Winners And Losers Emerge In Rice Scheme: Thailand

[webfact]

Winners and losers emerge in rice scheme

ACHARA PONGVUTITHAM,

PETCHANET PRATRUANGKRAI

THE NATION

BANGKOK: -- The government's rice-price pledging policy has paved the way for Siam Indiga to become the country's biggest exporter, with total export volume reaching 480,000 tonnes during the first nine months of this year.

In a success story that critics said might raise political questions, the company has moved up from the country's No 3 spot to become No 1, while its competitors have reportedly all seen export volumes drop by an average of 40-50 per cent. The company exported nearly 200,000 tonnes last year.

Siam Indiga's name has been linked with the bankruptcy-threatened rice-exporting trading arm President Agri Trading, which was the country's biggest rice exporter from 2003 to 2005, during the tenure of ousted prime minister Thaksin Shinawatra. In that period, critics claimed that political ties were affecting the rice trade. Some traders allegedly benefited from the Commerce Ministry's bidding process for rice in government stockpiles more than the others.

EXPORTERS' RANKS RESHUFFLED

According to a report by the Thai Rice Exporters Association, the Kingdom's rice export volume dropped by a significant 44.56 per cent to 5.04 million tonnes during the first nine months of this year. Export value plunged by 34 per cent to Bt93 billion, or by 35.7 per cent in dollar terms to US$3 billion, during the first eight months.

Chaiyaporn Rice became the country's second-biggest exporter with an export volume of 420,000 tonnes during the first nine months, replacing Asia Golden Rice. The country's former top exporter, Capital Rice, dropped to third.

Previously, the country's top five exporters were, in order, Capital Rice, Asia Golden Rice, Siam Indiga, Chaiyaporn Rice and CP Intertrade. The list now stands at Siam Indiga (480,000 tonnes), Chaiyaporn Rice (420,000 tonnes), Capital Rice (350,000 tonnes), Asia Golden Rice (330,000 tonnes) and CP Intertrade.

An exporter source said the country's top five rice exporters - with the exception of Siam Indiga - have faced export drops in terms of both volume and value by an average of 40-50 |per cent. For instance, the |country's former top exporter Capital Rice, whose monthly export volumes reached an average of 120,000-130,000 tonnes last year, has seen the figure drop to 70,000-80,000 tonnes. Asia Golden Rice, the country's former second-biggest exporter, has seen a similarly significant drop.

A rice-exporter source said questions were being asked as to whether the government of Prime Minister Yingluck Shinawatra was treating traders equally and fairly.

Regarding other criticisms of the rice-price pledging scheme, the source said that if the government had signed government-to-government contracts totalling 7.23 million tonnes of rice as claimed, this export volume should be reflected in reports by the importing countries - which doesn't seem to be the case.

"It is impossible that the government, as claimed, has gradually shipped 1 million to 2 million tonnes in the past few months, without there being any record of such an export volume," said the source.

NO BIG-LOT SHIPMENT IN RECENT MONTHS

According to reports from Thailand's Foreign Trade Department and Customs Department, during the first seven months of this year, rice exports to Indonesia have dropped significantly by 52.61 per cent to 297,640 tonnes; to the Philippines by 99.85 per cent to 246,000 tonnes; to Bangladesh by almost 100 per cent to 58,000 tonnes; to China by 65.8 per cent to 65,003 tonnes; and to Ivory Coast by 46.24 per cent to 173,014 tonnes.

Remarkably, those markets have been named by the government as its key buyers under government-to-government contracts.

Sumeth Laomoraphorn, chief executive officer for rice and food business of CP Trading Group, the country's fifth-ranked exporter, said the firm's export volume had dropped by 20 per cent to 320,000 tonnes in the first seven months, falling 7 per cent in value terms to Bt7.2 billion. CP is also focused on the domestic market, targeting trade of 400,000 tonnes of rice this year, both white and jasmine.

Sumeth remained optimistic, however, pointing to higher export prices amid the drop in volume. In addition, the company's export drop could be partially explained by the fact that buyers are opting to purchase more parboiled rice from India, which is offering more attractive prices.

