Thai Govt's Rice Pledging Scheme To Be Evaluated

[chiangmaikelly]

Which of the two assessments above is closest to the mark, I know which one I'd go for.

Good post. The point of which is? The two assesments are opinions. There was no factual evidence presented in either assesment. A good example is, "You wrote, "since there is no plan to actually sell the rice at this point." Not true."

There have been numerous references to discounted selling of rice in this thread but steveromagnino didn't read the thread and didn't know that so I didn't post them as a rebuttal. That was my point. The Thai government is trying to sell direct to other countries so the market loss will not be obvious. If anyone knows anything about the rice scheme they would know this. Unfortunately Steve is just another uninformed biased person who is taking a shot at the government using the rice scheme as a club.

[steveromagnino]

You wrote, "there was no appreciable reduction in rice production nor export sales; so this blows the theory that it is required to subsidies rice farmers to make them grow rice." No it does't.

.

source http://www.geohive.com/charts/ag_rice.aspx

Rice production Thailand metric tonnes 1970 - 2010

Thailand 13,850,000 17,368,100 17,193,200 25,843,900 31,597,200

- no evidence of reduction in rice production

Academic research http://www.jgsee.kmutt.ac.th/apnproject/Web_Postconference/pdf/9_Thailand.pdf

ref. page 6 again, no evidence of reduction in rice production

Thai export volume http://www.asiagoldenrice.com/Thai-Rice-Export-Volume-Year.php

- no substantial evidence of reduction in export as a result of rice guarantee scheme vs. pledge scheme

You wrote, "The rice scheme is now enabling more substandard and sub scale farmers to stay in business a little longer. No it's not.

- how else do you justify rewarding economically inefficient behaviour by using taxes from those who are productive to support the non productive?

You wrote, "the younger generation would rather earn more money working in an airconned factory rather than underpaid backbreaking work in the fields." No they don't.

- refer academic research http://www.fao.org/sd/dim_pe3/docs/pe3_051001d1_en.pdf it's a fact that the population doing rice farming is aging

- the manufacturing sector and services now are a larger employer than agriculture; as a contributor to GDP far greater; this is evident in multiple publications

e.g. http://intstudiesthailand.wikispaces.com/Thailand's+Workforce

You wrote, "From a world global perspective, it is a basically a crime to waste so much water and resources growing and paying for something that is only being wasted." It is not being wasted.

It is if it isn't being sold or used, and just rotting.


You wrote, "since there is no plan to actually sell the rice at this point." Not true.

- please indicate the promotional and marketing campaign other than corrupt government to government schemes that are being used to sell the rice; this is not a plan, it's a skim, there's a major difference. There is no logical reason to conceal operations of the sale process...unless it is suspect. How often do you think procurement occurs with no oversight?

As the person paying for the rice pledging scheme (not sure how much your personal income or company income tax is) I would like to know where my money goes.

Edited May 16, 2013 by steveromagnino

[chiangmaikelly]

You wrote, "there was no appreciable reduction in rice production nor export sales; so this blows the theory that it is required to subsidies rice farmers to make them grow rice." No it does't.

.

source http://www.geohive.com/charts/ag_rice.aspx

Rice production Thailand metric tonnes 1970 - 2010

Thailand 13,850,000 17,368,100 17,193,200 25,843,900 31,597,200

- no evidence of reduction in rice production

Academic research http://www.jgsee.kmutt.ac.th/apnproject/Web_Postconference/pdf/9_Thailand.pdf

ref. page 6 again, no evidence of reduction in rice production

Thai export volume http://www.asiagoldenrice.com/Thai-Rice-Export-Volume-Year.php

- no substantial evidence of reduction in export as a result of rice guarantee scheme vs. pledge scheme

You wrote, "The rice scheme is now enabling more substandard and sub scale farmers to stay in business a little longer. No it's not.

- how else do you justify rewarding economically inefficient behaviour by using taxes from those who are productive to support the non productive?

You wrote, "the younger generation would rather earn more money working in an airconned factory rather than underpaid backbreaking work in the fields." No they don't.

