Exporters Shift To Non-Thai Rice: Special Report

[bigbamboo]

"Rice trading is now considered a 'sunset' industry because of the high costs, low margins and intervention by the government," Chookiat Ophaswongse

So when Thaksin has achieved his goal of bankrupting Thai Rice Exporters Association, members (Amart) and takes over. what will he do with 10 million tons of rotting rice?

At last you are starting to see what is going on in this country. Now Thaksin is one smart cookie and so far he has run the amart ragged and if you think he is just going to dump millions of tonnes of rice, please think again..you can guarantee hes got that based covered

Thaksin?

Sorry, I thought it was his sister, Prime Minister Yingluck, who had been elected by the people to run the country not her fugitive brother. Are you saying there has been another coup?

[seminomadic]

This is called the "New Economic Way" or N.E.W. for short. In Thai you could call it the Niew Klang policy (นิ้วกลาง). It uses the principles of Buy High, Sell Low and claim you will make a profit, while knowing that the long term result will be losses and inflation with only a select group, unnamed in the policy) to benefit.

It ignores the laws of supply and demand. It is another case of government manipulation of markets, that is allegedly for the purpose of benefiting a specific group (rice farmers) without any consideration or care for the impact on everyone else (except those who will gain the most and those are not the farmers), including the target group (rice farmers). It mis-allocates resources that have alternate uses, and does not consider the long term impacts on all groups.

seminomadic : This is nothing more than a the government declaration of war on the laws of economics. It is true that rice farmers have gotten short term price increases for their crops, but like just about every government policy, almost no one looks past that immediate benefit. The consequences we are seeing now were not only predictable but were predicted.

When a country unilaterally tries to force up prices on world markets, all it takes is an increase of supply from other countries (India, Vietnam) to change the price signals to the markets. The prices signals go from "low supply, high demand, higher prices" to "high supply, lower demand, lower prices". Simply put, why should any rice importer in any other country pay a higher price, if it can get a lower price and knows it?

Since we have seen here that the pledging scheme has caused higher rice prices in Thailand; and since we know that rice farmers are not the only poor people in Thailand, doesn't the increased price of rice mean that the pledging scheme is hurting other poor people? Doesn't it make everyone living in Thailand a bit poorer because they have to pay more for rice, and thus have less money for other things? And it affects you even if you don’t eat rice.

In terms of the rice stocks in warehouses, we are starting to see some of the impacts now. The rice may or may not rot before it can be sold, but isn't the point that if it does not rot and can be sold, it will cause an increase of supply next year? An increase in supply without an increase in demand means prices should fall, and the government is saying it wants to extend the pledging scheme to next year, which will mean that rice exporters will have the same problem next year, only worse, because Thailand's credibility will be lower. The government wants to pay farmers high prices next year and if the exporters are losing money now, they might stop exporting. Then what happens? As the old adage goes, doing the exact same thing over and over again and expecting different results is insanity.

In fact when government policies cause prices to increase in the local market, it is called inflation. Inflation is a tax. So by manipulating the price of rice, the government has in fact levied a tax on all the people without passing any new tax laws. See the benefit? Eureka! A new (stealth) tax!! And it's free!! Yea Yea! (sarcasm).

Another way to say this is that governments love to screw all the poor in the long term by helping its favorite poor group in the short run.

Thanks! Very clear & informed.

[Terry Newman]

Some very interesting points here, but I think it is all a bit one sided !!!!! Where are you team

[khaowong1]

The Thai people I talk to are not even aware that any other country in the world grows rice. They think they are the only ones and can't understand how they can lose money on growing rice. I showed them a sack of rice that said, made in India, and they figured it came from Thailand the the people in India just put their name on it. Ignorance is bliss.

[scorecard]

You know, sometimes when I read stories like the OP and the post above, I feel glad that living here I can choose to pull my ace out of my sleeve, and that is not to turn the news on TV, don't buy a paper, turn off the computer and live in the happy ignorant bliss that I do.

Jim,

I think quite a few Thais spend a lot of their life in that same mode. Unfortunately it is the same reason the country is the way it is: lack of practical understanding of ensuring things are done in the best interests of the country.

Sadly for us, your practical knowledge does not count: you were born speaking the wrong tongue and without a master.

