Rising Costs Offset Gains Of Rice Price-Pledging

[Lite Beer]

SPECIAL REPORT

Rising costs offset gains of rice price-pledging

Thanapat Kitjakosol

The Nation on Sunday

BANGKOK: -- Populist policies partly responsible for farmers' predicament, say some experts

Despite the government's much-hyped rice price-pledging policy guaranteeing a minimum rate of Bt15,000 per tonne of rice per rai for one crop, farmers are still burdened with high farming costs which reduce their margin to only Bt4,000 to Bt6,000.

The figure will be even lower, given the ideal farming output at one tonne of rice per rai of farmland. However, in reality unfertile rice paddies yield only Bt600 to Bt700 per kilo of rice per rai. Even worse, the populist policy has prompted a rise in the rent of farmland by about 30 per cent across the country.

Opas Pinkaew, a farmer based in Nonthaburi's Bang Yai district, said he had earned about Bt8,000 per tonne per rai because of already high farming costs, which would rise further in the future. "Without the government's rice price-pledging policy, farmers will simply face a dead-end in their career shouldering high farming costs," he added.

The 48-year-old, who owns 20 rai of farmland and leases another 11 rai, has a long list of expenditures: rent at Bt700 per rai, fertiliser Bt800 per rai, rice seed sire Bt600 per rai, insecticides, petrol for motorised insecticide sprayers, in addition to wages paid to farmhands, to people who spray insecticides, all of which total up to Bt7,000 per rai.

Another farmer living nearby, Amphorn Buajan, gave a detailed list of her spending on farming per rai: rent Bt1,000 - 30 per cent higher, which she said was a result of the populist policy; pre-ploughing steps and ploughing Bt350; scattering of seed sire Bt50; weed-killing chemicals Bt50; insecticide spraying Bt200; rent for crop harvesting tractor Bt300.

The list continues: fees for trucks transporting rice to milling houses Bt200, fertiliser Bt850, secondary use of rice-killing chemicals and insecticides Bt1,665, or Bt333 each on five occasions. This amount will double during a locust attack. Traditionally, hirers of farmhands will also have to provide them free drinking water and meals, or even liquor and energy drinks in after-work feasts, she said.

Amphorn, 58, said the other costs per rai included rice seed sire Bt600; petrol for motorised insecticide sprayers Bt1,000; rent for water pumps and petrol Bt1,150. After adding wages for farmhands, her cost could go up to Bt6,252, or Bt7,930 occasionally if locusts have to be dealt with.

After automatic deduction for moisture content and foreign objects of about Bt3,000 per tonne, Amphorn said the government-pledged rate of Bt15,000 was reduced to Bt12,000. For her 12-rai rice paddies, Amphorn said she would receive about Bt48,800 from the amount supposedly set at Bt144,000 based on the Bt12,000 moist-deducted rate.

Withoon Plianjamroon, director of Bio Thai - an NGO promoting farming relying on biochemistry - said the rent had increased from Bt1,000 to Bt1,500 after the price-pledging policy came into effect, especially in central provinces which have long been home to Thailand's rice production. "For three crops, a farmer will pay Bt4,500 per rai as farmland rent," he added.

The price of fertilisers have increased from Bt750 per 25kg sack to Bt900 in one year, and so have the prices of insecticides and other chemicals. Another populist policy raising the daily minimum wage to Bt300 has made it more difficult for farmers to seek willing and punctual farmhands, or expect them to reach their full productivity. Citing a figure by the Office of Agricultural Economics, Withoon said the per-rai farming cost at Bt4,800 had increased to Bt6,240.

Wichian Phuanglamjiak, a deputy head of the Thai Rice Growers' Association, said the estimate of per-rai farming cost was higher at Bt7,000 to Bt9,000, while the post-deduction rate for a similar policy initiated, but no longer in use, by the Democrat-led government would earn farmers Bt7,500 while the rate designated by the current government would earn them Bt12,000, however, with a delay in payment. He did not elaborate.

According to figures by the US Department of Agriculture, Thailand is ranked seventh in an eight-country rice output table among Asean countries. Vietnam tops the list with 874kg per rai, while Thailand's output is 452kg, slightly better than Cambodia's 415kg.

-- The Nation 2012-11-11

[asiawatcher]

The Dems should use this breakdown in their censure motion. Well done - save a lot of time...

[johna]

The farmers in central Thailand are getting ฿13000 per tonne, the most common excuse given for this low price is is moisture content is to high, I doubt any farmer is getting 15000

[Mosha]

Why does it mention rent? I thought the farmer had to own the Chanote?

[Moruya]

Up in my wife's village, there is way more sugar cane, tapioca and corn being grown than rice. A lot of the rice being grown is for personal consumption.

