Govt Subsidies Do Long-Term Damage To Thai Farmers

[webfact]

EDITORIAL

Govt subsidies do long-term damage to Thai farmers

The Nation

BANGKOK: -- Because of price guarantees for rice, farmers are focusing on quantity over quality; in the end, this will be disastrous for both them and the country's rice exports

The government's policy of pledging to buy rice from farmers has resulted in a lower quality of Thai rice. The government's subsidy scheme, which purchases white rice at Bt15,000 per tonne, has encouraged farmers to push for quantity of production while ignoring the quality.

If this trend continues, Thai rice may lose its competitive edge and its long-established image of being premium quality.

The government has spent Bt100 billion on purchasing the last main crop in November. It plans to spend another Bt120 billion for the second crop, which will be harvested in March. This fulfils promises it made to farmers during the election campaign last July.

The subsidy plan may benefit some farmers in the short term. But in the longer run, it will reduce the overall quality of Thai rice because farmers will now focus on producing greater quantities at the expense of the quality of their produce.

The massive flood disaster last year has made the situation worse. Approximately 10 million rai of rice fields have been damaged. When the water subsided, farmers wanted to sow rice seeds immediately. But many opted for low-quality seeds because they could not source a sufficient amount of certified-quality seeds. The quality of rice grown from these low-standard seeds will certainly be lower.

According to figures from the Agriculture Ministry, rice plantation increased from 57 million rai in the 2010-2011 crop season to 61.94 million rai during the 2011-2012 season. However, the efficiency of our rice production methods and the quality of Thai rice has not improved in conjunction with the rise in the area under cultivation. The average yield per rai for the current crop season has dropped to 394 kilogrammes per rai, compared to 397 kilogrammes per rai during the previous season.

The government's rice pledging programme is meant to increase the earning potential for farmers, but it does nothing to assist farmers in developing long-term sustainable methods, efficiency and productivity. The upshot of this short-sighted subsidy policy is that many farmers are likely to end up more dependent on the government's support. The opposite should be happening: Thailand should be educating farmers on sustainable methods that lead to greater productivity and long-term security. Our farmers should be given the tools to be able to improve their well-being on their own.

But this will never happen if farmers aim for low quality production that earns government handouts. Many farmers have already shifted to short-grain rice, which takes only 90 days to harvest, compared to the high-quality, long-grain rice, which takes 120 days to harvest.

These farmers simply aim for higher volume to secure more fast cash. The government accepts the rice, no matter what the quality. Therefore, farmers try to cut production costs to increase the profit margin. In addition, some farmers use excessive amounts of chemical fertilisers because they wrongly believe that this will speed up the harvesting process. The government's scheme is caught in a downward spiral that will only work to the long-term detriment of Thai rice.

Although the government may accept this rice, exporters will find it difficult to export it because of its low quality, which is no better than the average rice available from neighbouring countries such as Vietnam. Yet, Thai rice is now more expensive than that of our competitors because the subsidy programme has pushed up the cost of production. Eventually, the government will have to use state money to subsidise this low-quality rice on the world market.

Instead of making farmers even more dependent on subsidies and handouts, the government should be educating them to be more self-reliant, and encouraging them to produce higher quality rice and high-end products such as organic rice.

Thai farmers need to improve their knowledge to stay competitive, especially with the advent of the Asean Economic Community in a few years time. If this situation is not rectified now, Thai farmers may be unable to compete with the fiercer competition from neighbours like Burma and Vietnam, where yields and productivity are already higher than in Thailand.

-- The Nation 2012-03-01

[OzMick]

Spot on! More and more low quality rice bought at inflated prices, and which cannot be sold at a profit - so what's the bloody point? Politics. Votes bought with taxpayer's money, propping up an uneconomic, labour-intensive low-yield industry because it employs a vast army (use intended) of low-income voters easily bought.

Billions of baht that could be used to educate, and to better the life of the country's people, wasted because it would be unpopular to point out that if your income is too low, you should think about changing jobs.