IMHO the first sentence is the reality of the situation:

"I think quite a few Thais spend a lot of their life in that same mode. Unfortunately it is the same reason the country is the way it is: lack of practical understanding of ensuring things are done in the best interests of the country."

It seems to divide into two camps:

- A large percentage of farmers and their families (with all respect to them) who are easily manipulated mostly because they are simply unaware of the big picture.

- A very large percentage of those in paid regular employment, who spend most of their time thinking and worrying about surviving tomorrow, they simply don't have the luxury of being able to set out a plan for next year, etc.

maybe , maybe not. My Mrs and her family sell their rice locally for (I think) 30 Baht a kilo becuase Yingluck is offering only 20 Baht a kilo. I might have the exact figures wrong but the relativities are correct. They are also aware of the corruption involved in the rice scheme and the governement in general but have had the foresight to buy a rice harvester and make more money from that than actually growing rice. They do not have enough hours in the day to harvest all of the rice required by the locals so are in the process of buying another harvetser for next season. Not all rice farmers are dumb hicks.

I'm not and never would suggest that all Thai farmers are dumb hicks. But I do believe that a large % are unaware of the big picture, some are indoctrinated to believe the 'message' from the saviour, and there are the farmers who are intimidated, to different degrees, by the kamnan and others to do as they are told / to ask for permission to do anything.

You mentioned your mrs. Well we too have relatives who are farmers, one particular guy has gotten into serious debt which he cannot possibly ever pay off, and he's very intimidated by the local village chief (who now holds the chanut documents, as secutity over debts, for most of the local farmers who have land). The kamnan loans him more and more cash and the kamnan magically arrives on the right day to claim and take away all of the crop.

He buys rice from a local supermarket for his family meals. This cycle has now been in place for about 10 years and will very probably repeat itself again until the farmer involved just signs away his land.

My Thai adult son has tried to talk to him about the future, again just recently and explained that Vietnam, India, China, etc, have' taken over', he refuses to listen and just babbles on about how 'rice farmers in other countries don't know how to grow rice'. He's totally convinced that the messiah will land soon and magically fix it all. He says abhisit should have stopped other countries from growing rice.

Edited January 14, 2013 by scorecard

[davehowden]

"He says abhisit should have stopped other countries from growing rice."

I thought all along it was his fault!!!!

[Mosha]

The real price of popularism is being revealed bit by bit, by the time the people see the full cost as its effect becomes obvious to them and the country as a whole, the damage may be too much to reverse in the short term, I wonder who they will blame when it comes time to point fingers?

They will blame who they are told to blame.

[Ricardo]

"He says abhisit should have stopped other countries from growing rice."

I thought all along it was his fault!!!!

Wonder who might be putting out that message ?

[Thai Dreamer]

What does this mean: "Only a few companies, which enjoy close connections with the government, can trade rice at a low cost and not suffer tremendously from the high pledging price, a source said." ????

Are they getting free rice?

I believe this is what it means.

BANGKOK: -- The opposition has established a link between the government's rice-pledging scheme and massive money laundering by producing evidence of a dummy company, individuals and old ghosts like President Agri Trading and Siam Indica, which could be found involved in non-existent rice deals.

In the latest deal, the Chinese firm paid Bt300 per sack of rice, rather than market price of Bt1,500-Bt1,555, Varong said. Taking this into account, the men in question would make a profit of Bt20 billion. Also, he said, the rice has not gone anywhere but is being stored in Siam President's warehouse in Phichit, he said. There are some 400,000 sacks of rice in the facility, collected between May 5 and July 16, he added.

Thanks for that good info, it really is disgusting. Just image what that money could be spent on that could really help the population???

Just Disgusting

[noitom]

The Thai rice cartel coming to an end.

[TheGhostWithin]

Where's righteous? Where's hugo6? Where's g'kid?

One is also inclined to ask where that other very prominent supporter of the rice pledging scam scheme 473geo is as well Perhaps blown away with the rice chaff?

.

He has probably drowned in the surplus supply. I do not know him personally but it appears he has succumbed to "not being able to cover up the situation any longer", and in true Thai style, has probably been transferred to another district.

