Extension Of Thai Rice-Pledging Scheme: Bad News

[webfact]

Extension of rice-pledging scheme: bad news
PETCHANET PRATRUANGKRAI
THE NATION

BANGKOK: -- The government's insistence on maintaining the rice-pledging price at Bt15,000 per tonne for another year will not only continue to dampen Thailand's export competitiveness and the rice-trading industry, but also lead to higher budgetary losses and a gloomy future for rice-farming development.

Despite many disagreements and clear evidence showing that too high a subsidy on rice has caused a host of problems for the industry, Yingluck Shinawatra's government on Monday agreed to extend its price pledging on the crop until February next year. The government has made this decision out of concern that it could lose face and support from farmers if it were to take the opposite direction, since a high pledging price was one of the major policies enabling Yingluck and her party to win the last general election.

However, the government has not thought twice about the wider implications of its decision on the sector, despite having had a chance to do so. The plan to stick with the high pledging price will continue to ruin the Thai rice industry and plant development. The country will inevitably face further losses, yet the most costly lesson is that Thailand could permanently lose its status as the world's largest rice exporter because of its inability to compete on price with leading rivals in the global market.

The government could also go bankrupt because of another year of excessive spending via high subsidy costs, while it has to date earned small returns from rice selling.

Rice farmers will also suffer when the pledging programme does eventually come to an end, since the government will then finally force them to grow other economic crops on which there will be no need to pay a high subsidy under its farmland zoning plans.

The government has announced that it will concentrate on farmland zoning for rice and other major crops next year. The measure aims to limit the budget for highly subsidised prices and reduce the huge losses that the government must shoulder each year in fulfilling its election pledge.

Budgetary spending on the rice scheme for the past full year stood at Bt337.24 billion, comprising Bt118.57 billion for major-crop rice and Bt218.67 billion for second-crop rice. The government has gained only Bt20 billion from rice sales.The Bank for Agriculture and Agricultural Cooperatives has complained that it has lack of funds to continue the pledging.

The bank is therefore seeking an additional budget to continue with the scheme, while stockpiles are rising amid falling exports to the global market. Previously, Commerce Ministry permanent secretary Vatchari Vimooktayon acknowledged that the rice pledging had caused Thailand to lose its crown as the world's top rice exporter.

The ministry prompted to revise down the pledging price to pave the way for rice exporting.The distortion of prices resulted in the Kingdom losing its top-ranked export nation status to India last year. Thailand's share of the cake dropped from 33.5 per cent in 2011 to 21.79 per cent, while India's share more than doubled from 14.57 per cent to 32.18 per cent.

Vietnam, meanwhile, increased its share from 21.98 per cent to 24.18 per cent during the same period.The Thai Rice Exporters Association has projected that Thailand will be able to export only 6 million to 7 million tonnes of rice this year, against 6.9 million tonnes last year. India and Vietnam, who can offer prices between US$100 and $200 a tonne lower, will continue to export more and increase their market share. Other Asean rice-trading nations, such as Myanmar and Cambodia, will also take more global share at the expense of Thailand.

FARMING DEVELOPMENT SUFFERS

Aat Pisanwanich, director of the Centre of International Trade Studies at the University of the Thai Chamber of Commerce, said Thailand would continue to be knocked off its pedestal as the leading grower and international trader of rice because the subsidised price is too high.

"Pledging with a high price during the past two years has already proved that it has ruined the industry," he said.

"Thai rice plantation has not developed, as the government has invested a huge sum on the subsidy scheme each year rather that spending money on long-term development," he continued.

He added that the country could no longer claim that Thai rice was of a higher quality than its rivals' produce because there was now much less development in farming, a problem compounded by the fact that prices are too high.

Besides the wide price gap between Thai rice and that of its major export rivals resulting in consumers and importers choosing other countries' rice,

Thailand will face a tougher situation when selling rice overseas because it can also be replaced by many other cereals that can be cultivated within a short period of time. The country will face huge losses as it will be unable to release sufficiently high quantities due to its lower market share, while the stockpiled produce will continue to deteriorate in quality, Aat said.

The rice-farming industry has not made any progress in its development and competitiveness since the government has been guaranteeing prices via the high-subsidy programme, he added.

