Agricultural Policies Do More Harm Than Good: Thai Editorial

[webfact]

EDITORIAL

Agricultural policies do more harm than good

The Nation

BANGKOK: -- Disastrous price subsidies for farm produce will do long-term damage to Thailand's farmers, who form the core support of the ruling Pheu Thai Party

The government must revise its farm subsidy policy before the consequences of it have even more negative effects on the livelihood of the nation's farmers.

The government continues to claim that its subsidy policy will result in a better standard of living for Thai farmers, simply by boosting the prices of farm produce. But the evidence so far suggests that the government should immediately bring a halt to the scheme and stop the massive spending of taxpayers' money on wasteful projects that do not serve the purpose of boosting prices in a sustainable manner.

Worse still, the subsidy scheme has distorted the market, wrecking Thai competitiveness in exports of farm produce and eroding the incentives for Thai farmers to improve their productivity.

The government's price intervention programmes for rice, cassava, red onion, garlic and pineapple have cost huge sums of money that have ended up as a complete waste because, without buyers, some crops have spoiled in the government's vast stockpiles.

Unfortunately, Commerce Minister Boonsong Teriyapirom is adamant that the government will not revise the policy, because it was an election promise to gain rural votes. This is negligence that shows disregard for the evident bad results of the policy so far.

The government has so far spent Bt200 billion on the rice subsidy programme alone. Six months have passed and the rice price has not reached the government's target level. Even worse, overseas orders for Thai rice have evaporated because Thai rice prices are now higher than those of our neighbours, which can produce higher yields per hectare at a lower price and with no market distortion.

The failure of the rice subsidy programme is also reflected in the fact that so far no farmers have redeemed their produce with the government at the promised price of Bt15,000 per tonne because the prices on the market have never reached that target. In short, the rice programme has not actually boosted prices for farmers because the rice price is still quoted at less than Bt11,000 per tonne.

These wrong-headed policies do not encourage farmers to improve their capacity and productivity. According to a study by the Centre for International Trade Studies at the University of the Thai Chamber of Commerce, the average yield per rai of Thai rice is one of the lowest in the Southeast Asian region. In fact, Thailand now ranks a lowly 7th among Asean countries in terms of productivity. We now produce only 448 kilograms of rice per rai, compared to around 862 kilograms in Vietnam.

Thailand likes to brag that it is the world's biggest rice exporter but the yield per rai in the country is now far below the world average of 680 kilograms.

The government, however, seems blind to these factams with no focus on how to help our farmers improve their production capacity. Instead, the government tries to buy farmers' votes by promising high figures for selling rice directly to the government.

Another abject failure is the attempt to prop up the cassava price. This price has not yet increased in line with the government's pledging policy. The budget from the government to shore up the price of this commodity has been doubled to Bt40 billion for the coming season. The actual price of cassava remains low at Bt1.30-Bt1.90 per kg compared with the government's pledging price of Bt2.75-Bt2.90.

Farmers are falling into this trap of expectancy. Pineapple growers are now also asking for urgent measures to shore up prices of that product. The Bt300 million spent so far on red onions has literally been wasted, with the putrid odour of mountains of these rotting vegetables in the government's stockpiles. No one has benefited from this disastrous scheme because the government did not have any management plan after buying these red onions from farmers.

These examples show how the farm subsidy programme has failed to serve its purpose. Except for spending taxpayers' money to satisfy its rural support base, the government does not have any idea about how to help the country's farmers realise their potential in a long-term, sustainable manner.

Eventually, these catastrophic polices will have a negative lasting effect on our farmers, who form the electoral stronghold of the Pheu Thai Party, and the government may end up paying the price of its failure.

-- The Nation 2012-04-24

[Buchholz]

The government must revise its farm subsidy policy before the consequences of it have even more negative effects on the livelihood of the nation's farmers.

The man in charge has said no.

Warning bells are being sounded today by experts quoted in the other paper regarding the ruinous rice policy.

The warnings are two-fold in that the higher prices are adversely effecting exports as well as huge costs to the taxpayers for these government-subsidized purchases.

The kicker is that fugitive ex-PM Thaksin is insisting the policy continue.

[maidu]

It's sadly ironic, that the very policy which worked to suck in many farmers' votes, will be the policy which will compel the same farmers to vote Democratic Party in the next round. The puppetmaster will continue to insist his idea should stay, because he is genetically incapable of admitting to making mistakes.

The same man who, while PM, compelled the Thai Air Force to ship near-rotten fruit (which wasn't selling in Thailand) overseas - for Thai embassy personnel to sell in foreign countries. How much taxpayer money was spent on jet fuel for those military transport planes? We'll never know. How much fruit was sold? Probably none - it was likely shoveled out to rot outdoors. Thaksin is a business genius? You tell me.

