Business As Usual For The Govt As Thai Rice Loses Business

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THAI TALK

Business as usual for the govt as Thai rice loses business

Suthichai Yoon

The Nation

Kobsuk Iamsuri, president of the Thai Rice Exporters Association

BANGKOK: -- The bad news from out there from the foot soldiers in the battlefield is that we are losing the fight and the commanders in the war room had better change the strategy.

The word from the commanders has come back: "No change in strategy. You may lose in the battlefield but we will negotiate with the commanders on the other side."

Do you think, in the end, the country can win the war? Do you think the "commanders on the other side" will negotiate with "commanders on this side" if they already have the upper hand?

That is what is happening in the rice export war. Exporters have been filing reports that confirm that things are going very badly. Thailand is losing its long-held traditional position as the world's leading rice exporter.

First, India is back in the market in full force. It has renewed permits for private exporters to double rice exports from two to four million tonnes.

Second, Vietnam and India have cut their prices down in a move that has sparked fierce competition - so much so that Thai rice is at least US$100 per tonne more expensive - at $515-$525 per tonne.

Kobsuk Iamsuri, president of the Thai Rice Exporters Association, has raised the red flag, screaming for the government to urgently consider a policy shift in the rice subsidy policy, or else the "crisis" could get worse. And, she warns, Thailand stands to lose out in a long-drawn-out battle that will have far-reaching implications beyond what politicians can contemplate at the moment.

The value of Thailand's rice exports has so far dropped by about 50 per cent compared to the same period last year. According to Kobsuk, the main reason for this major decline is India's return to the market - and new competition from Burma and Cambodia, while "old rivals" such as Vietnam, and even the United States, have more or less doubled their exports of rice of various kinds.

Vietnam, for one, has mounted an aggressive strategy by cutting its rice price to the world's lowest, while India isn't taking this competition sitting down either. Things might get so competitive that rice could be offered at as low as $300 per tonne. That could drive Thailand into a corner.

The rice exporters' chief spokesperson insists that the world market hasn't responded positively to the Thai government's highly-publicised policy of using its rice-subsidy scheme to jack up global rice prices to the $700-$800-per-tonne range. Instead, the real prices are between $400-$500.

"Therefore, I am afraid the rice policy isn't working, both in its aim to push up prices and protect Thai exporters and farmers," she declared, adding that India and Vietnam have snatched away the parboiled rice market from Thailand, while Vietnam has beaten Thailand in the high-end market for hommali fragrant rice. Hong Kong and China, two of Thailand's major buyers in this category, have recently gone to Vietnam instead.

Kobsuk predicts that Thailand's total rice exports this year may shrink to 6.5 million tonnes, down from last year 10.5 million tonnes. It's going to be a record low.

But those words - confirmed by most other major rice exporters - haven't triggered any alarm bells within the government so far.

Commerce Minister Boonsong Teriyapirbom, asked to comment on these highly negative reports, didn't show any sign of concern. He said the government won't change its policy to accept paddy from farmers at Bt15,000 per tonne.

Why, in the face of all this bad news from the front line, does he refuse to consider a review of the policy?

"Because it's the government's policy," he says.

How is he going to tackle the issue?

The minister repeated what the government's leaders have said from the outset: "We will sell our rice through government-to-government (G-to-G) deals."

How that can be a solution remains a mystery. Would any foreign government buy Thai rice from the Thai government at a price higher than the market quotations? If the Thai government wants to sell to another government at a "competitive" price, that would mean yet another subsidy out of the Thai taxpayers' pocket.

How that can be called a "solution" is anybody's guess.

-- The Nation 2012-04-26

[ratcatcher]

Pua Thai knows best. Thai farmers will be rich by this time next year.

Thaksin said so.

This is going to be an interesting year ahead.

[Ricardo]

Weren't all Thais going to be rich, after six months, some ten months ago ? Still waiting ! This just shows what happens when you promise the impossible.

On the other hand, the new PTP-government did deliver on the tax/price-cut for fuel, and is only now quietly reintroducing it in gradual steps, perhaps a similar pull-back might be wise for the rice-subsidy paid-to-middlemen, so that the exporters can manage to sell the last crop ? Before the warehouses are overflowing with year-old rice slowly rotting.

None of this should surprise TV-posters, it was forecast here, last year.

[Buchholz]

Commerce Minister Boonsong Teriyapirbom, asked to comment on these highly negative reports, didn't show any sign of concern. He said the government won't change its policy to accept paddy from farmers at Bt15,000 per tonne.

Why, in the face of all this bad news from the front line, does he refuse to consider a review of the policy?

"Because it's the government's policy," he says.

and we all know where that originates...

from the thread:

Agricultural policies do more harm than good

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.

[laurentbkk]

Thailand always believed in his own strategy , they always thought it was the best and totally look down at the neighboring countries who made their way step by step ..Now Thailand has only to cry , the biggest loser in this are those farmers ..promising the impossible doesnt bring you very far.

