Rice Pledging Scheme Drives Out Thai Businesses

[MaiChai]

These Thai companies setting up shop outside Thailand wouldn't happen to be selling Cambodian rice advertised as Thai at a price much higher price than Cambodian rice

Sounds like a cunning Thai business plan?

[quandow]

When the warehouses are full the release of this rice will cause the markets to collaspe. Governments should never get enolved in food markets.

Read "Seeds of Destruction" by F. William Engdahl. Thailand (and many, many other countries) are falling prey to the schemes set forth by the Monsanto and Cargill companies for world domination of the food market. Thailand will collapse and these companies will swoop in to "save" them with initially cheap loans and choke holds on genetically modified organisms (GMO)/their patented seed and Roundup weed killer. Once established, they will continue to eliminate all small farms (as they have just about accomplished in the U.S.) creating a serfdom approach to farming. All in the name of greed.

[retarius]

I don't understand this scheme, but my family have just had a bumper crop and for the first time since I've been here have made a substantial profit...they need it after last years' floods....I'll lose no sleep if these parasite millers lose their shirts...let them set up elsewhere and bear the risks....

[OzMick]

I don't understand this scheme, but my family have just had a bumper crop and for the first time since I've been here have made a substantial profit...they need it after last years' floods....I'll lose no sleep if these parasite millers lose their shirts...let them set up elsewhere and bear the risks....

Their substantial profit was made because they were paid around 50% more than their crop was worth, and that subsidy coming from taxpayer's revenue. You and they may be thinking "Well I'm alright Jack!" but on deeper reflection you will realise that the funds used to buy your votes would otherwise be spent on schools, hospitals, roads and all the other things western societies supply more abundantly. Or perhaps not.

[Skywalker69]

Mark my words. Thailand has rejected Thaksin and he is going to destroy it!

This is my own theory, Thaksin is desperate, trying to close a deal to get white washed. If it goes in his favor he will let go of the rice pledge, if not well as you say GJ he is in for a vengeance.

OK better put my crash helmet on and wait for the TV "Thaksinistas" and "Red Shirtinistas" verbal attacks.

[volk666]

I don't understand this scheme, but my family have just had a bumper crop and for the first time since I've been here have made a substantial profit...they need it after last years' floods....I'll lose no sleep if these parasite millers lose their shirts...let them set up elsewhere and bear the risks....

Perhaps this is an example of a new attitude developing among Thai farmers - it's perfectly okay to milk the country for tens of billions of baht every year.

And no, parasite millers won't lose their shirts, they get far bigger slice of country's money than farmers, considering that there are thousands of farmers for each miller.

People who are losing shirts here are the ones who have to pay higher prices for their food and daily necessities because government takes 7% (soon to be 8) of their money and pays to the millers, who in turn pay to the farmers.

Corporations, on the other hand, had their taxes reduced long before minimum wage went up in Bangkok and they so not paying for that rice.

There's also the little issue with selling that rice. If they can't export it there's no one to buy it, thus it becomes cheaper. This time farmers got advances on the rice that will never be sold, and it might work next year, too, but eventually market will win and rice farmers will be like those pineapple growers this year who dump their produce by tons because it's too expensive and no one needs it that much anyway.

This year the government screwed up only relatively small groups - garlic, red onions, tapioca and pineapple growers. Who cares, right? Well that's what people will say to rice farmers, too, when the money will eventually run out to support their "I'm alright, Jack" attitudes.

Edited April 30, 2012 by volk666

[bigbamboo]

These Thai companies setting up shop outside Thailand wouldn't happen to be selling Cambodian rice advertised as Thai at a price much higher price than Cambodian rice

Sounds like a cunning Thai business plan?

Sounds like something Chuwit evidenced a while back.

[vijer]

This scheme was never intended to help farmers or Thailand to begin with. It was always meant to be a handout of the budget to the connected politicians who control rice mills in exchange for supporting Thaksin. He needs massive monetary handouts in order to keep those powerful feudal politicians loyal to him, and to keep their support in his quest for a pardon for his crimes and in order to get the money the courts took from him, the money he stole from the Thai people, returned. The disastrous affects this policy may have on farmers or on the nation as a whole are completely irrelevant. The plan is working as designed.

And the poor keep getting the shaft. This is what happens when people are uneducated, but of course corrupt politicians are happy with that.

[farang000999]

if you want to provide subsidy, do it via taxation of wealth and redistribution. not silly price manipulations but we all know this is another scheme.

[Ricardo]

At some point the government will need to sell-on their rice-stocks, to make room in the warehouses, for the next crop.

To offer it overseas, at a competitive-to-world-market-rates price, they will perhaps need to pay a further subsidy to the rice-exporters. Or equally to sell it on the domestic-market, and try to reduce the rate-of-inflation, surely a similar subsidy will be required.

So PM-Yingluck may find herself in the unfortunate position, of buying-high and selling-low, and squandering taxpayers-money on both stages of the transaction, to keep happy the PTP-supporting millers and also the poor-voters.

This nightmare-senario might become even worse, if people were to buy the cheap older domestic-rice and re-sell it to the mills, at the higher-prices supposedly-guaranteed to the farmers. But of course people would never do that, would they ?

One wonders what solution DL will come up with, to solve this tangled web, and how it might affect global rice-futures ? I'm glad it's not my problem to have to solve !

[heiwa]

With reported wide spread corruption in the price pledging scheme by millers why doesn't the government revoke this scheme - at least to prove they "want to be honest". We all know why they won't revoke this scheme. If a scheme has been completely corrupted and the government does not step in to stop the scheme then it can only prove that the government in fact is completely corrupted. I think they could understand this in Grade 3. It appears some in Government need to go back to school. Thailand your government is a disgrace. They could put their hand up and say we made a mistake - losing face would be better than to let this scam continue.

