Thai Govt's Rice Pledging Scheme To Be Evaluated

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CONTROVERSIAL POLICY
Rice pledging scheme to be evaluated
Suphannee Pootpisut
The Nation

BANGKOK: -- The subcommittee overseeing the government's rice pledge revolving fund will soon convene to evaluate the fund's status, said Luck Wajananawat, president of the Bank for Agriculture and Agricultural Cooperatives (BAAC).

He said that the subcommittee would also discuss the Commerce Ministry's plans to pay back the Bt500 billion loan it borrowed from BAAC to run the pledging scheme. Most of those funds had now been spent on the scheme, he noted.

Luck said that if the government failed to meet the target for releasing rice from the stockpile - money that it needed to pay back BAAC - it might have to look at other ways to increase funds for the rice pledging project.

The government allocated Bt500 billion for the project, of which Bt410 billion was a loan from the BAAC, while the rest was lent to the government from the bank's own coffers. The ministry had already paid Bt110 billion of the total Bt220 billion to be repaid this year. Luck said that in effect, the government had to release stockpiled rice so it could make enough money to repay the fund. This would, in turn, enable the BAAC to continue the pledging scheme for the next crop season. Of the total Bt110 billion returned to the bank, Bt85 billion is for BAAC's main crop pledge last year and the rest for the main crop of 2011.

Over the past few months, the BAAC has used Bt21.5 billion of the amount returned, to pledge a second crop for 2012/2103, totalling 1.34 million tonnes of rice from 17,000 rice farmers. The bank expects that seven million tonnes from the second rice crop will be included in the scheme. The pledging process for the second crop will end on September 15. Currently the fund could afford the pledge for the second crop, Luck said.

He said the subcommittee would also discuss whether the strong baht and the decline in the price of rice on the global market would affect the government's decision to release rice from the stockpile.

-- The Nation 2013-05-13

[OzMick]

"..........whether the strong baht and the decline in the price of rice on the global market would affect the government's decision to release rice from the stockpile."

Again with the 'release' crap. The question is are they going to lose billions of baht by selling at a loss, or lose billions of baht by leaving it to rot.

The next question will be, do we continue to lose billions of baht on this abortion of a policy or do we tell the rice farmers they get less than half what we promised for their next crop. With suggestions of an election in the wind, what price vote-buying?

[dcutman]

All the while it is costing the taxpayer about Bt1.5 billion a month on interest and maintenance fees to the BAAC, as well as Bt10 billion a month to warehouse all these rotting crops. Plus all the billions that have already been lost due to crop spoilage.

[worgeordie]

Good Khun LUCK,

regards Worgeordie

[Bellweather]

It won't take an expert to evaluate the fund's status so the only problem will be to keep the rice farmers happy and how to " sell " the scheme as still being a viable concern that isn't a drain on the country's finances. As usual withe populist policies the PTP have painted themselves into a corner and have to rely on treating their supporters, if not the rest of the public, like mushrooms ( keep them in the dark and feed them on shit ).

[jonnyscot]

Maybe a good time for them to consider a face saving "exit route" not enough farmers this season taking advantage of the scheme,,,,,,,,,,,,,

now they can turn on the water to the canals to allow the farmers to start growing rice again

[yoshiwara]

The excuse is in place. Strong baht and international prices blah. They would love to sell the stuff at lower prices but cannot. Dumping rules. One ham-fisted attempt to sell the stuff to China with dodgy invoices, so its back to the warehouses boys.

[waza]

"The ministry had already paid Bt110 billion of the total Bt220 billion to be repaid this year. Luck said that in effect, the government had to release stockpiled rice so it could make enough money to repay the fund. This would, in turn, enable the BAAC to continue the pledging scheme for the next crop season. Of the total Bt110 billion returned to the bank, Bt85 billion is for BAAC's main crop pledge last year and the rest for the main crop of 2011."

So a 50% return on the investment costs, but no profit so far and no indication of where that money came from.

Maybe here is a clue........

"Rather than sell the rice on the open market—and risk embarrassment as private dealers see the haircut the government is taking—Thailand is trying government-to-government deals that allow buyer and seller to keep prices secret. On April 15 the Ivory Coast’s Commerce Ministry said it had bought “various qualities” of Thai rice at “competitive and stable” prices. Four months after the 38,500 tons arrived, however, the Ivorian government has had to trash 7,600 tons because of quality problems, according to an official at the Commerce Ministry. Eighty percent of the rice still sits in warehouses."

So what can the PTP government do now?

"Thailand is likely to sell most of rice from the government stockpile at a loss and “well below acquisition prices” this year to help generate funds for the continuation of the government rice mortgage program, a move that will likely cause strong price competition and criticism among rice exporting countries, says the USDA Post in its latest report. Under the direction of the government, Thailand’s Ministry of Commerce is targeting rice sales worth 180 billion baht (about $6 billion) or sales of around 5 million tons of rice by the end of this year to finance the rice mortgage program in 2012-13 and 2013-14. The USDA Post says that the government rice stocks are expected to be sold at below acquisition prices, particularly for low quality old-crop white rice, to help Thai exporters to compete with Vietnamese rice."