[AleG]

The funny thing is that, even if this scheme worked the result would be that the staple food for billions of people would significantly increase in price; I thought it was the Democrats and the elites that had the poor in contempt...

[swillowbee]

... the strategy that government-government negotiated rice sales at prices that exceed the free market is somehow a 'good idea' must rely upon corrupt-corrupt transactions... I suppose Thailand (corrupt party #1) could announce deals with corrupt party # 2 coming from any of a number of equally corrupt nations ... there remain 3rd world corrupt nations still out there, with which Thailand is every bit their equal.

... one of the few sectors in which Thailand has a chance of building a future is agriculture (land + sunshine + water + cheap uneducated labor) ... though tnot so sexy, the resources and capabilities of the nation seem best suited to be a nation of farmers ... I just never fathomed that the Thai farmers are so firmly shackled by the elites that rule these poor people (consistent, though, with Thailand's modern-day feudal system) ... but, between the farmers and the free market, there appear groups (government, or middle-men) who control the farmers economics ... Thailand's poor just don't stand a chance.

... corruption + incompetence = Thailand ... a mathematical certainty.

Edited April 26, 2012 by swillowbee

[LuckyLew]

Nice to see someone who lives in posh luxury in Dubai and his

kid sister are taking care of the core base of their supporters.

If Pathum Thani is a sign of the masses waking up, then the

current ruling party will be in for a big shock at the polls during

the next election. I suspect the envelopes on offer at the poling

station doors will have to be a little thicker

[trainman34014]

Quick phone call to Dubai needed. ' Errrr; what do we do now boss? '

To call this Government a Dogs Dinner would be insulting to a Dogs Dinner. Far too busy worrying about Wonder Womans next photo'-call in some distant land rather than sorting out local policy that may help the odd Thai Farmer or two.

[andytime]

I guess a new "hub" for Thailand - the hub for buying all of it's own products - rice, rubber, pork, tapioca, pineapples (et al) and with the surplus shrimp now being produced (likely they can also be added shortly). Miracle Thailand.. indeed it is!!!

[GentlemanJim]

But Thailand does seem to be the 'hub' of hot women who hold senior positions. What with Yingluck and now Ms Kobsuk Iamsuri, wheeew! At least the latter is also displaying some kind of intelligence by highlighting the forthcoming financial hurricane about to engulf the farmers.

[lujanit]

I was speaking with a rice exporter last week and he said that his exports were down 50% and he could see no upside under the current government policy and the fact that India and Vietnam are undercutting Thailand by a large margin compounds the problem. Interestingly while the official price for paddy is 15K per ton, he told me that the mill, by paying cash can get a ton for about 10.5k. Even paying that price he cannot compete effectively in the export market. To make his situation worse this guy only exports, he has no domestic market.

Last night on Discovery I watched a new ad by the TAT. Miracle Year, Amazing Thailand. I think they left out the word Disaster between Miracle and Year .

[E1717007]

Thailand always believed in his own strategy , they always thought it was the best and totally look down at the neighboring countries who made their way step by step ..Now Thailand has only to cry , the biggest loser in this are those farmers ..promising the impossible doesnt bring you very far.

Worst of all, they never learn from their "better" neighbours!

[daninthai]

The funny thing is that, even if this scheme worked the result would be that the staple food for billions of people would significantly increase in price; I thought it was the Democrats and the elites that had the poor in contempt...

All politicians and high-ranking officials in Thailand are "elites". It's certainly not just the Democrats.

[sparebox2]

Little make up and loose white dress.

lovely.

[OzMick]

Thaksin's "cunning plans" more and more resemble those of a chap named Baldrick.

Millions of tons in storage, yet the domestic price keeps rising. If you doubt this, ask her indoors.

[pimay11]

I guess a new "hub" for Thailand - the hub for buying all of it's own products - rice, rubber, pork, tapioca, pineapples (et al) and with the surplus shrimp now being produced (likely they can also be added shortly). Miracle Thailand.. indeed it is!!!

And the Bt300 million wasted on rotten red onions.

[animatic]

OP "The value of Thailand's rice exports has so far dropped by about 50 per cent compared to the same period last year...."

Of course they go on to blame everyone but their own ineptitude.

As if these other countries were not competing for the same market last year.

They were. If India had a bad year, they let them compare to the lats year india was exporting too.

Yes it will be an interesting year as the artificially, politically-elevated rice prices drive more and more buyers

to 'better bang for the buck' markets.