The company projects its total export volume at 620,000 tonnes, down 15 per cent, this year. Its main export market is African countries that focus on parboiled rice. Thailand's total export volume of parboiled rice is 3 million tonnes, with CP's share standing at 280,000 tonnes.

The CEO accepted that the export drop derived from uncompetitive prices. However, the government cannot step back from the pledging policy now, he said, or it will face a storm of protest from farmers.

"It will take about a year to see real results from the government's price-pledging policy. We have to wait and see. At the moment, the government should seriously consider whether to proceed with the scheme or find a suitable way to revise its price-subsidy policy," Sumeth said.

To solve its own export drop, the company will focus more on exporting high-quality product such as parboiled rice to African countries, where consumers' |purchasing power is increasing, |he said.

-- The Nation 2012-10-10

[cloudhopper]

"It will take about a year to see real results from the government's price-pledging policy."

Unlike the current imaginary disastrous results.

[siampolee]

Note that the BAAC received some ninety two billion baht, yes that's right ninety two billion baht, of compensation payment to cover their involvement in the rice pledging scam scheme some two days ago according to the news flash SMS from , ''The Nation.''.

This maladministration is indeed creating a future colossal debt mountain for the Thai people to shoulder in the not too distant future, no doubt the main beneficiaries will of course be insulated from the debt crisis though unlike the common people.

Edited October 10, 2012 by siampolee

[Buchholz]

The government's rice-price pledging policy has paved the way for Siam Indiga to become the country's biggest exporter

additional information on Siam Indiga...

January 16, 2012

Scandal-tainted Siam Indiga looks set to win an allocation of two million tonnes of government rice, which would open the door to massive corruption by politicians, a rice-trading source said.

The government would lose billions of baht from this deal, which would allow the company to monopolise the government's rice stocks through its close connections with politicians, the source said.

A rice-trading source said the Commerce Ministry would soon allocate two million tonnes of government rice, which is now managed by the ministry's Foreign Trade Department, to Siam Indiga. The company will then export the rice to Indonesia and Africa following the government's stock-release plan.

The source said the cost to Siam Indiga would be only Bt11-Bt12 per kilogram compared with the market price of Bt15. The government would claim that the lower price is fair, as the stocks are old rice.

The source pointed out that the low price given to Siam Indiga would let the company and some politicians make a killing from the gaping spread between the cost and the high overseas price.

Siam Indiga is known to be close to bankrupt President Agri Trading, the country's biggest rice exporter during the time that Thaksin Shinawatra was prime minister. The company's real top manager is Apichart Jansakulporn, a former executive of President Agri. He has close relations with Thaksin.

President Agri Trading won a bid for a big lot of rice from the Commerce Ministry in 2007 when Wattana Muangsook, now a banned Thai Rak Thai politician, was the minister.

President Agri has been sued by the Public Warehouse Organisation (PWO) for Bt6 billion in compensation for defaulting on bidding orders in past years. President Agri also reportedly owes banks Bt10 billion.

http://www.nationmultimedia.com/business/Reported-Siam-Indiga-rice-deal-prompts-fears-of-co-30173772.html

.

[Ricardo]

There was an interesting interview with self-exiled former-PM Thaksin on Bloomberg recently

http://www.bloomberg...aksin-says.html

in which Thaksin is reported as saying that the rice-purchase program should run for several more years.

"If we manipulate the mechanism for two years, three years, then things will be moving naturally", he is reported to have said, "The rice price in the world market is increasing."

I must admit that I myself have doubts about efforts to manipulate the global market in the medium-term succeeding, and whether it is right that the Thai government for example should attempt to rig world-prices, in this way. It seems a long way from merely trying to help farmers get a better price locally, as PTP promised pre-election, or the previous administration also attempted to do.

One can only hope that nobody trading in rice-futures uses insider-knowledge of the scheme, and the attempt to "manipulate the mechanism", to make a personal profit on this. That might be seen by some to be immoral, if not technically illegal, if done offshore.

The article also says that the U.S. Department of Agriculture expects Thailand's exports this year to be reduced by 39 percent to 6.5 million tons, less than both India and Vietnam, which would mean that the country is further from its previous position of being the worlds' top-exporter ?