[heiwa]

Khao, what rice means to the Thais - and their government does this to them. My God, this certainly is a reason for mass protest - playing with the food supply - i.e. making people hungry - is that what the government was elected to do? It just shows how patient Thai people "can" be. It's no wonder the Deep South think they are better going on their own. They certainly could not manage things any worse than the incumbents - who feel their job is to make the electorate hungry.

[heiwa]

I'm afraid we all all pissing against the wind. Does anyone recall the Australian auditor who was shot dead when he was auditing the books of a Thai miller - sugar or rice - can't remember exactly. As the French say - what is is. This is the way things are here - keep the people stupid - and fleece the electorate of their resources - they go one step further here by making the electorate hungry. The time for a coup is way overdue.

Edited May 1, 2012 by heiwa

[BigJohnnyBKK]

Thais are taught to believe that their government can fix all problems, never the truth that no government can fight against global market forces.

The Thai government pretends to be able to set prices on all kinds of commodities, and ends up just causing all kinds of supply disruptions with no benefit to anyone but those with corrupt connections and at great expense to the public treasury.

Just as true for currency as well.

You know how Thais are always asking how many baht your currency is worth? It's because they think there is a direct correspondence between a country's currency value and its wealth - England is richer than America because the pound is worth more, etc. Even uni students studying business believe this, until you actually sit them down with the statistics and prove it false. Then trying to teach them why it's false, well that's something else again.

Maybe if they didn't spend so much time learning about "Thai morality" and how to pass completely bogus tests. . .

[AleG]

....

So PM-Yingluck may find herself in the unfortunate position, of buying-high and selling-low, and squandering taxpayers-money on both stages of the transaction, to keep happy the PTP-supporting millers and also the poor-voters.

...

I don't think she'll care too much about squandering tax money, the Shinawatra clan is notorious for it's propensity to not pay taxes.

It's other people's money.

[Crushdepth]

Can someone answer a question for me about the rice situation in Thailand?

Did these same issues exist during the previous Democrat Government?

These issues are purely the result of an election pledge by the current government to pay prices to farmers that are massively over the market norm. They tried to buck the world markets using their position as leading rice exporter and failed.

The winners out of this are other rice exporters such as India and Vietnam. Cambodia may have been shrewd in permitting foreign investors to participate in rice production provided that machinery is purchased to increase competitiveness.

Domestically the winners are the rice warehouse businesses - the article above insinuates that these are owned by Thai politicians. The losers are the tax payers who are paying money into a black hole.

The situation is that the Thai government is essentially buying and storing millions of tonnes of rice that it can only sell at a loss. Once the wareshouses are full it will force their hand one way or another. They either stop buying, build yet more warehouses or sell at a loss. Given the disintegration of the vast majority of other election promises, PTP will be very reluctant to hold up the white flag by either ceasing to purchase rice or selling at a loss.

Thailand - the hun of rice storage?

They can always burn it.

[Skywalker69]

At some point the government will need to sell-on their rice-stocks, to make room in the warehouses, for the next crop.

To offer it overseas, at a competitive-to-world-market-rates price, they will perhaps need to pay a further subsidy to the rice-exporters. Or equally to sell it on the domestic-market, and try to reduce the rate-of-inflation, surely a similar subsidy will be required.

So PM-Yingluck may find herself in the unfortunate position, of buying-high and selling-low, and squandering taxpayers-money on both stages of the transaction, to keep happy the PTP-supporting millers and also the poor-voters.

This nightmare-senario might become even worse, if people were to buy the cheap older domestic-rice and re-sell it to the mills, at the higher-prices supposedly-guaranteed to the farmers. But of course people would never do that, would they ?

One wonders what solution DL will come up with, to solve this tangled web, and how it might affect global rice-futures ? I'm glad it's not my problem to have to solve !

Yes 200 000 tons of pineapples, soon to be rotten.

Edited May 1, 2012 by Skywalker69

[rubl]

I've asked this question a few times now, but no answer so far. Maybe I have to wait till the PM Yingluck government reports on their achievements in the first nine months.

With THB 350 - 410 billion to be spent (and a lot already spent) on various produce price pledging schemes, it would be interesting to have an itemisation of amount paid and to whom. Look at it as an external audit, we the taxpayers like to probe every once in a while especially when lots of money is spent without a good idea as to the usefulness of the spending.

PS indeed I am a taxpayer in Thailand, comes with the 'legal alien' part I'm afraid

[heiwa]

I've asked this question a few times now, but no answer so far. Maybe I have to wait till the PM Yingluck government reports on their achievements in the first nine months.

With THB 350 - 410 billion to be spent (and a lot already spent) on various produce price pledging schemes, it would be interesting to have an itemisation of amount paid and to whom. Look at it as an external audit, we the taxpayers like to probe every once in a while especially when lots of money is spent without a good idea as to the usefulness of the spending.

PS indeed I am a taxpayer in Thailand, comes with the 'legal alien' part I'm afraid

interesting to have an itemisation of amount paid and to whom - if anyone attempted to find that out it would mean a bullet in the head (that's what an Aussie auditor got for auditing a bankrupt mills books - no-one replace him after that) - don't even go there - they have law here - its called mafia law - the police, politicians, anyone with any position - all criminals - but they don't see it that way - it is their reward for a privileged higher birth. We must respect their culture - rewards for the post - even honest workers accept this - that's why Taksin could be so popular.