Even if they are able to sell this 5 million tons for 180,000,000,000 baht or 36000 baht per ton it still wont cover costs. Given that the PTP government has selected the subcommittee themselves I expect the results of this evaluation to be a complete white wash of the scam.

Edited May 13, 2013 by waza

[Halion]

Running around in ever decreasing circles looking for yet another scapegoat. Absolutely zero credibility.

One would have to be criminaly insane to vote for the PTP.

[1weatherman]

Lets look on the bright side. Just think of all the extra rice in the warehouses that the rats have to eat. Speaking of rats....

[fakename]

Sounds like a situation, where people get in credit card debt, and have to have more cards, to pay off the other cards. Just getting by with paying the interest, and then finally, the cards come crashing down, and its bankruptcy. Easy to understand this happening to a person with a 5th grade education, and cant do the math. Apparently, math isnt the strong point of this government!

[GentlemanJim]

Lets look on the bright side. Just think of all the extra rice in the warehouses that the rats have to eat. Speaking of rats....

There must be some HUGE rats living around these warehouses now, with absolutely booming populations. Wait for the plague of the rodents to strike ! (I am talking real rats as opposed to those in Parliament building! )

[Robby nz]

Four months after the 38,500 tons arrived, however, the Ivorian government has had to trash 7,600 tons because of quality problems,

That's very close to 20% of what was sold that had to be dumped.

If that is extrapolated over the whole stored stockpile it comes to a fair size loss without even taking into account the loss of sale over purchase price and storage costs.

Wonder if the Thai Govt paid compensation for what had to be dumped?.

Whatever, I doubt the Ivory Coast will be a return customer.

Then there will be other countries who may have been thinking of a G to G deal that now could be having second thoughts.

[chiangmaikelly]

Somebody help me with these numbers. They are too big for me. GDP next year according to IMF 13967.77 billions Thai Baht. What percent of the GDP is the rice pledging scheme going to cost?

[robblok]

Somebody help me with these numbers. They are too big for me. GDP next year according to IMF 13967.77 billions Thai Baht. What percent of the GDP is the rice pledging scheme going to cost?

GDP is something totally different from tax income.. did you not know that ?

No reason to compare it to GDP more interesting to compare it to tax income.

[ratcatcher]

Lets look on the bright side. Just think of all the extra rice in the warehouses that the rats have to eat. Speaking of rats....

There must be some HUGE rats living around these warehouses now, with absolutely booming populations. Wait for the plague of the rodents to strike ! (I am talking real rats as opposed to those in Parliament building! )

There is a plus side to feeding the rice to the rats. Thais, at least people with rural roots, enjoy the rat meat ground up and fried as pad khrapow ngoo.

The rat diet of rice is clean and there is protein in the meat, so why not close up the holes in the warehouse walls and let the rats eat the rice and then harvest the rats.

A win win situation.

[chiangmaikelly]

Somebody help me with these numbers. They are too big for me. GDP next year according to IMF 13967.77 billions Thai Baht. What percent of the GDP is the rice pledging scheme going to cost?

GDP is something totally different from tax income.. did you not know that ?

No reason to compare it to GDP more interesting to compare it to tax income.

Economic statistics are compared as a percent of GDP. We could use percent of allowence of 12 year old school children or the amount of money raised by beggars in the weekly market. The fact is that statistics between countries are compared in percent of GDP.

[hellodolly]

Four months after the 38,500 tons arrived, however, the Ivorian government has had to trash 7,600 tons because of quality problems,

That's very close to 20% of what was sold that had to be dumped.

If that is extrapolated over the whole stored stockpile it comes to a fair size loss without even taking into account the loss of sale over purchase price and storage costs.

Wonder if the Thai Govt paid compensation for what had to be dumped?.

Whatever, I doubt the Ivory Coast will be a return customer.

Then there will be other countries who may have been thinking of a G to G deal that now could be having second thoughts.

Actualy although it waas sold government to governmeent it was still dumping.

"On April 15 the Ivory Coast’s Commerce Ministry said it had boughtvarious qualities” of Thai rice at “competitive and stable” prices."

Now how could Thailand sell at those prices when they paid more for the rice.

[hellodolly]

I finally figured out why they sell it Government to Government.

It is all done under the table allowing both sides to fill their pockets.

Edit

Of course the big losers are the Population of each country.

The Thais pay for it out of their pocket and the Ivory Coast or Chinese pay the cost plus a reasonable profit for the merchant plus corruption money to the government.

A Government win win

A civilian lose lose

Edited May 13, 2013 by hellodolly

[chainarong]

I am at a complete LOSS as to what went wrong , everything was in place , this was a terrific idea, I think it got lost in the detail, and now the Tha Bht has gone bonkers, the finance department should have told us more , T.S Dubai.