But that estimate cannot be correct, if the Thai government alone is claiming recently to be exporting 7 million tons, in government-to-government direct-deals ?

Edited October 10, 2012 by Ricardo

[ramrod711]

A rice-exporter source said questions were being asked as to whether the government of Prime Minister Yingluck Shinawatra was treating traders equally and fairly.

No

Siam Indiga's name has been linked with the bankruptcy-threatened rice-exporting trading arm President Agri Trading, which was the country's biggest rice exporter from 2003 to 2005, during the tenure of ousted prime minister Thaksin Shinawatra. In that period, critics claimed that political ties were affecting the rice trade. Some traders allegedly benefited from the Commerce Ministry's bidding process for rice in government stockpiles more than the others.

Really?

Siam Indiga's name has been linked with the bankruptcy-threatened rice-exporting trading arm President Agri Trading, which was the country's biggest rice exporter from 2003 to 2005, during the tenure of ousted prime minister Thaksin Shinawatra. In that period, critics claimed that political ties were affecting the rice trade. Some traders allegedly benefited from the Commerce Ministry's bidding process for rice in government stockpiles more than the others.

Shocking! I hope no one is suggesting tht corruption took place.

[Thai at Heart]

Love how baht per kilo numbers are reported whilst exports are USd per ton. That alone is fishy

[asiawatcher]

Surprise surprise. a Thaksin association and the exporter gets grants of 2M tonnes? And was the largest exporter in the Thaksin years? Corruption? Never...

But look at the most damning figures...

This year alone - rice exports to indonesia down 53%, to Philippines down 99%, to Bangladesh down a bees dick off 100%, to China down 66%, Ivory Coast down 46% and on it goes.

Yep this Government in it's first year has been outstanding in performance and are now holding prices up - thus sales are down. And what about the farmers you morons? Stockpiling? Well if one can afford it, and sit and wait - and we know who can - then they are gambling with the country's reserves. Who votes for these idiots?

[KarstenBoAndersen]

This is not a bussiness ! It is corruption on a high level and had always been it !

A new company can not get any rice to export, even it have all the customers etc.

It is a closed society where all business is rotten !

The loosers in the then end is the Thai population !

[Thai at Heart]

Surprise surprise. a Thaksin association and the exporter gets grants of 2M tonnes? And was the largest exporter in the Thaksin years? Corruption? Never...

But look at the most damning figures...

This year alone - rice exports to indonesia down 53%, to Philippines down 99%, to Bangladesh down a bees dick off 100%, to China down 66%, Ivory Coast down 46% and on it goes.

Yep this Government in it's first year has been outstanding in performance and are now holding prices up - thus sales are down. And what about the farmers you morons? Stockpiling? Well if one can afford it, and sit and wait - and we know who can - then they are gambling with the country's reserves. Who votes for these idiots?

They are going to have to dump it, or the next crop is going to arrive and there is going to be absolutely nowhere to put it all. As I said up above though, bandying these numbers around in whole baht per kilo, when the export is in USD per ton shows that there is absolutely no transparency in this deal at all.

11 baht per kilo = 366 USD per tonne, which if this is the price that it is being released to a company at, is absolute PURE corruption since the market rate for Thai rice is significantly higher than this. These prices should be quoted in baht, to the 3rd or 4th decimal. Why does the government even have to sell the product to the miller, just contract him on a cost plus packing charge? The government negotiated the price presumably, why on earth does the miller have to get involved other than as a packing house? Offer the business out competitively for packing from all the major millers, best price wins and loss is limited.

Doing it this way is so blatantly open to corruption, it really is pathetic.

To be perfectly honest, it is so typical that the Thai governments get involved in something as apparently distasteful as cigarette manufacturing, and moves heaven and earth to protect it, but allows such a massive commodity as rice to have become bascially a Sino-Thai corruption fest. What possible benefit do the "private" millers bring to this market? I honestly fail to see it. If ever there was a reason for a supposedly competitive (which is the biggest misnomer of them all since these buyers are essentially a tightly knit cartel) market to be nationalised, this one is it.

So now we have the worst of both worlds, the government doing country to country business, with a private enterprise gouging margin out of the middle for simply providing a packing house. Incredible.