[jonclark]

Irrespective of the politics, one thing is clear there is a large part of Thailand's working population that is in dire need of help and modernization. To be a farmer is be a fundamental part of the cultural landscape, but to weighed down with crushing debts, poverty and no way out. Throwing money at the problem will not solve the lack of long term financial sustainability that currently exists. It maybe that in order for farming to be sustainable small local farmers may need ot be replaced by large scale corporate farms and farm labour employed elsewhere. Not a nice thought, but one which needs considering

[Mosha]

Up in my wife's village, there is way more sugar cane, tapioca and corn being grown than rice. A lot of the rice being grown is for personal consumption.

The few paddies we had down here in the tambon, are now dug up and are growing palm oil.

[edwinchester]

Why does it mention rent? I thought the farmer had to own the Chanote?

Even farmers who rent were supposed to benefit in the hoped for rise in the price of rice.

The reality is as the OP. Rising costs have put profit to what they had in previous years.

In our village some people are charging 2000 bht per rai as rent.

[Thai at Heart]

After automatic deduction for moisture content and foreign objects of about Bt3,000 per tonne

Why is this automatic? Surely not the middle man gouging the farmer?

[jerrysteve]

The Thais never seem to learn but the hard way. The handwriting was already on the wall long ago.

Free markets dictate the price in all world markets, they failed to see the forest thru the trees.

[slapout]

The real red flag for this scam, look at the amount of money the whole process is costing the government (from farmer thru drying, sacking, transport, storage, treatment, commissions, product loss, etc) vs the world market price of rice..

There have been some observations that the budget allowed/spent vs amount of rice reported in storage more than doubles the 15 or 20 baht being bandied around. This type of scam is being conducted in other farming produce. rubber, some fruits, pork, etc. Then look at the school tablet, flood relief payments, flood prevention projects, fuel price at pump, etc.

Corruption/theft has gone from a deep cut concern, to a major life supporting loss of blood, over the past few months.

[belg]

1) if the crops does not bring enough money, why not change to something else ?

2) why not take a loan to buy the land you work on, hence to cut out the yearly rent cost... much better than to spend on booze, cigarettes, gambling, hookers

[Thai at Heart]

The real red flag for this scam, look at the amount of money the whole process is costing the government (from farmer thru drying, sacking, transport, storage, treatment, commissions, product loss, etc) vs the world market price of rice..

There have been some observations that the budget allowed/spent vs amount of rice reported in storage more than doubles the 15 or 20 baht being bandied around. This type of scam is being conducted in other farming produce. rubber, some fruits, pork, etc. Then look at the school tablet, flood relief payments, flood prevention projects, fuel price at pump, etc.

Corruption/theft has gone from a deep cut concern, to a major life supporting loss of blood, over the past few months.

The figures are easy to see. They deduct 30% from the farmer up front, but then assume they have paid 15k for the rice, reduce the volume by yield and moisture loss, and you arrive at the prices in the market, minus the profit.

Problem us they have already penalized the farmer for moisture and yield once already. The middlemen are having their cake and eating it.

The farmer is subsidizing the millers processing yield. What an utter con for the farmer.

[Hugo6]

red herring from The Nation - costs are up and it is the fault of the rice program.

This guy Thanapat Kitjakosol needs to go out and buy a brain fast.

[rubl]

"Without the government's rice price-pledging policy, farmers will simply face a dead-end in their career shouldering high farming costs," he added.

No need to worry, money is no problem. The government already reserved up to THB 400 billion in the 2013 fiscal year budget.

[Skywalker69]

The farmers in central Thailand are getting ฿13000 per tonne, the most common excuse given for this low price is is moisture content is to high, I doubt any farmer is getting 15000

In some areas they get 11 000thb

[Thai at Heart]

The farmers in central Thailand are getting ฿13000 per tonne, the most common excuse given for this low price is is moisture content is to high, I doubt any farmer is getting 15000

In some areas they get 11 000thb

Read the article standard deduction for moisture of 30%. They are entitled to test for moisture, but 30% sounds almost exactly like the milling yield to me. Husk, bran etc.

The milling yield is the Millers responsibility not the farmer. I can't believe there us anything like 30% moisture loss from paddy to bag, unless this is straight from the field. If so, it's a con of the highest order.

[clockman]

As per usual politicions practising true buddhists tenets, iam allright jack!

[Phatcharanan]

2) why not take a loan to buy the land you work on, hence to cut out the yearly rent cost... much better than to spend on booze, cigarettes, gambling, hookers

Probably because the owner does not want to sell

[Thai at Heart]

2) why not take a loan to buy the land you work on, hence to cut out the yearly rent cost... much better than to spend on booze, cigarettes, gambling, hookers

Probably because the owner does not want to sell

Because a bank rarely treats farming income as earnings.