Uthai Kamnueng, a farmer in Nonthaburi, said he had speeded up his cultivation cycle to grow two or three crops a year in order to join the pledging scheme.

However, rushed growing results in farmers paying less attention to the quality of their grain. He said they could accept a lower pledging price as long as the government were to help farmers in a more sustainable way. "Like exporters, rice farmers want to see more sales. The government could help subsidise the cost of production by other means, as long as it encouraged the growth of the industry," Uthai added.

The farmer also called on the government to seek a sustainable way to develop rice plantation in the light of increasing competitiveness among neighbouring countries.


-- The Nation 2013-03-14

[Locationthailand]

Ignorance far outweighs this govt's arrogance. The Thai people voted, they get what they deserve.

[aussiebebe]

Without the support of farmers the government would have lost the election, and the consequences of such a plan were known beforehand. Even so, it's remarkable how swift and devastating this policy has been on exports and government spending. When this scheme ends the rice export market will have changed beyond recognition; going head-to-head with Indian rice exports, the Thais won't know what hit them.

[dcutman]

The result of India's rice pledging program.

There is no way this could happen in Thailand, right?

Punjab, India: a labourer empties a sack of rotten rice in
Khamano village. India hiked the base price it will pay farmers for rice
this year well above current domestic levels, raising the prospects for
a bumper harvest and exports from the world’s second-biggest producer.

Edited March 14, 2013 by dcutman

[chiangmaikelly]

It is a good thing the industrial sector is growing at a rapid rate because the rice farmers are going to be out of a job next year. Since agriculture is 10% of the GDP but 40% of the labor force there has to be a shift.

[Bagwan]

All this Government needs now is Peter Sellers and Leslie Nielson to join them and Thailand will have the greatest pantomime on Earth. The very thought of Yingluck striding about the stage in fishnet tights slapping her thigh - Ooohhh. Any nominations for those who will play the two ugly sisters?. There's one guy who I think would be a walk-in for the part.

[siampolee]

Indeed the arrogance and the condescending attitude of the post # 5 is beyond belief

So as a result of the rice growing farmers being forced out of business and no doubt off of their land the price of the main staple food is going to increase greatly.

One wonders how the man and the woman on the street are going to view the hike in their cost of living?

Remember the comment , ''There is always rice in the field and fish in the stream.''

Take the land and the living away from the farmer and those two aforementioned items will disappear. People get angry then,

Very easy to pontificate when one is earning a good salary and can afford to live and yet ignore those who are going to be existing at subsistence level..

[Robby nz]

Sort of trumps yesterdays expert on rice.

[Robby nz]

The government has announced that it will concentrate on farmland zoning for rice and other major crops next year. The measure aims to limit the budget for highly subsidised prices and reduce the huge losses that the government must shoulder each year in fulfilling its election pledge.

The idea then would seem to be to zone land as to what can and can not be grown it as a way to limit the amount of rice grown and therefor going into the pledging.

Wonder how the farmers will view being told what they can and can not grow on their land?

[Pimay1]

Sort of trumps yesterdays expert on rice.

Exactly. I think he needs to go back to raising cocks.

Edited March 14, 2013 by Pimay1

[EyesWideOpen]

The PTP broke most of their other pre-election promises. So should be no problem to break the promise about rice pricing. Especially since it is devastating the economy as well as the future of rice exports...

[Moruya]

What PTP has done incredibly well is to prove that evern without the number one exporter exporting anything, the price of rice has still tumbled........

It's mindless, vote buying initiatives are a massive waste of tax-payers money and Thailands budget.

[moe666]

A steady downward spiral here, from too much rice to too much low quality rice, to not enough rice, all set in motion by the great farmer Big T who has probably never set foot into a rice paddy.

[OzMick]

It is a good thing the industrial sector is growing at a rapid rate because the rice farmers are going to be out of a job next year. Since agriculture is 10% of the GDP but 40% of the labor force there has to be a shift.

At the current cost to the economy, the sooner the rice farmers are out of a job the better for all concerned. So tell me again why this brilliant government is paying the hugely expensive subsidies to keep them in the industry, oh economic guru.

[MaxLee]

Thaksin thinks, Pheu Thai is doing, if they can't make profit within the first year, drag it out until next year, and if they STILL don't make a profit, drag it out until the upcoming year, until the Thailand is full of unsold rice...