[hellodolly]

Well I was certainly shocked when I read the article. According to it the only winner was Siam Indiga's.

I expected an article about rice growers or politicians that had to get bigger closets.

Some day I am going to learn that reality and head lines on Thai Visa are not always the same.

[SICHONSTEVE]

There was an interesting interview with self-exiled former-PM Thaksin on Bloomberg recently

http://www.bloomberg...aksin-says.html

in which Thaksin is reported as saying that the rice-purchase program should run for several more years.

"If we manipulate the mechanism for two years, three years, then things will be moving naturally", he is reported to have said, "The rice price in the world market is increasing."

I must admit that I myself have doubts about efforts to manipulate the global market in the medium-term succeeding, and whether it is right that the Thai government for example should attempt to rig world-prices, in this way. It seems a long way from merely trying to help farmers get a better price locally, as PTP promised pre-election, or the previous administration also attempted to do.

One can only hope that nobody trading in rice-futures uses insider-knowledge of the scheme, and the attempt to "manipulate the mechanism", to make a personal profit on this. That might be seen by some to be immoral, if not technically illegal, if done offshore.

The article also says that the U.S. Department of Agriculture expects Thailand's exports this year to be reduced by 39 percent to 6.5 million tons, less than both India and Vietnam, which would mean that the country is further from its previous position of being the worlds' top-exporter ?

But that estimate cannot be correct, if the Thai government alone is claiming recently to be exporting 7 million tons, in government-to-government direct-deals ?

'One can only hope that nobody trading in rice-futures uses insider-knowledge of the scheme, and the attempt to "manipulate the mechanism", to make a personal profit on this. That might be seen by some to be immoral, if not technically illegal, if done offshore'.

HOPE!!! are you kidding - there is a 'hope in hell' that this won't happen - easy money for those with the right connections and friends!!!

[khunken]

^^

I too doubt that the Thai government can manipulate international rice trade. What they can do (& are doing) is manipulate the rice trade within the country. I'd recommend Voranai's Bangkok Post article on Sunday as a good take on the subject.

We still haven't got any actual details from the Commerce Minister about the supposed gov't to gov't sales which so far fall into the white lie category.

[Ricardo]

There was an interesting interview with self-exiled former-PM Thaksin on Bloomberg recently

http://www.bloomberg...aksin-says.html

in which Thaksin is reported as saying that the rice-purchase program should run for several more years.

"If we manipulate the mechanism for two years, three years, then things will be moving naturally", he is reported to have said, "The rice price in the world market is increasing."

I must admit that I myself have doubts about efforts to manipulate the global market in the medium-term succeeding, and whether it is right that the Thai government for example should attempt to rig world-prices, in this way. It seems a long way from merely trying to help farmers get a better price locally, as PTP promised pre-election, or the previous administration also attempted to do.

One can only hope that nobody trading in rice-futures uses insider-knowledge of the scheme, and the attempt to "manipulate the mechanism", to make a personal profit on this. That might be seen by some to be immoral, if not technically illegal, if done offshore.

The article also says that the U.S. Department of Agriculture expects Thailand's exports this year to be reduced by 39 percent to 6.5 million tons, less than both India and Vietnam, which would mean that the country is further from its previous position of being the worlds' top-exporter ?

But that estimate cannot be correct, if the Thai government alone is claiming recently to be exporting 7 million tons, in government-to-government direct-deals ?

'One can only hope that nobody trading in rice-futures uses insider-knowledge of the scheme, and the attempt to "manipulate the mechanism", to make a personal profit on this. That might be seen by some to be immoral, if not technically illegal, if done offshore'.

HOPE!!! are you kidding - there is a 'hope in hell' that this won't happen - easy money for those with the right connections and friends!!!

"are you kidding"

One must remember the very-strict libel-laws, and try to be discreet, in posting !

I was also struck by the frequent use of the word "we", in that article :-

"If we manipulate the mechanism for two years, three years"

"We do not just throw away the money", Thaksin said

"I don't think we have much because we keep selling," he said, referring to the rice stockpile next year.

"If we were to push to sell to compete with India"

"We will be doing OK"

About the losses, estimated at about 60 billion baht a year, "We don't lose that much".

