Thai Rice Mountain Casts Shadow Over World Market

[webfact]

Thai rice mountain casts shadow over world market

by Apilaporn Vechakij

BANGKOK, Oct 24, 2012 (AFP) - Thailand's status as the world's top rice exporter is under threat from a controversial scheme to boost farmer incomes that has resulted in a growing mountain of unsold stocks, experts warn.

Prime Minister Yingluck Shinawatra's year-old policy to buy rice from farmers for 50 percent more than the market price has hit the competitiveness of Thai exports, which are expected to almost halve in 2012.

"It's the worst year we have ever faced," said Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association.

"We are already losing our market share in the world to our competitors, especially the newcomers like Cambodia and Myanmar which are producing more and more rice for export," he told AFP.

Rice is the staple food for more than three billion people -- nearly half the world's population. Last year Thailand had nearly a third of the global export market.

But its worldwide share is forecast to drop to less than one-fifth in 2012, according to the US Department of Agriculture (USDA), which expects the Southeast Asian nation to fall behind rival exporters Vietnam and India.

Thailand produces about 20 million tonnes of rice each year on average, about half of which is normally sold overseas.

This year, however, exports are expected to reach only about 6.5 million tonnes, according to the exporter association and the USDA.

With its warehouses filling up quickly, Thailand is running out of space to house its unsold stocks and even briefly considered using an aircraft hanger in Bangkok's number two airport Don Mueang.

The longer the government holds on to the stocks, the bigger the drain on the public finances.

Yet experts say if Thailand abandons the scheme now, it risks flooding the world market.

"They are in a jam because with all this rice hanging around they have very little option to do anything else other than just keep on going because otherwise the rice price will drop and then they will have political problems," said Ammar Siamwalla, an economist with the Thailand Development Research Institute Foundation (TDRI).

"The Vietnamese and the Indians are rubbing their hands. They're taking advantage of the fact that we've slowed down our exports considerably," he said.

If Thailand tries to shift its glut of rice on world markets now, "the price would plummet," Ammar warned. "There is no exit strategy."

He estimates that Thailand has about 10 million tonnes of stock sitting around in storage. The USDA predicts the country will have stocks of about 9.4 million tonnes at the end of 2012 and 12.1 million tonnes in 2013.

China and India also have large stockpiles but their production and domestic consumption are much higher.

While the scheme is putting strains on Thailand's government finances, it has been welcomed by many farmers, whose support helped sweep Yingluck to a landslide election victory last year.

Her older brother Thaksin Shinawatra, who was ousted as prime minister by royalist generals in a coup in 2006, is hugely popular with Thailand's rural poor thanks to his populist policies while in power.

"I want the government scheme to continue because, at the very least, it helps us farmers sell our rice at a high price," said Supoj Joopia, who has 9.6 hectares (24 acres) of rice paddy in Chachoengsao province east of Bangkok.

He said his annual earnings from rice cultivation have soared by more than half to 780,000 baht ($25,000) since signing up.

About four million households rely to some extent on farming in Thailand, of which 900,000 have joined the scheme so far, according to the TDRI.

The policy is seen as benefiting owners of large farms in particular as they have a bigger surplus to sell to the authorities after their own household consumption. The scheme has also been dogged by allegations of corruption.

The government says it is confident that it can find buyers for its rice on world markets at a price that will raise the living standards of its farmers.

It says it has signed deals to sell rice directly to other countries.

Nigeria, Iraq, Indonesia, Ivory Coast and South Africa are the top customers so far this year, according to the Thai Board of Trade, which says exports slid 45 percent in January-September from a year earlier, to 5.0 million tonnes.

"We're still confident that we can keep releasing the rice that we have," Commerce Minister Boonsong Teriyapirom said earlier this month.

But not everyone is so optimistic and the fear is that Thailand might struggle to recapture lost market share.

"If the situation continues like this, you will see a lot of exporters gone out of business," Chookiat said.

-- (c) Copyright AFP 2012-10-24

[Ricardo]

Thailand's status as the world's top rice exporter is under threat

Too late, I'm afraid, we're now only number-3 after India and Vietnam, for what it's worth.

Lost face for the government ? Only if they admit what they've achieved !

If Thailand tries to shift its glut of rice on world markets now, "the price would plummet," Ammar warned, "there is no exit strategy".