So much food wasted over greed and corruption and rip of from election campaigns,

This won't be Thailand any more, but a country which is ruled by ancestries of China, the same morons who brought in Corruption and cheating cheap shots, backstabbing and paid murder without getting punished, in the first place.

Thai Chinese Elite rules, the ethnic and original Thai people are getting screwed, ripped off, and tortured.

Thailand isn't a bad country, but it's rather ruled and administered by the wrong bunch of ethnic personalities that encourage cheating over ethics...

[Chao Lao Beach]

Thai Rice Same Same but Different India Rice.

India have brown rice in brown bag.

Thailand have white rice in white bag, packed by people with bleached white skin.

Edited March 14, 2013 by Chao Lao Beach

[cooked]

I wonder about statistics: around (Buriram) here nobody has signed up for the scheme, and if someone gets ฿14.- a Kg (like we did) then they are happy. We made about

฿23 000.- for all that work. I think most rice farmers are subsistence farmers, the big guys that are in the scheme (including a certain family whose name begins with T) are probably not particularly important as far as votes are concerned. But it's nice to have friends....

Whatever happens, subsistence farmers won't be much affected by what happens in Bangkok unless they get paid to go for a demonstration in Bangkok like they were last time. Their interest in politics and the economy is limited to how much they get paid when they go to vote.

[siampolee]

Telling farmers what they can grow and not grow is indeed a communist dogma which as we've seen over ther years in all of the communist dominated states is certainly not the most productive agrarian policy.In fact it was very counterproductive.

In reality it's all about the top few grabbing the land and the local farmers becoming their feudal employees, all rather like the early Norman system of serfs and villeins. Indeed a wonderful step back from personal freedom.

Another fine example of Thaksins and the .PT.P. (Parasites and Ticks Party) take on democracy.. .

Edited March 14, 2013 by siampolee

[chiangmaikelly]

Telling farmers what they can grow and not grow is indeed a communist dogma which as we've seen over ther years in all of the communist dominated states is certainly not the most productive agrarian policy.In fact it was very counterproductive.

In reality it's all about the top few grabbing the land and the local farmers becoming their feudal r employees, all rather like the early Norman system of serfs and villeins. Indeed a wonderful step back from personal freedom.

Another fine example of Thaksins and the .PT.P. (Parasites and Ticks Party) take on democracy.. .

You may be right but it certainly has a lot of precedence in the US where not only are farmers told what to grow but in some cases paid not to grow. I think you can google agricultural subsides in Europe you will find it is not communist or Japan which has the highest agricultural subsidies in the world. I don't think Japan is communist is it? In most countries it's a good scam for the rich folk in the US Con Agra and Monsanto and my ex brother in law. Thailand is learning, it'll take a while.

Edited March 14, 2013 by chiangmaikelly

[IMA_FARANG]

The whole problem with this scheme is that the farmers are NOT getting a gaurenteed price.

It's the middlemen who are getting the pledged price from the government.

The middlemen are free to give a fair pledged price to the farmers, but they do not have to and the government is not forcing the middlemen to do so.

They can simply tell the farmer that his rice is not good enough for the pledged price .... and then buy that rice at a dicount price,

Once they have the rice, they simply tell the government they purchased it at the pledged price .... and the government pays the pledged rice to the middlemen.

It's a recipe for fraud .... and the government knows it ..... but the middlemen are solid voters for the government.

Instant profit for the middlemen .... and the government pays for the storage of that rice in addition.

An organised political scam, buying votes with the taxpayers money.

[chiangmaikelly]

The whole problem with this scheme is that the farmers are NOT getting a gaurenteed price.

It's the middlemen who are getting the pledged price from the government.

The middlemen are free to give a fair pledged price to the farmers, but they do not have to and the government is not forcing the middlemen to do so.

They can simply tell the farmer that his rice is not good enough for the pledged price .... and then buy that rice at a dicount price,

Once they have the rice, they simply tell the government they purchased it at the pledged price .... and the government pays the pledged rice to the middlemen.

It's a recipe for fraud .... and the government knows it ..... but the middlemen are solid voters for the government.

