Thailand Will Dump Rice: U S Group

[brianP]

It is difficult to determine accurately the amount spent on ag subsidies by individual nations. This is because it can be done in such a variety of ways. There are direct payments, price supports, crop insurance subsidies, disaster payments, price floors, payments for keeping land out of cropping (for environmental reasons), agricultural extension services-- whoa, stop me from going on, you get the picture. Much of the ag aid is indirect, and thus difficult to quantify.

The amount of ag aid to domestic producers by the US and other OECD countries would astound you.

Libertarian websites (which I do not generally hold in special regard) regularly rail against ag subsidies. Here's a quote from one:

Among OECD members (a group of high-income countries), “producer support estimate” rates average about 31 percent of total revenue for the main grain, oilseed, sugar, and livestock products.

http://www.econlib.o...dyPrograms.html

The same website says that farm supports in the US have totaled about $20 billion per year in recent years. Certain commodities are favored. Again from the website:

The average rate of “producer support estimate” for the heavily supported commodities in the United States ranges from about 55 percent of the value of production for sugar to about 22 percent for oilseeds.

The subsidies in developed countries generally favor large farmers. In 2003 the WTO reported that the US gave 90% of its subsidies to large farms.

http://www.slideshar...s-pros-and-cons

Such price supports lead to the regular dumping of US and European ag products on the world market that destabilize entire countries' economies. Ghana and Haiti are two cases in point, where cheap US rice has undermined local economies.

Haiti:

Nearly two centuries of rice cultivation shows that Haiti was self-sufficient in its rice supply up until 1980. However, following a severe flood in the 1970’s that drastically reduced the island’s yield, U.S. companies began to send shipments of rice to the island, soon using their subsidized crop to undersell local farmers.

http://www.worldhung...ials/chavla.htm

Ghana:

Between them, the US, Japan and the EU subsidised their rice production by $16bn (£8.48bn) in 2002, the latest year for which full data are available. The US policy is particularly harmful for the rice-growers of Ghana. In 2003, the US paid $1.3bn in rice subsidises to its farmers and sold the crop for $1.7bn, effectively footing the bill for 72% of the crop.

Many of these subsidies go to big Arkansas rice farms. One company alone, Ricelands of Arkansas, was the recipient of US agricultural subsidies totalling $490m between 1995 and 2003.

...Ghanaian rice is only available for six months of the year. The poor quality of Ghanaian rice is no secret. Lack of government subsidies mean the farmers cannot afford to invest in any machinery to help with harvesting the rice. "We do not have a combine harvester. It is all done by hand," Ms Salifu said.

Neither does the village have a mill. Sometimes the farmers lay the rice out on the road and let the cars run over the crop to separate the husk from the grain. Or they beat the crop in the fields with heavy sticks. Either way, the crop ends up broken and with stones in it.

http://www.guardian....a05.development

The tale of ag subsidies and the globalized trading system is a complicated one. Most countries support their local ag industry, with two notable exceptions: Australia and New Zealand, who made a decision to move away from price supports. (New Zealand ended heavy supports in 1984.) Though their farmers receive a measly 3-5% in aid (as a percentage of crop value), they seem to be doing well. In fact, unlike other countries, people are choosing to stay in the ag sector. Why this should be should interest us, I think. And if Australia and New Zealand can do this, why not other wealthy countries as well?

http://newfarm.rodal...subsidies.shtml

A good post DITF.

It could be speculated that some large agro businesses are not in the actual business of growing crops, but rather are in the business of clever manipulations to make money out of government sponsored subsidies rather than the product itself.

They have been getting their 64k a year not to grow on their worthless land in the South and North for a half century, the US beef and dairy industries ruled America in the 50s to 90s, but now people are dying of cholesterol and heart problems from all the animal fats ingested thru life, and smartening up,or is it the shitty taste and no quality?