The Thai Rice Exporters Association are of course arguing their own members' case, they used to make good money by exporting rice, and no longer can, especially if other companies get what rice is released for sale. But that doesn't mean that their fears about the consequences of any disorderly change-in-strategy are unfounded.

It might have been better to build agreement with other major rice-exporters, and try to set a higher base-price below which international-efforts to support prices might have had some effect, rather than PTP's go-it-alone strategy. Too late now !

Did voters understand pre-election, that they would be supporting a public-funded plan to "manipulate the mechanism for two years, three years", as PTP-strategist former-PM Thaksin recently said in Singapore, reported on Bloomberg last month ?

http://www.bloomberg.com/news/2012-09-24/thai-rice-policy-should-stay-several-more-years-thaksin-says.html

He certainly seems well-informed about both milled/paddy-stocks currently held, and government-to-government sales which are claimed, but of which details (especially sale-prices & shipment-dates) are unavailable, and which have thus far not been seen to replace previous shipments. Hence the rising stocks in warehouses.

It could all easily end in tears. But hey, it's only public-money, after all !

[Pib]

See what you get when you throw a mountain of taxpaper's money at this rice scheme: a mountain of rice the govt can't sell. Or well, it's only money.

No argument rice farmers really like the scheme as its putting more income in their pockets, but it's sure costing the country in taxpayer dollars and greatly reducing rice exports. Wonder how long the government will continue to dump truckloads of money at the base of this rice mountain they are building? It's years before the next election; maybe the govt should more wisely use the money until it vote buying time again.

[AleG]

"I want the government scheme to continue because, at the very least, it helps us farmers sell our rice at a high price," said Supoj Joopia, who has 9.6 hectares (24 acres) of rice paddy in Chachoengsao province east of Bangkok.

He said his annual earnings from rice cultivation have soared by more than half to 780,000 baht ($25,000) since signing up.

About four million households rely to some extent on farming in Thailand, of which 900,000 have joined the scheme so far, according to the TDRI.

The policy is seen as benefiting owners of large farms in particular as they have a bigger surplus to sell to the authorities after their own household consumption. The scheme has also been dogged by allegations of corruption.

I'm not a well qualified Agriculture Minister, but my stupid suggestion, if the idea is to help poor farmers, would be to cap the subsidy to farms with X number of hectares (say, 20) and then only Y tons of rice, per year could qualify for a subsidy, so we don't end up with Somchai's three rai paddy producing 1000 tons of rice per crop, if you know what I mean.

As it is now, the richer and bigger the rice producer, the more they benefit from the scheme. Why should 60 or 70 per cent of the money get swallowed by big fish to give the crumbs to the farmers who are really in need?

Oh, right, the big fish deliver votes to the people that then siphon obscene amounts of money back, that's why.

[otherstuff1957]

Notice that the farmer they quoted has 24 acres of land - that's 60 rai. The average farmer in Thailand owns about 22 rai.

Just as the article said, it's the larger landowners who are reaping the most benefits. The father of one of my old students owned about 1000 rai of rice land. His children now go to one of the more expensive international schools!

[chooka]

A news program

http://www.youtube.com/watch?feature=player_detailpage&v=TRm2Dm-97as

[somtumlion]

Its funny how the ardent TV Red shirt Thaksin lovers are STONE COLD SILENT about this stupid program...

[kotsak]

and this from BBC...

http://www.bbc.co.uk/news/business-20053024

[Pimay1]

Its funny how the ardent TV Red shirt Thaksin lovers are STONE COLD SILENT about this stupid program...

There is no defence for the defenceless. I have been expecting the usual but....but....but.... the Democrats ect.

[TommoPhysicist]

The way to help farmers would be to buy the rice directly off them.

The headline should read

"Prime Minister Yingluck Shinawatra's year-old policy to buy rice from "greedy middle men" for 50 percent more than the market price, while paying the farmers less than before."

Add to that the fact rice is traded in US$, and the strong value of the Baht against the dollar, makes the Thai rice crop uneconomic to buy by foreign countries. The middle-man taking all the profit makes it uneconomic to grow and sell in Thailand.

We grow 5 rai of rice, what we don't eat ourselves, we give away .... not worth selling.

Edited October 24, 2012 by TommoPhysicist

[chooka]

Its funny how the ardent TV Red shirt Thaksin lovers are STONE COLD SILENT about this stupid program...

There is no defence for the defenceless. I have been expecting the usual but....but....but.... the Democrats ect.