Instant profit for the middlemen .... and the government pays for the storage of that rice in addition.

An organised political scam, buying votes with the taxpayers money.

Ya, that's how I thought it worked.

[siampolee]

We are not talking subsidies which in many cases benefit the consumers as opposed to the producer. Where in all of the curent maladministration pontifications are there reports or promises of subsidies to the local Thai farmer ? Nowhere. It's all about a few families and international conglomerates consolidating their farming activities under one group thus cornering the market as you have so succinctly said Changmaikelly Monsato and others have already done. The consumer is footing the bill in more ways than one too in the long term we will have to wait and see as to the results of genetically modified foodstuffs peddled by these agricultural bandits in cahoots with the governments of the respective countries.. Brave New World springs to mind where ones political discipline dictated one diet and accommodation status.

Edited March 14, 2013 by siampolee

[DP25]

The PTP broke most of their other pre-election promises. So should be no problem to break the promise about rice pricing. Especially since it is devastating the economy as well as the future of rice exports...

They can't break this one because PTP are making a killing from this scheme. They don't give a hoot about the farmers, this is all about them.

[cooked]

The whole problem with this scheme is that the farmers are NOT getting a gaurenteed price.

It's the middlemen who are getting the pledged price from the government.

The middlemen are free to give a fair pledged price to the farmers, but they do not have to and the government is not forcing the middlemen to do so.

They can simply tell the farmer that his rice is not good enough for the pledged price .... and then buy that rice at a dicount price,

Once they have the rice, they simply tell the government they purchased it at the pledged price .... and the government pays the pledged rice to the middlemen.

It's a recipe for fraud .... and the government knows it ..... but the middlemen are solid voters for the government.

Instant profit for the middlemen .... and the government pays for the storage of that rice in addition.

An organised political scam, buying votes with the taxpayers money.

Yes indeed you drive by the storage facility just down the road and you see ฿17.0 on a big sign. As you have to wait for hours if you go yourself you get a deduction for transport. (would have involved 8-9 trips with our overloaded truck) .A deduction for water content. A deduction because the harvester went too fast and picked up weed seeds. A deduction for being a stupid rice farmer...as soon as the guys get their cash they go to the bank to pay off last year's debts, buy some stuff and go into debt again when their tractor needs replacing. Quite a few new machines and cars appear, only to disappear after a few months.

[Martstar]

We bought rice from Big C in Chiang Rai yesterday... not sure what the story is but the price was significantly higher than the last time we bought a bag..... is this the immediate future?

[Halion]

There has been so much comment and argument on this subject with the the majority of the public simply missing the essence of the whole scenario

This has nothing whatsoever to do with logic or the long term impact on theThai rice trade. It is simply a few greedy little bastards wanting to milk this for all it is worth , while they can, regardless of the long term implications to the Thai nation.

You get what you vote for. Mai Pen Rai.

[bigbamboo]

All this Government needs now is Peter Sellers and Leslie Nielson to join them and Thailand will have the greatest pantomime on Earth. The very thought of Yingluck striding about the stage in fishnet tights slapping her thigh - Ooohhh. Any nominations for those who will play the two ugly sisters?. There's one guy who I think would be a walk-in for the part.

Sorry, I'm still thinking about the Yingluck in fish net tights bit.........

[drdoom6996]

Ignorance is BLISS, this is utter STUPIDITY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[belg]

nice trick with secret selling or rice or not to china and magically re-appearing into the books and getting the comission over and over again ... was it not 800 baht per tonne in storage per month ? the profits on a year are totally gone ...

everybody goes to big c, tesco, whatever

you see 50 different kind of brands and prices

so what do you buy at what price ?

what do you pay for your 5 or 10 kg bag of rice....

Edited March 14, 2013 by belg

[waza]

This scam cant last, it is already overstretching the Thai budget, the PTP will have to decide if they want to fund this scam or run the country. "A recent Senate report said public debt, which was 42.4% of GDP at the end of April, would rise by an average of 4% per year if the scheme continues, and the Prime Minister has already admitted as much". Another crack in Thaksin support, he better consolidate his total control before the hens come home to roost. Maybe the 2 trillion baht loan will extend this scam but sooner or laters the truth will come out. Another economic miracle from the PTP.