Clearly he identifies very closely with the governments' policies and strategy. Some might, mistakenly of course, imagine that they are his own policies, rather than his sister's government's ones.

Edited October 10, 2012 by Ricardo

[slapout]

There have been several attempts to manulipate various commodty futures over the years, by countries, financial institutions, individuals, consortiums, etc. Some had a lot more financial clout/market than Thailand, they have had some short term success, but the markets seem to fall back to a supply/demand/reserves value, which more reflects the worlds wants/needs. Not what some financial egomanic trys to dictate.

The world has a huge capacity to supply, market, transport, and adapt to change, of ag product, as well as quite a lot of players and a few alternatives. Thailand may have a better shoot at setting a regional price on "another popular activity" than they do a rice market.

[tinfoilhat]

hmmmmmm.

probably just coincidence.

there is obiviously something to be said for audacity

Edited October 10, 2012 by tinfoilhat

[ratcatcher]

Yesterday evening I saw a brief news report stating that the government was checking around the country looking for available aircraft hangars and similar buildings to be used for storage of this vast and quickly growing pile of rice they are accumulating.

Who knows, there is a large excess of floor storage space at Don Mueang and I'm sure other airports around the country are also in possession of spare footage. They are going to need it. Mr Thaksin is expecting large accumulations in the rice hedging scheme scam.

"Welcome to Suvarnabhumi International Airport, please stay on the marked walkways and avoid climbing on the piles of rice sacks. Thank you."

[Thai at Heart]

Yesterday evening I saw a brief news report stating that the government was checking around the country looking for available aircraft hangars and similar buildings to be used for storage of this vast and quickly growing pile of rice they are accumulating.

Who knows, there is a large excess of floor storage space at Don Mueang and I'm sure other airports around the country are also in possession of spare footage. They are going to need it. Mr Thaksin is expecting large accumulations in the rice hedging scheme scam.

"Welcome to Suvarnabhumi International Airport, please stay on the marked walkways and avoid climbing on the piles of rice sacks. Thank you."

They are like the mum in law banging on about the million baht dowry.

[GentlemanJim]

It is about time some decent journalists made themselves national heroes by becoming decent INVESTIGATIVE journalists. This country is screaming out for an honest, moral inquiring mind. If you journo's are reading, WAKE UP and do the right thing!

[Buchholz]

Yesterday evening I saw a brief news report stating that the government was checking around the country looking for available aircraft hangars and similar buildings to be used for storage of this vast and quickly growing pile of rice they are accumulating.

Who knows, there is a large excess of floor storage space at Don Mueang and I'm sure other airports around the country are also in possession of spare footage. They are going to need it. Mr Thaksin is expecting large accumulations in the rice hedging scheme scam.

"Welcome to Suvarnabhumi International Airport, please stay on the marked walkways and avoid climbing on the piles of rice sacks. Thank you."

Link to Photo:

http://news.yahoo.com/photos/workers-rest-front-sacks-rice-rice-mill-ratchaburi-photo-120154550.html

Workers rest in front of sacks with rice at a rice mill in Ratchaburi province October 10, 2012. Thailand 's rice intervention scheme is distorting trade around Southeast Asia, attracting rice smuggled from neighbouring countries into Thai government stockpiles, but genuine business remains slack and Thai prices have fallen this week.

REUTERS

http://news.yahoo.com/photos/worker-rests-while-sitting-sacks-rice-rice-mill-photo-120552995.html

A worker rests while sitting on sacks with rice at a rice mill in Ratchaburi province October 10, 2012.

REUTERS

[RubbaJohnny]

However unlikely occured to me that there may be the outside chance it is not a level playing field or as found in theEmerald Islea bent paddy perchance?

[bigbamboo]

It is about time some decent journalists made themselves national heroes by becoming decent INVESTIGATIVE journalists. This country is screaming out for an honest, moral inquiring mind. If you journo's are reading, WAKE UP and do the right thing!

Admirable sentiment but don't forget that when moral, upright public figures have tried it before they have been removed from their posts, threatened with outrageous law suits or just disappeared.

Maybe with more public suppport it might be worth the risk.