[Mosha]

What is the difference between rice and oil? The OPEC cuts supply, oil prices sky rockets. When it eases supply, oil prices go down. But when it comes to rice, the rules are changed? Dumping happens when a country is selling a commodity to the global market as prices lowers than what it sells for domestically - at least that is how I understand this economic term. If Thailand were to release its stock of rice, the price of global rice will decrease. However, if that rate is still higher than the domestic price of rice, it should not be termed as dumping.

Oil companies run the world.

[cdnski12]

BookMan is correct. The USA complaining of Agricultural Susidies is the Proverbial Wolf In a Sheep's Skin. The US Govt grossly subsidises the US Corn Crop, thereby skewing all world trade in Animal Meats, because corn is the prime constituent of most animal feeds. We are talking many 100's of billions of USD. Nary a word about this in the Presidential Debates. If the USA stopped it's insane wars, terminated the corn subsidy which is not really necessary and cut back drastically on the money flooding into Israel ... it could balance it's budget in a short time.

[maidu]

The Thai rice is much more delicious than the non flavored bland rice from USA, too bad they don't price rice on flavor and micro-nutrient factors. Besides being genetically engineered,the US likes to nuke and process the the good stuff out of grains for longer shelf life,adding some vitamins and nutrients artificially later. Biggest shame is that extra foodstuffs globally can't be shared with the Millions starving right now in the world!

I agree with your last sentence. However, I reside in Thailand and eat out often. When possible, I go to Muslim restaurants. Why? Because Muslim places know how to make yellow rice and they also have a lovely semi-hot sauce on offer. Thai places have just 3 two types of rice: Plain white (boring, tasteless, and all-starch), rice with meat (ok, but usually MSG laden), and sticky rice (only available at street venders or the highest class Thai restaurants. Not available at regular Thai restaurants).

When Thais can figure out how to make rice that tastes good, I'll be there. Better than that, if they can segue towards more nutritious fare, then I'll stand up and applaud. P.S., I go to a Burmese border town for even tastier treats (tea house fare, potato pasties, etc), but that's another story.

Edited October 20, 2012 by maidu

[OzMick]

IMHO the dumping fear is based on the inevitable consequences of an idiotic scheme. As Thailand holds out for higher prices, the warehouses continue to fill until no more adequate storage is available. They are then forced to bite the bullet and sell at market prices while the huge storage rots to zero value, or sell for whatever price they can get.

This not only leads to huge losses on the stored rice, but causes market fluctuations which will hurt other sellers.

The commerce minister Mr Boonsong said "The scheme doesn't affect rice exports in other countries. On the contrary, they benefit from pledging programs." He should be informed the aim is to benefit his own country, not their competition.

The grandiose schemes of the big fish kicked out of his little pond, trying to manipulate world markets, will only waste Thailand's resources - but I'm sure he will make a profit along the way.

[Konini]

What is the difference between rice and oil? The OPEC cuts supply, oil prices sky rockets. When it eases supply, oil prices go down. But when it comes to rice, the rules are changed? Dumping happens when a country is selling a commodity to the global market as prices lowers than what it sells for domestically - at least that is how I understand this economic term. If Thailand were to release its stock of rice, the price of global rice will decrease. However, if that rate is still higher than the domestic price of rice, it should not be termed as dumping.

Oil companies run the world.

This is very true. Big difference with the pledging scheme is that the rice producing countries don't have a cartel like the oil producers. That makes stockpiling a very dangerous gamble - OPEC sticks together, other rice producers will take the opportunity to carve their own slice of the market.

[ricardofel]

If stored rice gets even a little bit moist, it can rot. Quality of rice may show its fuzzy head in the equation. Thailand's giant stockpile may lose value faster than you can say; "Thaksin wants the program to continue for private reasons which he won't articulate. Yet surely those reasons revolove around making money or political gain."

That's the big issue....they don't care if the Thai rice goes bad. They'll just dump it on another 3rd world country.