[scorecard]

Spot on! More and more low quality rice bought at inflated prices, and which cannot be sold at a profit - so what's the bloody point? Politics. Votes bought with taxpayer's money, propping up an uneconomic, labour-intensive low-yield industry because it employs a vast army (use intended) of low-income voters easily bought.

Billions of baht that could be used to educate, and to better the life of the country's people, wasted because it would be unpopular to point out that if your income is too low, you should think about changing jobs.

And meanwhile Vietnam (especially Vietnam), India and Burma have there eyes on the ball and gaining ground in the export of top quality rice at good prices, and with good returns to their farmers.

What's also being ignored is that Vietnam is gaining ground in terms of all round professionalism, and in terms of 'supplier of choice'.

[hanuman2543]

Thais and planning for the future, being competitive and producing quality? Impossible.

[maidu]

not mentioned in the article: Practically all rice grown in Thailand is sprayed with toxic chemicals. Increasing #s of people will want their rice to be organic. Will Thailand be able to deliver?

Also: Thai farmers devote too much of their land to rice. There are other crops which would yield greater value. At the least, Thai farmers should consider portioning their land to different sorts of crops. It was less than 2 years ago that Thailand suffered 'it's greatest drought in 20 years.' How many remember the collective cry of 'Help, we need more water for rice!' at that time? Plus, China is building ever more giant dams on the Mekong (and similar plans for the Salween), so water-guzzling rice is not the wave of the future, particularly 2 to 3 crops per year.

[OzMick]

Spot on! More and more low quality rice bought at inflated prices, and which cannot be sold at a profit - so what's the bloody point? Politics. Votes bought with taxpayer's money, propping up an uneconomic, labour-intensive low-yield industry because it employs a vast army (use intended) of low-income voters easily bought.

Billions of baht that could be used to educate, and to better the life of the country's people, wasted because it would be unpopular to point out that if your income is too low, you should think about changing jobs.

And meanwhile Vietnam (especially Vietnam), India and Burma have there eyes on the ball and gaining ground in the export of top quality rice at good prices, and with good returns to their farmers.

What's also being ignored is that Vietnam is gaining ground in terms of all round professionalism, and in terms of 'supplier of choice'.

Just returned from buying Mum a new phone, Uniden, "Australia's top selling phone" - do I have to tell you where it was made?

[OzMick]

not mentioned in the article: Practically all rice grown in Thailand is sprayed with toxic chemicals. Increasing #s of people will want their rice to be organic. Will Thailand be able to deliver?

Also: Thai farmers devote too much of their land to rice. There are other crops which would yield greater value. At the least, Thai farmers should consider portioning their land to different sorts of crops. It was less than 2 years ago that Thailand suffered 'it's greatest drought in 20 years.' How many remember the collective cry of 'Help, we need more water for rice!' at that time? Plus, China is building ever more giant dams on the Mekong (and similar plans for the Salween), so water-guzzling rice is not the wave of the future, particularly 2 to 3 crops per year.

When considering "yield greater value" from the farmer's viewpoint, you have to allow for subsidies. Whether they ever reach the farmer is another matter.

[jonclark]

Spot on! More and more low quality rice bought at inflated prices, and which cannot be sold at a profit - so what's the bloody point? Politics. Votes bought with taxpayer's money, propping up an uneconomic, labour-intensive low-yield industry because it employs a vast army (use intended) of low-income voters easily bought.

Billions of baht that could be used to educate, and to better the life of the country's people, wasted because it would be unpopular to point out that if your income is too low, you should think about changing jobs.

And meanwhile Vietnam (especially Vietnam), India and Burma have there eyes on the ball and gaining ground in the export of top quality rice at good prices, and with good returns to their farmers.

What's also being ignored is that Vietnam is gaining ground in terms of all round professionalism, and in terms of 'supplier of choice'.

To true,

But the government is more concerned with gaining and holding political ground on the domestic front and handouts are a perfect, effective and simple way of ensuring success. The intelligence of such a policy, well, I think we all agree that a different story.

[asiascharlie]

No surprise here .Playing with market prices is idiotic not mention unsustainable .Teaching people to help themselves is developement .Giving them handouts is an insult .

[airconsult]

Has to do with education and perception as well.