[pattayaorganic]

In my former career I was an agri/aqua culture policy advisor to the JPN govt. I wish Abhisit would call me about advice on how to fix the mess that PT has made in this sector. It is not that difficult, actually.

Price subsidies are normally used in this sector to prop it up due to TEMPORARY and UNFORESEEN events. The subsidies are highly counter-productive when used to address structural deficiencies in the market as they are doing now.

A little basic economics illustrates the point. The market price for rice is lower than people expect, so the market is "telling you" that there is too much rice. My establishing an artificial price drastically higher than the parity price, you do a double whammy, i.e. you exacerbate the excess demand and you fail to give farmers the competitive signal to improve productivity. Now with the artificially high price, farmers will produce even more rice (let alone the real-world affects of importing cheap, neighboring rice and selling at the high subsidized price).

There is a multi-pronged solution that will surely fix this situation. First of all you have to understand the relative power imbalance between the farmers and the millers. To address this, Thailand should adopt the system of coin operated milling that JPN has done. These small scale mills are scattered throughout the rice producing areas of Japan and farmers can bring their rice to the machine and for a few coins have it milled to whatever specification they desire. This will serve to return the balance of power to the farmers which will allow them more diverse marketing channels for their product (unmilled rice is currently worthless to local consumers).

Secondly, there is significant research into alternative, higher producing and low input commodities such as sweet sorghum in Thailand, but the oligopolies that control the rural sector do not allow these technologies for flourish. By implementing the coin operated mill policy, and returning the power balance to the farmer, the floodgates of innovation and advancement are free to open the flow of innovation and productivity improvement to the thai farmer.

In addition, a more robust (meaning well-funded) extension program such as that in the US would help to better disseminate new technologies, varieties and farming techniques to the farmers.

I have in the past worked on Royal Projects designed to help the poor farmers and have seen the problems associated with these idealistic programs. The concept is fine, but in the execution stage the farmers involved act like spoiled kids expecting and just waiting for the government to step in and help them at the first sign of trouble. It does not teach them responsibility. If they drink too much lao khao the night before and their ponds need tending, but they are too hungover to get up and do it. they always think, well, the government will help me if something happens so most times they don't get up.

The government has to let the invisible hand of the market work and give the farmers the tools and information they need to make a living, but all the while be careful to avoid a co-dependent relationship with them.

Doing this correctly will bring true social revolution to Thailand and the kicker is that it can all be done for LESS money than is currently being spent...

[whybother]

<snip>

There is a multi-pronged solution that will surely fix this situation. First of all you have to understand the relative power imbalance between the farmers and the millers. To address this, Thailand should adopt the system of coin operated milling that JPN has done. These small scale mills are scattered throughout the rice producing areas of Japan and farmers can bring their rice to the machine and for a few coins have it milled to whatever specification they desire. This will serve to return the balance of power to the farmers which will allow them more diverse marketing channels for their product (unmilled rice is currently worthless to local consumers).

<snip>

I am sure that the government understand all too well the imbalance between the farmers and millers. The aim of their policies is not to change that.

[zakk9]

This is very dangerous for Thailand long term, and the timing is bad, since it's happening while neighbouring countries are becoming increasingly competitive within the rice market. The agricultural sector in Thailand is developing minimally, and there's a real risk that one of Thailand's core sources of income will be reduced. All the more ironic since it's the only large industry in Thailand totally independent of foreigners.

[bumpkin]

Subsidies at a farm level have proved beneficial in an emergency situation for short term support, but they are no basis for a sustainable agricultural policy. When used as am electoral bribe, that is disgraceful. It has been demonstrated in numerous countries around the world, educating farmers in modern animal and crop husbandry, along with removal of social and legal obstacles to rural development, is the only way to progress. The money committed to subsidies would be far better spent on providing a competent extension service and other practical measures at a farm and village level.

[quandow]

This problem is much deeper than just Thailand. The Monsanto company is systematically taking over, country by country, agriculture (they now call it "agribusiness"). They are poisoning the global food supply with genetically modified organisms (GMO's) that have been shown, when tested in lab rats, to cause organ damage and poor development. Prominent scientists who have tried to voice their concern were shut down or publicly discredited. I am the first one to be a skeptic when considering conspiracy theories, but I see daily evidence such as this article that adds up to support this attack on countries. Read "Seeds of Destruction" by F. William Engdahl, do some independent research of the purported information, then draw your own conclusion.