Edited October 10, 2012 by bigbamboo

[Thai at Heart]

Yesterday evening I saw a brief news report stating that the government was checking around the country looking for available aircraft hangars and similar buildings to be used for storage of this vast and quickly growing pile of rice they are accumulating.

Who knows, there is a large excess of floor storage space at Don Mueang and I'm sure other airports around the country are also in possession of spare footage. They are going to need it. Mr Thaksin is expecting large accumulations in the rice hedging scheme scam.

"Welcome to Suvarnabhumi International Airport, please stay on the marked walkways and avoid climbing on the piles of rice sacks. Thank you."

Link to Photo:

http://news.yahoo.com/photos/workers-rest-front-sacks-rice-rice-mill-ratchaburi-photo-120154550.html

Workers rest in front of sacks with rice at a rice mill in Ratchaburi province October 10, 2012. Thailand 's rice intervention scheme is distorting trade around Southeast Asia, attracting rice smuggled from neighbouring countries into Thai government stockpiles, but genuine business remains slack and Thai prices have fallen this week.

REUTERS

http://news.yahoo.com/photos/worker-rests-while-sitting-sacks-rice-rice-mill-photo-120552995.html

A worker rests while sitting on sacks with rice at a rice mill in Ratchaburi province October 10, 2012.

REUTERS

10mn tons of anything takes up a lot of space.

Where they are going to store the next crop, God only knows.

[farang000999]

winners: those connected to the corrupt politicians

losers: the other 99.9999999%

[Ricardo]

One should perhaps look further, than the current losses being crystalised whenever the government or a favoured exporter makes a heavily-subsidised sale overseas, and consider what damage might happen if the current high physical-stocks were to have to be dumped on-the-market to make room in the warehouses for the next crop.

This might surely affect world-prices further, if the stocks were suddenly released.

From the Bloomberg article, "Thaksin said the government has about 17 million tons of paddy on hand, and stockpiles of milled rice are estimated at about 4 million tons. Sales to Indonesia, Iraq and Ivory Coast, as well as other countries in the Middle East and Africa, will keep reserves down, he said."

It's reassuring that someone has a good knowledge of the current situation, no doubt PM-Yingluck is also following it closely, to ensure that no corruption occurs and that losses under the scheme are kept to an affordable minimum.

Domestic consumers/voters will also be keenly aware of the price they pay, for their staple food, as the politicians try to increase the prices received by Thai rice-farmers.

[Thai at Heart]

One should perhaps look further, than the current losses being crystalised whenever the government or a favoured exporter makes a heavily-subsidised sale overseas, and consider what damage might happen if the current high physical-stocks were to have to be dumped on-the-market to make room in the warehouses for the next crop.

This might surely affect world-prices further, if the stocks were suddenly released.

From the Bloomberg article, "Thaksin said the government has about 17 million tons of paddy on hand, and stockpiles of milled rice are estimated at about 4 million tons. Sales to Indonesia, Iraq and Ivory Coast, as well as other countries in the Middle East and Africa, will keep reserves down, he said."

It's reassuring that someone has a good knowledge of the current situation, no doubt PM-Yingluck is also following it closely, to ensure that no corruption occurs and that losses under the scheme are kept to an affordable minimum.

Domestic consumers/voters will also be keenly aware of the price they pay, for their staple food, as the politicians try to increase the prices received by Thai rice-farmers.

They may add well burn half of it. Interestingly, they haven't started giving it away domestically yet.

[Ricardo]

They may add well burn half of it. Interestingly, they haven't started giving it away domestically yet.

Perhaps that might be a leading-sign, of an upcoming election, giving it away I mean !

Reminiscent of the good-old-days of EU butter-mountains and wine-lakes !

[Thai at Heart]

They may add well burn half of it. Interestingly, they haven't started giving it away domestically yet.

Perhaps that might be a leading-sign, of an upcoming election, giving it away I mean !

Reminiscent of the good-old-days of EU butter-mountains and wine-lakes !

Well an extra spoon on ever plate in Thailand had to start making a small dent in the pile.

Edited October 11, 2012 by Thai at Heart

[Ricardo]

Perhaps Thailand should aim to be ASEAN's new hub of home-made rice-whisky production ?