[billd766]

Rice is not much different than anything else. Its called market share. When you have top dog status you fight with everything you have to keep it. For years customers happily payed a bit more for Thai rice. But they will not pay that much more these days and are going to other countries that have pored millions of dollars in improving there rice quality. Now these countries are gaining the market share and most likely will keep it. Now instead, the Thai farmers rice will not be getting that premium and will have to settle for lower prices just to stay in the game. You getting the picture now?

Do you think anybody other than Thaksin thought this scam up? , if you read post #15 all these companies mentioned are TS's good old buddies.

All the millers and huge rice operations making fortunes right now. They are connected to this family or to the other government official one way or another.

Checked with a couple of guys in work today. Their families have sold at 15k per ton near udon since the policy has been in effect.

Can't speak for the rest of the market, but that is what they told me.

Ask your guys at work if they own their land and have a chanote for it.

As far as I understand it if you are the owner and have the chanote you get more or less the pledged price.

However if you only RENT the land or DON'T have a chanote as the land is not fully recognised then you don't get the full rate.

Some friends of mine up Phitsanulok way only got 12,000 baht for their last harvest less I suspect the moisture content which knocks it down a bit more.

Of course when the rice mills sell it on all the rice is perfect, naturally.

[Moruya]

^{An interesting article in the BP today about millers with full silos "buying" the paperwork from the farmer so they can sell "ghost" rice to the government and having nowhere to store the impending harvest.}

[dcutman]

^{An interesting article in the BP today about millers with full silos "buying" the paperwork from the farmer so they can sell "ghost" rice to the government and having nowhere to store the impending harvest.}

Hey whats 7 million tons of invisible rice between friends? B120 billion, peanuts to this govt. Edited January 15, 2013 by dcutman

[TomTao]

The real price of popularism is being revealed bit by bit, by the time the people see the full cost as its effect becomes obvious to them and the country as a whole, the damage may be too much to reverse in the short term, I wonder who they will blame when it comes time to point fingers?

They will blame who they are told to blame.

"It wasn't me, it was him" they say waving their arms in the direction of the opposition leader (with coins flying out of thier sleeves and notes falling out of their jackets), "he's the one who tricked you, not us, we're innocent!".

[Thait Spot]

"Rice trading is now considered a 'sunset' industry because of the high costs, low margins and intervention by the government," Chookiat Ophaswongse

So when Thaksin has achieved his goal of bankrupting Thai Rice Exporters Association, members (Amart) and takes over. what will he do with 10 million tons of rotting rice?

At last you are starting to see what is going on in this country. Now Thaksin is one smart cookie and so far he has run the amart ragged and if you think he is just going to dump millions of tonnes of rice, please think again..you can guarantee hes got that based covered

In what?

Sent from my Nexus 7 using Thaivisa Connect Thailand mobile app

[Thait Spot]

^{An interesting article in the BP today about millers with full silos "buying" the paperwork from the farmer so they can sell "ghost" rice to the government and having nowhere to store the impending harvest.}

Hey whats 7 million tons of invisible rice between friends? B120 billion, peanuts to this govt.

Got my Ray Charles specs on

Sent from my Nexus 7 using Thaivisa Connect Thailand mobile app

[dcutman]

^{An interesting article in the BP today about millers with full silos "buying" the paperwork from the farmer so they can sell "ghost" rice to the government and having nowhere to store the impending harvest.}

Hey whats 7 million tons of invisible rice between friends? B120 billion, peanuts to this govt.

Got my Ray Charles specs on

Sent from my Nexus 7 using Thaivisa Connect Thailand mobile app

Turning a blind eye to 7 million tons is hard to believe. Part of the original rice scam handbooks SOP, more than likely.

[Thai at Heart]

^{An interesting article in the BP today about millers with full silos "buying" the paperwork from the farmer so they can sell "ghost" rice to the government and having nowhere to store the impending harvest.}

Hey whats 7 million tons of invisible rice between friends? B120 billion, peanuts to this govt.

Got my Ray Charles specs on

Sent from my Nexus 7 using Thaivisa Connect Thailand mobile app

Turning a blind eye to 7 million tons is hard to believe. Part of the original rice scam handbooks SOP, more than likely.

