivated by what green is given to them by PT.

Its all about the Green Vote - and they don't mean the enviroment!

[JoeCard]

Many senior members here too senior to understand that between the tw options:

1. Rice subsidized by the farmers, the poorest in the Thai social scale

2. The government, with all the curruption subsidized by the have not,

The most obvious social action is for the Government to subsidize the Rice farmers paying them a FAIR price...this is no give away.

Relative well off seniors living of their rents cannot relate with the hardship of the farmers this government is committed to ease.

Is only understandable that if the welfare of the farmers improve, the dear old senior members will have to move on with their pensions to a country where their lollies are cheaper and with a plentiful supply of farmers daughters selling themselves to keep Papa and Mama afloat.

i would call any effort to change this inequality Justice not Populism.

[philw]

Many senior members here too senior to understand that between the tw options:

1. Rice subsidized by the farmers, the poorest in the Thai social scale

2. The government, with all the curruption subsidized by the have not,

The most obvious social action is for the Government to subsidize the Rice farmers paying them a FAIR price...this is no give away.

Relative well off seniors living of their rents cannot relate with the hardship of the farmers this government is committed to ease.

Is only understandable that if the welfare of the farmers improve, the dear old senior members will have to move on with their pensions to a country where their lollies are cheaper and with a plentiful supply of farmers daughters selling themselves to keep Papa and Mama afloat.

i would call any effort to change this inequality Justice not Populism.

Excellent and on the button.

The farmers have been screwed for generations here.

Maybe real change is in the air....and about time too.

[Crushdepth]

The government has no intention of sustaining this scheme. All the handouts are geared towards one thing - increasing government popularity in the lead up to granting Thaksin an amnesty. Once that's done the electorate can jam it.

[OzMick]

Many senior members here too senior to understand that between the tw options:

1. Rice subsidized by the farmers, the poorest in the Thai social scale

2. The government, with all the curruption subsidized by the have not,

The most obvious social action is for the Government to subsidize the Rice farmers paying them a FAIR price...this is no give away.

Relative well off seniors living of their rents cannot relate with the hardship of the farmers this government is committed to ease.

Is only understandable that if the welfare of the farmers improve, the dear old senior members will have to move on with their pensions to a country where their lollies are cheaper and with a plentiful supply of farmers daughters selling themselves to keep Papa and Mama afloat.

i would call any effort to change this inequality Justice not Populism.

Excellent and on the button.

The farmers have been screwed for generations here.

Maybe real change is in the air....and about time too.

My dear old Dad gave me some good advice - If your doing your best and still can't make enough money, change your job.

Farmers are not indentured servants or slaves, in a free market economy they have the right to whatever employment suits them, but they persist at rice farming. If the govt stopped subsidising their pittance lifestyle, they might sell up, get a haircut, and get a real job - in the meantime moving a few centuries ahead.

[philw]

The government has no intention of sustaining this scheme. All the handouts are geared towards one thing - increasing government popularity in the lead up to granting Thaksin an amnesty. Once that's done the electorate can jam it.

How do you know ???

[philw]

Many senior members here too senior to understand that between the tw options:

1. Rice subsidized by the farmers, the poorest in the Thai social scale

2. The government, with all the curruption subsidized by the have not,

The most obvious social action is for the Government to subsidize the Rice farmers paying them a FAIR price...this is no give away.

Relative well off seniors living of their rents cannot relate with the hardship of the farmers this government is committed to ease.

Is only understandable that if the welfare of the farmers improve, the dear old senior members will have to move on with their pensions to a country where their lollies are cheaper and with a plentiful supply of farmers daughters selling themselves to keep Papa and Mama afloat.

i would call any effort to change this inequality Justice not Populism.

Excellent and on the button.

The farmers have been screwed for generations here.

Maybe real change is in the air....and about time too.

My dear old Dad gave me some good advice - If your doing your best and still can't make enough money, change your job.

Farmers are not indentured servants or slaves, in a free market economy they have the right to whatever employment suits them, but they persist at rice farming. If the govt stopped subsidising their pittance lifestyle, they might sell up, get a haircut, and get a real job - in the meantime moving a few centuries ahead.

So easy ??

You clearly know not a thing about rural Thailand or Asia.