Edited April 26, 2012 by animatic

[Unkomoncents]

That's tragic for Thai farmers, as they will foot the bill for their government's incompetence. As for the government, som nam naa! Many Thailand watchers have been waiting for the inevitable repercussions of Thailand's general venality and obtuseness. Protectionism can mask the corrupt, uncompetitive, fatcat character of many Thai companies (True Corp, CP, etc.) and the government, but only for so long. The Thai government's 'schemes' are completely counterproductive in a globalized marketplace (not much of a concept of globalization at all at the grassroots level in Thailand). If the price of rice is negotiated at the intergovernmental level, then Thailand has to find ways to subsidize rice production to create better rice at cheaper prices than it's competitors. That's just basic economics. The Thai government, knowing it can't compete on a fair playing field, is always trying to artificially manipulate economic conditions. Their bumbling was partly responsible for the 1997 economic crisis.

[Skywalker69]

Thaksin's "cunning plans" more and more resemble those of a chap named Baldrick.

Millions of tons in storage, yet the domestic price keeps rising. If you doubt this, ask her indoors.

I think deep down he knows he will never go back, but in revenge he want to pay back in other ways.

[thurien]

Worst of all, they never learn from their "better" neighbours!

right, same with mobile internet which has been an absolutely dumb story over the years (!) already - still the Thai say "in Laos, Cambo, VN they only have 3G - we shall skip 4G and directly go into 5G..." their talent for totally ignoring facts, overrating their non-existent expertise coupled with an acid nationalism is frightening

Edited April 26, 2012 by thurien

[Bagwan]

But Thailand does seem to be the 'hub' of hot women who hold senior positions. What with Yingluck and now Ms Kobsuk Iamsuri, wheeew! At least the latter is also displaying some kind of intelligence by highlighting the forthcoming financial hurricane about to engulf the farmers.

I note that she has a copy of the OED on her bookshelf. That alone marks her as of greater intellect than Yingluck and her speech writers. My attention was drawn to another book apparently with the title 'RICE'. I do hope that it wasn't a primer.

[spiritrace]

We had to stop using Jasmine rice in our restaurant because the cost trippled.

[bigbamboo]

If only Thailand could see it but it is being swamped by it's neighbours even before the AEC comes into effect. Whether it is rice or tourism or anything else Thailand can no longer maintain it's misplaced complacency.

[Bagwan]

But Thailand does seem to be the 'hub' of hot women who hold senior positions. What with Yingluck and now Ms Kobsuk Iamsuri, wheeew! At least the latter is also displaying some kind of intelligence by highlighting the forthcoming financial hurricane about to engulf the farmers.

I note that she has a copy of the OED on her bookshelf. That alone marks her as of greater intellect than Yingluck and her speech writers. My attention was drawn to another book apparently with the title 'RICE'. I do hope that it wasn't a primer.

Don't forget this beauty.

[JohnAllan]

"Commerce Minister Boonsong Teriyapirbom, asked to comment on these highly negative reports, didn't show any sign of concern. He said the government won't change its policy to accept paddy from farmers at Bt15,000 per tonne.

Why, in the face of all this bad news from the front line, does he refuse to consider a review of the policy?

"Because it's the government's policy," he says.

How is he going to tackle the issue?

The minister repeated what the government's leaders have said from the outset: "We will sell our rice through government-to-government (G-to-G) deals."

How that can be called a "solution" is anybody's guess."

MPs the world over offer the same solutions when asked difficult questions: they reiterate and regurgitate. And these are supposed to be intelligent and responsible people, or so they would have us believe.

Edited April 26, 2012 by JohnAllan

[h90]

Pua Thai knows best. Thai farmers will be rich by this time next year.

Thaksin said so.

This is going to be an interesting year ahead.

I thought we are already all rich since 3 Month

[h90]

"Commerce Minister Boonsong Teriyapirbom, asked to comment on these highly negative reports, didn't show any sign of concern. He said the government won't change its policy to accept paddy from farmers at Bt15,000 per tonne.

Why, in the face of all this bad news from the front line, does he refuse to consider a review of the policy?

"Because it's the government's policy," he says.

How is he going to tackle the issue?

The minister repeated what the government's leaders have said from the outset: "We will sell our rice through government-to-government (G-to-G) deals."

How that can be called a "solution" is anybody's guess."

MPs the world over offer the same solutions when asked difficult questions: they reiterate and regurgitate. And these are supposed to be intelligent and responsible people, or so they would have us believe.

I think you blame the wrong person....he isn't in the position to change policy.

[belg]

it is obvious that false promises might bring the country to collapse...

basic economic laws of supply and demand , off course thai people and thailand are above, or let us say that they do not understand the game

rising with subsidy the price of rice, that only profits big millers and middle persons, but certainly not the farmers, deepens the pockets of the rich

less demand of thai rice, let's call it miracle rice of thailand and even increase the price more because it is so much better than any other rice

[louse1953]

But Thailand does seem to be the 'hub' of hot women who hold senior positions. What with Yingluck and now Ms Kobsuk Iamsuri, wheeew! At least the latter is also displaying some kind of intelligence by highlighting the forthcoming financial hurricane about to engulf the farmers.

A visit to the optometrist is over due.