And if this us the case, just think how many people are in on it, and it has taken this long for the media to disclose it.

There must be thousands of peopke in the know. It isn't as though you can mistake a full or empty warehouse and miss 7mn tonnes of product.

[Ricardo]

Perhaps this 'ghost rice' is what has been sold, in government-to-government deals with countries which deny any knowledge of them, and which the exporters-association say has not been shipped ?

Just so long as the money-go-round continues to deliver, to the millers and middle-men who deliver the votes, and the government can finance it with new 2.2-trillion-Baht borrowing or by going-slow on reimbursing the BAAC for what they've had to pay out, who cares what happens to the real stocks of rice on-the-ground or in-the-warehouse ?

Roulez les bon-temps ! (let the good times roll on !)

[dcutman]

Thai at Heart post #79

I would agree, but out of those thousands of people in the know, how many would be spilling their guts out to the press about it?

This is a huge payday for all involved.

The media here does not seem to have a lot will to discredit or investigate any of the suspect schemes going on right now. Look at the money distributed for flood prevention, for example.

[siampolee]

Hey whats 7 million tons of invisible rice between friends? B120 billion, peanuts to this govt.

Peanuts ? We always referred to them as ''Monkey Nuts'' when I was a kid.

Now I understand why this current maladministration likes mere peanuts, indeed no doubt their staple diet and rightly so too.

[warfie]

Geez, what a surprise! Who'd a thunk it?

[Thai at Heart]

Thai at Heart post #79

I would agree, but out of those thousands of people in the know, how many would be spilling their guts out to the press about it?

This is a huge payday for all involved.

The media here does not seem to have a lot will to discredit or investigate any of the suspect schemes going on right now. Look at the money distributed for flood prevention, for example.

Well that can be true to some extent, but the old monied rice exporters are taking a pounding right now. You tell me they can't get ANYONE to give them some evidence worth taking to a cop shop? If this is being carried out on such a massive scale, plenty know about it. How much does anyone pay a middle financial manager in a rice mill? 20k per month? Getting this info and some proof would be PRICELESS.

[Pimay1]

Has our intelligent see nothing, hear nothing, know nothing, do nothing PM commented on this yet?

[dcutman]

Thai at Heart post #79

I would agree, but out of those thousands of people in the know, how many would be spilling their guts out to the press about it?

This is a huge payday for all involved.

The media here does not seem to have a lot will to discredit or investigate any of the suspect schemes going on right now. Look at the money distributed for flood prevention, for example.

Well that can be true to some extent, but the old monied rice exporters are taking a pounding right now. You tell me they can't get ANYONE to give them some evidence worth taking to a cop shop? If this is being carried out on such a massive scale, plenty know about it. How much does anyone pay a middle financial manager in a rice mill? 20k per month? Getting this info and some proof would be PRICELESS.

Tell you the truth, It does not seem like its that big of a secret. When the Honorary President of the Thai Rice Millers Association himself, comes out with this piece of news.

You have to ask yourself, why Yingluck herself, didnt have this guy standing at attention in front of her desk with the Commerce Minister next her side this morning. But not one peep, from anybody.

[bhakta]

This scheme is designed by Thaksin & Associates to buy the votes of the Isaan farmers. They succeeded wildly and have the government now firmly in their grip. Farmers still get very little for their work, as 20,000 Baht a ton for Jasmine Rice paddy, is not a great deal of money, considering most of the farmers may harvest only 2 or 3 tons in a year. There is no doubt that the rice traders are going to India, Burma, Cambodia, and Vietnam for get lower priced rice to sell to their customers.

[Gonsalviz]

The real price of popularism is being revealed bit by bit, by the time the people see the full cost as its effect becomes obvious to them and the country as a whole, the damage may be too much to reverse in the short term, I wonder who they will blame when it comes time to point fingers?

There is of course the possibility that it's all a long-term strategy of the 'get real rich real quick club':

- Drain off as much as you possibly can and quickly, and run up massive debt, then lose an election and pass the total mess to the opposition who cannot fix it all quickly and have to stop lots of populist items to try to fix the economy and pay off loans etc, then criticize the opposition for that, then reoffer popular policies and win and start draining it all again.

That's what the Americans do.