Can you really tell a red supporter from yellow just by looking at thier avatar? So if I was to agree with something the Yingluk government did would that make me a dirty red lover? Then if I was to disagree on something (Like this rice) what would that make me, still a dirty red lover simply because I may or may not have agreed on something prior? Sounds a little cold war mentality. I have actually noticed on this forum that some people do not have tunnel vision, wear blinkers and look at things with an open mind.

There is no them and us and shouldn't be and calling for red supporters to come out and voice an opinion is like the KKK on a hunting trip. Those so called dirty reds who like Yingluk are probably standing beside you at the moment on this one and that is why you can't hear them.

[smedly]

See what you get when you throw a mountain of taxpaper's money at this rice scheme: a mountain of rice the govt can't sell. Or well, it's only money.

No argument rice farmers really like the scheme as its putting more income in their pockets, but it's sure costing the country in taxpayer dollars and greatly reducing rice exports. Wonder how long the government will continue to dump truckloads of money at the base of this rice mountain they are building? It's years before the next election; maybe the govt should more wisely use the money until it vote buying time again.

the problem with this government is the fact that they refuse to publish debt levels - they are hiding it, so nobody will know the extent of the problem until it's too late, I'll predict that this government will go out with a bang and only then will it be revealed just how bad things are, it will also be revealed that MP's siphoned off large amounts of cash from various government funded projects into their own pockets - billions and billions of baht will have gone missing, Thaksin will also have recieved his cut from the spoils making up for the confiscated funds.

The country will have been pillaged by these thugs at a level of corruption never seen before, thailand will emerge from this in ruins - you heard it here first

what might help Thai exports would be to deflate the currency, the baht has been too high for too long - a valuation needs to happen but that doesn't suit many of the rich who want to continue overseas investments making the poor suffer and exports suffer

Edited October 24, 2012 by smedly

[TommoPhysicist]

No argument rice farmers really like the scheme as its putting more income in their pockets,

I'm a rice farmer and I'm arguing.

This has given us no extra cash at all, zero, zip, zilch in our pocket or anywhere else.

[Scully]

I know Thai people always favor the new rice crop as it gives a much better flavour. Surely by storing this rice for any length of time is cutting its shelf life.

Not the best thing for the worlds kitchen to do.

[siampolee]

Thailand's Ponzi rice pledging scam scheme indeed a poisoned chalice.

[fstarbkk]

"I want the government scheme to continue because, at the very least, it helps us farmers sell our rice at a high price," said Supoj Joopia, who has 9.6 hectares (24 acres) of rice paddy in Chachoengsao province east of Bangkok.

He said his annual earnings from rice cultivation have soared by more than half to 780,000 baht ($25,000) since signing up.

About four million households rely to some extent on farming in Thailand, of which 900,000 have joined the scheme so far, according to the TDRI.

The policy is seen as benefiting owners of large farms in particular as they have a bigger surplus to sell to the authorities after their own household consumption. The scheme has also been dogged by allegations of corruption.

I'm not a well qualified Agriculture Minister, but...

Oh, I wouldn't worry about that too much; neither is the current office holder, apparently.

[jerrysteve]

It has come back to bite them in the ARSE...

s

ALL their Scheming really paid off!!!! They outsmarted themselves....

It looks like those scientists were right...eating white rice all these years has dulled their brains...

Those Orangatans they are using for kick boxing are smarter than the people in government

Edited October 24, 2012 by jerrysteve

[dcutman]

Dont worry folks the YS govt is on top of things, news in the very near future, (tomorrow) a govt to govt deal with mystery country, and no details.

If you shovel enough shit, things will come up roses.

[hellodolly]

Its funny how the ardent TV Red shirt Thaksin lovers are STONE COLD SILENT about this stupid program...

There is no defence for the defenceless. I have been expecting the usual but....but....but.... the Democrats ect.

Can you really tell a red supporter from yellow just by looking at thier avatar? So if I was to agree with something the Yingluk government did would that make me a dirty red lover? Then if I was to disagree on something (Like this rice) what would that make me, still a dirty red lover simply because I may or may not have agreed on something prior? Sounds a little cold war mentality. I have actually noticed on this forum that some people do not have tunnel vision, wear blinkers and look at things with an open mind.