My wife has been a bank manager for years, but reminded me the other day when she was in school they taught the students how to plant rice.......

[daninthai]

With other SE Asian countries rapidly gaining ground economically, Thailand will eventually lose it's customers, lose it's industry and lose it's tourists. Without a complete overhaul of the cultural landscape this country will sink into oblivion.

Sad thing is that we all know Thais will never change.

[Gweiloman]

Correct me if I'm wrong but the Swiss government subsidises it's farmers as well. How is that different?

[animatic]

A plan for the formers that can't see past it's short term self serving, to it's long term VERY illogical needs.

Ruining the marketplace for their product,

ruining the very products ability to compete,

and thus ruining the very people they SAY they are helping.

But they are only using that as a facade, they are helping themselves and their up country rice miller / transporter backers who leveraged the poor populace into electing them. Quid pro quo for the moment, penury for your childrens futures, but election for the cabale and it's controlling family.

Edited March 1, 2012 by animatic

[TAWP]

Every time any government decide to intrude into the free market place there will be a lot of negative consequences - often against them that are least able to defend themselves against big actors in the shape of corporations or the government itself.

not mentioned in the article: Practically all rice grown in Thailand is sprayed with toxic chemicals. Increasing #s of people will want their rice to be organic. Will Thailand be able to deliver?

Reminds me of the days around orchids here. Most Thai growers have severe problems getting their plants in good shape, pending between 'sick/infected' (with various things) to 'over-sprayed with chemicals and pesticides' - both things give problems with spot-checks at import-stations.

Some bigger actors have joined the game and decided to try to strangle out most other medium-sized operations by dumping the prices to minimal profit per flower...but I digress.

Having farmers aim for quantity before quality will be a very harmful thing when it comes to exports to EU etc.

[TAWP]

Correct me if I'm wrong but the Swiss government subsidises it's farmers as well. How is that different?

All of EU is via enormous payouts to farmers - some years ago the mentioned number was 70% of the unions yearly budget ended up as 'support' to farmers, mostly in the middle-region of the union.

[sparebox2]

Correct me if I'm wrong but the Swiss government subsidises it's farmers as well. How is that different?

All of EU is via enormous payouts to farmers - some years ago the mentioned number was 70% of the unions yearly budget ended up as 'support' to farmers, mostly in the middle-region of the union.

Same same, Thailand and EU.

[Gweiloman]

Correct me if I'm wrong but the Swiss government subsidises it's farmers as well. How is that different?

All of EU is via enormous payouts to farmers - some years ago the mentioned number was 70% of the unions yearly budget ended up as 'support' to farmers, mostly in the middle-region of the union.

Same same, Thailand and EU.

Exactly, so would be nice to read about criticisms of subsidies in general rather than just anti PT tirades.

[TAWP]

Exactly, so would be nice to read about criticisms of subsidies in general rather than just anti PT tirades.

Anti-PT? Don't be so sensitive, my posts was clearly 'anti-subsidies' and I said the same thing during the last government.

[Gweiloman]

Exactly, so would be nice to read about criticisms of subsidies in general rather than just anti PT tirades.

Anti-PT? Don't be so sensitive, my posts was clearly 'anti-subsidies' and I said the same thing during the last government.

Actually, wasn't referring to your post. If you notice, my original post was made before you had posted.

[OzMick]

Correct me if I'm wrong but the Swiss government subsidises it's farmers as well. How is that different?

The most obvious would be the percentage of voters involved in farming, The next would be the relative value of production of farming and the other sectors in the economy. Also, the percentage of subsidy which reaches farmers compared to that lost in corruption.

Same same, but bloody different.

[sparebox2]

Correct me if I'm wrong but the Swiss government subsidises it's farmers as well. How is that different?

The most obvious would be the percentage of voters involved in farming, The next would be the relative value of production of farming and the other sectors in the economy. Also, the percentage of subsidy which reaches farmers compared to that lost in corruption.

Same same, but bloody different.

If EU can, so can Thailand.

[TAWP]

If EU can, so can Thailand.

Seen what is going on in EU? EU cannot either.