- refer academic research http://www.fao.org/sd/dim_pe3/docs/pe3_051001d1_en.pdf it's a fact that the population doing rice farming is aging

- the manufacturing sector and services now are a larger employer than agriculture; as a contributor to GDP far greater; this is evident in multiple publications

e.g. http://intstudiesthailand.wikispaces.com/Thailand's+Workforce

You wrote, "From a world global perspective, it is a basically a crime to waste so much water and resources growing and paying for something that is only being wasted." It is not being wasted.

It is if it isn't being sold or used, and just rotting.

You wrote, "since there is no plan to actually sell the rice at this point." Not true.

- please indicate the promotional and marketing campaign other than corrupt government to government schemes that are being used to sell the rice; this is not a plan, it's a skim, there's a major difference. There is no logical reason to conceal operations of the sale process...unless it is suspect. How often do you think procurement occurs with no oversight?

As the person paying for the rice pledging scheme (not sure how much your personal income or company income tax is) I would like to know where my money goes.

You wrote, "how else do you justify rewarding economically inefficient behaviour by using taxes from those who are productive to support the non productive."

Rice farmers will never make as much money as an automotive engineer but that does not mean they are non productive; it just means rice farmers are not paid as much as an automotive engineer. If you want your country to keep producing rice then you have to take some of the taxes from the engineer and give it to the rice farmer.

You wrote, "the younger generation would rather earn more money working in an airconned factory rather than underpaid backbreaking work in the fields." You pay rice subsides to promote the young staying on the farm. We will know if this works in a few years. Not a new problem as you can see from the video.

You wrote, "- please indicate the promotional and marketing campaign other than corrupt government to government schemes that are being used to sell the rice."

You could google Thai rice sales or look at the link below for sales figures.

http://www.thairiceexporters.or.th/default_eng.htm

How long do you think it takes rice to rot? Rice is not like fresh fruit. One has years instead of months to sell it. So, no to answer your question it is not rotting.

[slapout]

Successful rice storage vs time is dependent on several factors (see below), any one of which can lead to rapid loss of grade. Rotting is not a term normally used in grain assesment as to condition of same., but can and will happen under the worst of conditions..

Mositure content of grain itself

physical state of grain, paddy, white, brown, etc

temperture at which it is stored

Humidity of storage facility

Storage facilities mode of handling the stored grain

Isolation from outside influence/factors, which can drastically enhance deteration

You do not store the amounts of rice we are talking about in tupperware containers, which under ideal holding conditions could give a shelf life of 25 years..How many grain silos have you seen in Thailand? The bulk is stored under a metal roof with either metal or shade cloth sides, on a concrete slab, Some is sacked in burlap or even paper sacks while much is dumped in bulk piles of grain.

The lack of proper storage and handling facilities, plus the other items which affect grade is why we can expect grade loss each year. This along with storage costs as well as that little grimlen called theft will just about guarantee that in the long run, only those with hands on the rice and those with hands on the budget, after it leaves the farmers hands, will have anything to show themselves.

[chiangmaikelly]

Successful rice storage vs time is dependent on several factors (see below), any one of which can lead to rapid loss of grade. Rotting is not a term normally used in grain assesment as to condition of same., but can and will happen under the worst of conditions..

Mositure content of grain itself

physical state of grain, paddy, white, brown, etc

temperture at which it is stored

Humidity of storage facility

Storage facilities mode of handling the stored grain

Isolation from outside influence/factors, which can drastically enhance deteration

You do not store the amounts of rice we are talking about in tupperware containers, which under ideal holding conditions could give a shelf life of 25 years..How many grain silos have you seen in Thailand? The bulk is stored under a metal roof with either metal or shade cloth sides, on a concrete slab, Some is sacked in burlap or even paper sacks while much is dumped in bulk piles of grain.

The lack of proper storage and handling facilities, plus the other items which affect grade is why we can expect grade loss each year. This along with storage costs as well as that little grimlen called theft will just about guarantee that in the long run, only those with hands on the rice and those with hands on the budget, after it leaves the farmers hands, will have anything to show themselves.

You mean like this?

[steveromagnino]

You wrote, "how else do you justify rewarding economically inefficient behaviour by using taxes from those who are productive to support the non productive."