Please explain how people trapped in a subsistence rural environment have the "right to whatever employment suits them...." and can achieve that right.

Your reference to haircuts does not do justice and probably reflects your tonsorial style.

[rubl]

The government has no intention of sustaining this scheme. All the handouts are geared towards one thing - increasing government popularity in the lead up to granting Thaksin an amnesty. Once that's done the electorate can jam it.

How do you know ???

Good question. Crushdepth should probably have written 'the government seems unlikely to be able to afford this scheme even if they wanted to'.

With the current economical climate to assume a mere 400 billion Baht can easily be found seems wishful thinking at best. Like depending on exports to countries in economical malaise, or income from millions of tourists, who wonder when they'll loose their job, or when they'll find a new one.

[philhal2]

Numbers has never been the strongest point of Thaksin oriented governments!!!!:jap:.

what about the numbers in the Thaksin bank accounts ? Or you dont read much ?

[houseinbkk]

My dear old Dad gave me some good advice - If your doing your best and still can't make enough money, change your job.

Farmers are not indentured servants or slaves, in a free market economy they have the right to whatever employment suits them, but they persist at rice farming. If the govt stopped subsidising their pittance lifestyle, they might sell up, get a haircut, and get a real job - in the meantime moving a few centuries ahead.

Surely of all the jobs in the world the production of food (and drinking water) are the most real job there is.

Though from a layman's viewpoint an advancement in technology and process in Thai farming methods wouldnt go a miss!

[OzMick]

Many senior members here too senior to understand that between the tw options:

1. Rice subsidized by the farmers, the poorest in the Thai social scale

2. The government, with all the curruption subsidized by the have not,

The most obvious social action is for the Government to subsidize the Rice farmers paying them a FAIR price...this is no give away.

Relative well off seniors living of their rents cannot relate with the hardship of the farmers this government is committed to ease.

Is only understandable that if the welfare of the farmers improve, the dear old senior members will have to move on with their pensions to a country where their lollies are cheaper and with a plentiful supply of farmers daughters selling themselves to keep Papa and Mama afloat.

i would call any effort to change this inequality Justice not Populism.

Excellent and on the button.

The farmers have been screwed for generations here.

Maybe real change is in the air....and about time too.

My dear old Dad gave me some good advice - If your doing your best and still can't make enough money, change your job.

Farmers are not indentured servants or slaves, in a free market economy they have the right to whatever employment suits them, but they persist at rice farming. If the govt stopped subsidising their pittance lifestyle, they might sell up, get a haircut, and get a real job - in the meantime moving a few centuries ahead.

So easy ??

You clearly know not a thing about rural Thailand or Asia.

Please explain how people trapped in a subsistence rural environment have the "right to whatever employment suits them...." and can achieve that right.

Your reference to haircuts does not do justice and probably reflects your tonsorial style.

Right, and of course you do. The best rice land in Thailand produces 500kg of jasmine rice per year, which with the new subsidy will GROSS B10,000. Do the math - you can't work enough rai to make a decent living with combining small areas and broad-acre mechanized farming. But that will take an agricultural revolution, so instead they subsidise the farmers, which drains the funds to give them a decent education, and the cycle goes on.

I went through the maths of it with a relative, then lent him the money to set up a shop, then buy a pick-up to fetch fresh produce from town. He has never looked back.

My wife, her sister and her husband worked it out for themselves. They moved to BKK and worked as security. The in-laws now own a pastry shop in town. The rest of the village grow rice and live on handouts.

"get a haircut, and get a real job" is a musical reference. Google it yourself.

[OzMick]

My dear old Dad gave me some good advice - If your doing your best and still can't make enough money, change your job.

Farmers are not indentured servants or slaves, in a free market economy they have the right to whatever employment suits them, but they persist at rice farming. If the govt stopped subsidising their pittance lifestyle, they might sell up, get a haircut, and get a real job - in the meantime moving a few centuries ahead.

Surely of all the jobs in the world the production of food (and drinking water) are the most real job there is.

Though from a layman's viewpoint an advancement in technology and process in Thai farming methods wouldnt go a miss!

That doesn't make it a sacred cow. In the US and Oz they broad-acre mechanized farm rice, and make enough money or go broke. Here they subsidise farmers who havn't got a hope of making enough money out of rice.