[OzMick]

I wonder if the clodhoppers will work out that paying a big subsidy which allows rents to rise was part of the scam, or be grateful to PTP because without the subsidy they'd never be able to pay the higher rents.

[hellodolly]

The Dems should use this breakdown in their censure motion. Well done - save a lot of time...

Well it certainly is a nice break down but I am less than enthused about it is as it is from the Nation.

They are not what I would call a reliable source.

[hellodolly]

Irrespective of the politics, one thing is clear there is a large part of Thailand's working population that is in dire need of help and modernization. To be a farmer is be a fundamental part of the cultural landscape, but to weighed down with crushing debts, poverty and no way out. Throwing money at the problem will not solve the lack of long term financial sustainability that currently exists. It maybe that in order for farming to be sustainable small local farmers may need ot be replaced by large scale corporate farms and farm labour employed elsewhere. Not a nice thought, but one which needs considering

Well there is another alternative. It is my understanding that both Viet Nam and Cambodia get a higher tonnage per rai.

Of cource it would mean not looking good. So i guess that idea is out the door.

Also a few years back it was proven that using buffalo on small farms was more profitable than machinery. Not sure if the scam covers small farmers.

[Nisa]

The farmers in central Thailand are getting ฿13000 per tonne, the most common excuse given for this low price is is moisture content is to high, I doubt any farmer is getting 15000

In some areas they get 11 000thb

Then it would seem using the average of 12,000 as they have is about right.

[dcutman]

The farmers in central Thailand are getting ฿13000 per tonne, the most common excuse given for this low price is is moisture content is to high, I doubt any farmer is getting 15000

In some areas they get 11 000thb

Then it would seem using the average of 12,000 as they have is about right.

Yes B12,000 is could be about right, for those farmers that can afford to wait for the delayed payment on delivered rice. For those that cant wait and need some money desperately, to pay expenses and keep farming. there are reports millers are paying much less for payment on delivery. B8500 to B10,500 depending on desperation.

[Nisa]

The farmers in central Thailand are getting ฿13000 per tonne, the most common excuse given for this low price is is moisture content is to high, I doubt any farmer is getting 15000

In some areas they get 11 000thb

Then it would seem using the average of 12,000 as they have is about right.

Yes B12,000 is could be about right, for those farmers that can afford to wait for the delayed payment on delivered rice. For those that cant wait and need some money desperately, to pay expenses and keep farming. there are reports millers are paying much less for payment on delivery. B8500 to B10,500 depending on desperation.

Sounds to me like they should find a new line of work if they have such cash flow problems in a business that already is losing proposition for the small guy and needs hefty government subsidies to make even those not cash strapped to barely break even.

[OzMick]

This policy is both hugely expensive and failing to achieve its stated aim (to substantially lift the income of poor rice farmers). Is there one member of this government who is NOT a landowner benefiting from higher rental returns?

That is a clear conflict of interest. Failing to declare such a conflict, proposing and continuing to support a failing policy with hugely negative effects is corruption.

[Nisa]

This policy is both hugely expensive and failing to achieve its stated aim (to substantially lift the income of poor rice farmers). Is there one member of this government who is NOT a landowner benefiting from higher rental returns?

That is a clear conflict of interest. Failing to declare such a conflict, proposing and continuing to support a failing policy with hugely negative effects is corruption.

No clue about the conflict of interest part as I am from a country where government officials routinely pass laws that benefits companies they have interest but as for it not working ... that is kind of scary and should be a wake up call. If these folks cannot make money even with the government over paying for their rice to the point of not being able to sell it at even a break even point then it is time to let these farmers go under and be gobbled up by the larger farming companies. Thailand has simply reached the point where they are discovering in a developed nation, the family farmer is not generally a profitable business.

[Moruya]

Up in my wife's village, there is way more sugar cane, tapioca and corn being grown than rice. A lot of the rice being grown is for personal consumption.

The few paddies we had down here in the tambon, are now dug up and are growing palm oil.

That makes it clear to me the benefit of the rice policy to smallholders

Sent from my Nexus 7 using Thaivisa Connect App

[dcutman]

Nisa

What a typical corporate mentality.

Pack the bags, sell the farm, move to the city and work in a factory?

Maybe the government could offer these farmers some education in modern crop management. Most rice farmers only grow rice. (one of the most soil exhaustive crops) Thats all they know, with some proper education in crop rotation, they could easily increase yields, and reduce the amount of chemicals they need to buy, making family farming a profitable business.

This pledging scam is only further hurting the farmer in that respect. Take 5 or 10% of the money from this govt scam and put it in eduction on growing different crops, and research on higher yielding crop seed and many of the poor farmers will be spared from its/your corporate mentality.