Rice farmers will never make as much money as an automotive engineer but that does not mean they are non productive; it just means rice farmers are not paid as much as an automotive engineer. If you want your country to keep producing rice then you have to take some of the taxes from the engineer and give it to the rice farmer.

When we pay them to produce something that is likely to be worthless because it is left to rot (also incurring costs of storage, financing, processing), and also provide them with subsidised healthcare, education, interest free loans and the numerous elements of a social contract between the needy and the rich, then I would suggest that it is cheaper to have them do nothing, or something else, than to engage in a pointless activity which costs more.

The numerous examples of subsidies in the UK coal mining industry, farming the world over and other market distortions suggest that at a certain point, you stop doing pointless things. Subsistance farming is not a productive use of time or resources, and this pledging scheme is effectively designed to prop up 40 rai or smaller farms....that's subsistence farming or as close as you can get to it in Thailand today. It's a dying way of life, and the focus on volume production is exactly the way to kill it; the right way to make subsistence farming profitable is to move up the value chain...something that doesn't happen when you encourage people to grow low grade rice as fast as possible.

So no, I don't think we should be aiming to continue to produce rice in this manner, I don't see the point. And I am paying for it, personally and as a company.

In my line of work, we employ approximately 5000 counting direct and indirect employees. We have a CHRONIC shortage of Thai staff at certain times of the year, as do most manufacturing firms; there is almost zero unemployment and spiralling wages; that is why manufacturing and services are growing at agriculture's expense because these workers see a future doing this rather than farming. They earn more, they work in aircon, they get to eat every day, life is simpler in a factory than in the fields; according to our workers. The numerous industry insiders will say the same thing in Japan, China, Thaialand - rice farming is a dying occupation because the young generation don't want to do it.

Pledging is giving it a shot of cash...but not a future. Because it is eventually not sustainable simply because Thailand is sharing the same climate as its neighbours, every year that we have a great crop...so do most of our neighbours. So there is no way to set up the cartel or price control.

I am amazed anyone sees this as anything other than a vote grab, the question is whether it is a vote grab that is sustainable or not...I say....not.

Agriculture unless farmers are taught to increase yields, productivity and increase the size of plots, is destined for long term decay - the government is aware of these problems and the current PM (in exile) actually tried to convert farmers to be business people with the village funds with his microfinance scheme; as one of its architects said to me, "the scheme cannot really be considered a success using economic measures, we overestimated the capability of rural farmers to be SME business people, and we rolled it out way too fast with no infrastructure to guage if people could pay or not." I see it when I visit the family upcountry (we own quite a lot of land although I don't personally farm it myself); the industries with the least amount of government input longterm are the ones that the industry is developing the best and most sustainably.

Now rice is a tricky one, because it's so massive, but the amount of water going into rice is effectively exporting a scarce commodity. There's some interesting academic research on this in Australia.

I've seen the massive rice storage in person the last time we went through pledging; rice industry insiders told me that the wastage rate with the existing method of storage is around 10-15% per year in a good case scenario. Each additional handling step also creates more broken rice and damages the price you can achieve. Given the temporary nature of storage they are erecting now it would logically be worse than this. Just like whisky, you cannot get around an angel's share in most produce; you especially cannot avoid it when the ability to store this amount of rice is a growing problem that was never planned for.

[steveromagnino]

Successful rice storage vs time is dependent on several factors (see below), any one of which can lead to rapid loss of grade. Rotting is not a term normally used in grain assesment as to condition of same., but can and will happen under the worst of conditions..

Mositure content of grain itself

physical state of grain, paddy, white, brown, etc

temperture at which it is stored

Humidity of storage facility

Storage facilities mode of handling the stored grain

Isolation from outside influence/factors, which can drastically enhance deteration

You do not store the amounts of rice we are talking about in tupperware containers, which under ideal holding conditions could give a shelf life of 25 years..How many grain silos have you seen in Thailand? The bulk is stored under a metal roof with either metal or shade cloth sides, on a concrete slab, Some is sacked in burlap or even paper sacks while much is dumped in bulk piles of grain.