There is no them and us and shouldn't be and calling for red supporters to come out and voice an opinion is like the KKK on a hunting trip. Those so called dirty reds who like Yingluk are probably standing beside you at the moment on this one and that is why you can't hear them.

They are to ashamed of them selves. You might want to turn it around and ask why the red shirt supporters are always putting down the Dems.

[hellodolly]

No argument rice farmers really like the scheme as its putting more income in their pockets,

I'm a rice farmer and I'm arguing.

This has given us no extra cash at all, zero, zip, zilch in our pocket or anywhere else.

The Government knows that so they gave you a credit card so you could get deeper in debt.

Now they can not only make money off of your labor but they can make more money off of interest.

[LuckyLew]

Only stupid people buy things for more than they are worth

Then again they are not spending their own money

Seems Gov;t is happy to take tax payers money and give it to

the farmers and pay off the middle men

What a farce

Everyone but Thaksin thins this is good

Then again giving the poor farmers money is in his best interest

as they will surely vote for more of the same

[Halion]

Simply vote buying at the expense of the both the Thai position in the global market place and the Thai nation as a whole.

These people do not care how much damage and destruction they cause as long as they can maintain their position and status in the community. They are not working for Thailand but for their own benefit Short term thinking engendered for personal gain.

[TomTao]

But not everyone is so optimistic and the fear is that Thailand might struggle to recapture lost market share.

"If the situation continues like this, you will see a lot of exporters gone out of business," Chookiat said.

Maybe thats the idea, keep the exporters who have ties to the dynistic clan alive and let the rest fall by the wayside, the less snouts in the trough to feed the better.

[babydriver]

what might help Thai exports would be to deflate the currency, the baht has been too high for too long - a valuation needs to happen but that doesn't suit many of the rich who want to continue overseas investments making the poor suffer and exports suffer

With Thai foreign reserves higher than the US and slightly below France and Italy that is impossible.

[jbrain]

What, do they still have a mountain of rice?

I thought it was all sold by now through government to government deals.

[jbrain]

No argument rice farmers really like the scheme as its putting more income in their pockets,

I'm a rice farmer and I'm arguing.

This has given us no extra cash at all, zero, zip, zilch in our pocket or anywhere else.

The Government knows that so they gave you a credit card so you could get deeper in debt.

Now they can not only make money off of your labor but they can make more money off of interest.

How does one over his head in debt pays interest on loans, let stand the initial amount ?

[kimamey]

No argument rice farmers really like the scheme as its putting more income in their pockets,

I'm a rice farmer and I'm arguing.

This has given us no extra cash at all, zero, zip, zilch in our pocket or anywhere else.

The reason is probably in your earlier post. 5 rai probably isn't enough to make it work for you. From what I've heard it's the big boys who are making the money.

[manfrommanteo]

Buying votes to enrich themselves and sold out the country. When will those who get bought ever figure out that they get screwed? So socialist populist programs don't work. Just check the track record. But the fools keep clamoring for more.

[asiawatcher]

The stupidity of the scam scheme falls squarely on the shoulders of a manipulated puppet calling herself a 'Prime' minister. If she had any decency she would distance herself from her criminal counter part, take the heat for this ridiculous scam, apologise to the tax payers and start letting the rice flow to market and resign as PM. The rice won't last in storage so better to get some pay day than writing off not only the money but the stock as well.

As stated yesterday, she has already flamed out and this gone down in history as the worst Govt policy of any of the past 26. Doing the bidding of an exiled criminal, one whose only motivation is vote buying and greed, would in my opinion, require immediate impeachment. Toss her out. A year of Peu Thai has doubled the cost of living, lost thousands of jobs and crashed many businesses. This insanity has to stop as the debts keep rising and the use of taxpayers funds being squandered mercilessly on scams to feed the pigs at the money trough.

Miss Yingluck, have the guts to resign. You and your corrupt party are an abject failure to your people.

[Ricardo]

No argument rice farmers really like the scheme as its putting more income in their pockets,

I'm a rice farmer and I'm arguing.

This has given us no extra cash at all, zero, zip, zilch in our pocket or anywhere else.

The Government knows that so they gave you a credit card so you could get deeper in debt.

Now they can not only make money off of your labor but they can make more money off of interest.

How does one over his head in debt pays interest on loans, let stand the initial amount ?

Using the money one gets paid, for voting the 'right' way, in the next election of course !

Or voting for the party which promises to cancel the debts, which it previously got you into, S.O.P. !