[smedly]

a new defence pact with China - it's all coming together

Rice for guns

Edited May 13, 2013 by smedly

[chiangmaikelly]

I am confused by the GDP numbers here. See we have two systems. In America a trillion is 10 to the 12th power. In British system a trillion is 10 to the 18th power. So you can see why I am confused cause there a lot of Brits here. So what is the Thai system and what percent of the GDP is the total cost of the loss of the rice pledging system. Since the American and British numbering systems are different you can see why I would want it as a percent of GDP.

I mean really how can one discuss the rice pledging scheme unless one knows how much money will be lost by the scheme?

[moe666]

Where is GK to explain it all away, he posted a very detailed piece when they started this program on how exactly it would be a win- win situation. He hasn't been back to explain why it has become a lose=lose situation. I guess no explanation need to describe the incompetence of this government in there policies and programs.

[tomross46]

He said that the subcommittee would also discuss the Commerce Ministry's plans to pay back the Bt500 billion loan it borrowed from BAAC to run the pledging scheme. Most of those funds had now been spent on the scheme, he noted.

If the bank loaned this money for the rice pledging, and it was not used for this scheme, than is that corruption? What was most of the 500 billion Baht used for? If it looks like corruption, and it smells like corruption, it must be corruption. Why isn't the bank and financial investigator following up.

The government is not happy with Thailand being listed on the list of corrupt countries. It has been published that 30 - 50% of the budget for government contracts winds up in the pockets of politicians.

Edited May 13, 2013 by tomross46

[chiangmaikelly]

Where is GK to explain it all away, he posted a very detailed piece when they started this program on how exactly it would be a win- win situation. He hasn't been back to explain why it has become a lose=lose situation. I guess no explanation need to describe the incompetence of this government in there policies and programs.

If a hill of beans is a trillion dollars don't worry because the losses don't amount to a hill of beans.

[OzMick]

It seems the only support for a populist vote-buying policy, plagued by corruption and failing in its stated aim, is that the losses are so big that they can't be accurately counted, and that's all right because the rest of the economy is fine.

He forgot to mention that it was a Thaksin decree which none of his muppets dare question.

[waza]

I am confused by the GDP numbers here. See we have two systems. In America a trillion is 10 to the 12th power. In British system a trillion is 10 to the 18th power. So you can see why I am confused cause there a lot of Brits here. So what is the Thai system and what percent of the GDP is the total cost of the loss of the rice pledging system. Since the American and British numbering systems are different you can see why I would want it as a percent of GDP.

I mean really how can one discuss the rice pledging scheme unless one knows how much money will be lost by the scheme?

Rice stockpiles have reached record highs of over 12.5 million tons, and the cost of procurement, handling and storage is likely to cause a loss equivalent

to 5% of its GDP, he adds............He also revealed that the mortagage scheme has fueled corruption in Thaialand. Rice millers – many who have links with members of the ruling party – often do not pass on the entire benefit to farmers.

Here this makes it easy to calculate

[hellodolly]

Well I never took economics but I think a scheme of this scope should be evaluated before it starts. That way they would be able to have a rough idea at what the loss will be and who will really gain from it.

Here we are out billions of Baht's and they have announced they plan to carry on with it and then they announce they are going to Evaluate it.

Isn't that putting the cart on front of the Buffalo?

[chiangmaikelly]

Well I never took economics but I think a scheme of this scope should be evaluated before it starts. That way they would be able to have a rough idea at what the loss will be and who will really gain from it.

Here we are out billions of Baht's and they have announced they plan to carry on with it and then they announce they are going to Evaluate it.

Isn't that putting the cart on front of the Buffalo?

It is another sky is falling response. How much has been lost and what percent of the GDP is that?

[robblok]

Somebody help me with these numbers. They are too big for me. GDP next year according to IMF 13967.77 billions Thai Baht. What percent of the GDP is the rice pledging scheme going to cost?

GDP is something totally different from tax income.. did you not know that ?

No reason to compare it to GDP more interesting to compare it to tax income.

Economic statistics are compared as a percent of GDP. We could use percent of allowence of 12 year old school children or the amount of money raised by beggars in the weekly market. The fact is that statistics between countries are compared in percent of GDP.

In government budgets income is more important as GDP .. this is about a government budget. You can have a high gdp but if your tax income is low.. (not good at collecting... low tax rate ect ect) it does not help you a thing.

I will make it simple for you, you don't look at your gross wages when your buying something you look at how much net your going to get. Because you can't touch the gross amount you cant do a thing with it net is the important part.

In 2010 the tax income was around 16% of the GDP.. not sure how much it is now.. look that is usefull.

Even more useful would be the whole budget. But hey Changmai as long as you can make it look insignifficant and some people believe you its ok isnt it.

http://www.tradingeconomics.com/thailand/tax-revenue-percent-of-gdp-wb-data.html

Edited May 13, 2013 by robblok