The lack of proper storage and handling facilities, plus the other items which affect grade is why we can expect grade loss each year. This along with storage costs as well as that little grimlen called theft will just about guarantee that in the long run, only those with hands on the rice and those with hands on the budget, after it leaves the farmers hands, will have anything to show themselves.

You mean like this?

that's a private sector company (Capital Rice Co. Ltd - subsidiary is Capital Cereals Co. Ltd) who are paid by the Public Warehouse Organisation of Thailand to store the rice. I can assure you that's at a cost! In addition.....it's state of the art.

There's plenty of warehousing less beautiful than this. To represent the PWO using an image of a private sector warehouse is both misleading and nonrepresentative. I believe rice farmers are now allowed to store rice in their own barns for instance.

let's look at a few numbers.

The crop pledged this year is 22m tonnes. We still have many tonnes from last year and a general inventory from previous years as well. The entire storage capacity of this company you have named and shown as representative of Thai warehousing of rice as one of the largest rice exporters in Thailand....is 300,000 tonnes.

And they need a fair chunk of that for their own business operations. they used to export 2m tonnes of rice a year including organic, high grade crops...I wonder how Capital Rice are doing these days....now that they probably struggle to buy rice they can export. Down 50% between 2010 and 2011.

http://www.capitalrice.com/index.php/riceupdates/archive/6

[chiangmaikelly]

You wrote, "how else do you justify rewarding economically inefficient behaviour by using taxes from those who are productive to support the non productive."

Rice farmers will never make as much money as an automotive engineer but that does not mean they are non productive; it just means rice farmers are not paid as much as an automotive engineer. If you want your country to keep producing rice then you have to take some of the taxes from the engineer and give it to the rice farmer.

When we pay them to produce something that is likely to be worthless because it is left to rot (also incurring costs of storage, financing, processing), and also provide them with subsidised healthcare, education, interest free loans and the numerous elements of a social contract between the needy and the rich, then I would suggest that it is cheaper to have them do nothing, or something else, than to engage in a pointless activity which costs more.

The numerous examples of subsidies in the UK coal mining industry, farming the world over and other market distortions suggest that at a certain point, you stop doing pointless things. Subsistance farming is not a productive use of time or resources, and this pledging scheme is effectively designed to prop up 40 rai or smaller farms....that's subsistence farming or as close as you can get to it in Thailand today. It's a dying way of life, and the focus on volume production is exactly the way to kill it; the right way to make subsistence farming profitable is to move up the value chain...something that doesn't happen when you encourage people to grow low grade rice as fast as possible.

So no, I don't think we should be aiming to continue to produce rice in this manner, I don't see the point. And I am paying for it, personally and as a company.

In my line of work, we employ approximately 5000 counting direct and indirect employees. We have a CHRONIC shortage of Thai staff at certain times of the year, as do most manufacturing firms; there is almost zero unemployment and spiralling wages; that is why manufacturing and services are growing at agriculture's expense because these workers see a future doing this rather than farming. They earn more, they work in aircon, they get to eat every day, life is simpler in a factory than in the fields; according to our workers. The numerous industry insiders will say the same thing in Japan, China, Thaialand - rice farming is a dying occupation because the young generation don't want to do it.

Pledging is giving it a shot of cash...but not a future. Because it is eventually not sustainable simply because Thailand is sharing the same climate as its neighbours, every year that we have a great crop...so do most of our neighbours. So there is no way to set up the cartel or price control.

I am amazed anyone sees this as anything other than a vote grab, the question is whether it is a vote grab that is sustainable or not...I say....not.

Agriculture unless farmers are taught to increase yields, productivity and increase the size of plots, is destined for long term decay - the government is aware of these problems and the current PM (in exile) actually tried to convert farmers to be business people with the village funds with his microfinance scheme; as one of its architects said to me, "the scheme cannot really be considered a success using economic measures, we overestimated the capability of rural farmers to be SME business people, and we rolled it out way too fast with no infrastructure to guage if people could pay or not." I see it when I visit the family upcountry (we own quite a lot of land although I don't personally farm it myself); the industries with the least amount of government input longterm are the ones that the industry is developing the best and most sustainably.

Now rice is a tricky one, because it's so massive, but the amount of water going into rice is effectively exporting a scarce commodity. There's some interesting academic research on this in Australia.

I've seen the massive rice storage in person the last time we went through pledging; rice industry insiders told me that the wastage rate with the existing method of storage is around 10-15% per year in a good case scenario. Each additional handling step also creates more broken rice and damages the price you can achieve. Given the temporary nature of storage they are erecting now it would logically be worse than this. Just like whisky, you cannot get around an angel's share in most produce; you especially cannot avoid it when the ability to store this amount of rice is a growing problem that was never planned for.

I don't think you have grasped the nature or reason behind agricultural subsidies. They began in the USA (to name one country) after WWI. After almost 100 years of the same thing in the US as Thailand I don't find it odd. You do. I don't wish to teach a course here in the necessity of price supports to maintain a countries agricultural industry.

You might want to look at rice prduction in Japan, why they do it and how much they spend to do it and how they keep farmers in rice production.

In any event it is a government decision and not a free market choice. You write too many wrong ideas for me to try and educate you for example, "Agriculture unless farmers are taught to increase yields, productivity and increase the size of plots, is destined for long term decay." That is an odd idea that ecnomists realized was in error 100 years ago. People are not willing to pay the real cost of food. Sorry but they have not been willing to pay the real cost of food for a hundred years.

Almost all governments around the world intervene actively in the operation of their agricultural markets. The ways they intervene and the reasons they do so depend in large part on the wealth of the country. I really don't think I should spend more time explaining this. Google would be a good place to start. You might want to read, "Methods of Agricultural Price Support and Stabilization in Australia. or http://www.economicsonline.co.uk/Market_failures/Price_stabilisation.html

[rubl]

Successful or not, but it remains that the OP has "Luck said that in effect, the government had to release stockpiled rice so it could make enough money to repay the fund.".

The moment we know how much of the stockpile, from which year and to what price we'll be able to judge the possible profit or loss. Till now the government has been less than trasparent in this with a much touted 'chinese' G2G deal just a possible intention to maybe buy a bit.

Conclusion: if the revolving fund of THB 500 billions isn't revolving the government needs to borrow a few hundred billion more. The more pressure on regaining at least some to keep the funds revolving the more likely pressure on price and increasing losses.

BTW indeed old rice no longer fit for human consumption (strict standards) may still be used as animal fodder. Mind you this depends on the state of the 'old rice'. Even for animals we've got standards regarding their feed. A month ago the Commerce Minister said that about 40,000 tons of old paddy from 2003-05 will be released for use as animal feed with prices of these releases to be announced later. It's unclear who will buy as no price know, nor quality of this rice. To early to talk about wishful thinking I guess, but any particular reason why this 2003-2005 rice was left behind?

[Thaddeus]

You wrote, "how else do you justify rewarding economically inefficient behaviour by using taxes from those who are productive to support the non productive."

Rice farmers will never make as much money as an automotive engineer but that does not mean they are non productive; it just means rice farmers are not paid as much as an automotive engineer. If you want your country to keep producing rice then you have to take some of the taxes from the engineer and give it to the rice farmer.

When we pay them to produce something that is likely to be worthless because it is left to rot (also incurring costs of storage, financing, processing), and also provide them with subsidised healthcare, education, interest free loans and the numerous elements of a social contract between the needy and the rich, then I would suggest that it is cheaper to have them do nothing, or something else, than to engage in a pointless activity which costs more.

The numerous examples of subsidies in the UK coal mining industry, farming the world over and other market distortions suggest that at a certain point, you stop doing pointless things. Subsistance farming is not a productive use of time or resources, and this pledging scheme is effectively designed to prop up 40 rai or smaller farms....that's subsistence farming or as close as you can get to it in Thailand today. It's a dying way of life, and the focus on volume production is exactly the way to kill it; the right way to make subsistence farming profitable is to move up the value chain...something that doesn't happen when you encourage people to grow low grade rice as fast as possible.

So no, I don't think we should be aiming to continue to produce rice in this manner, I don't see the point. And I am paying for it, personally and as a company.

In my line of work, we employ approximately 5000 counting direct and indirect employees. We have a CHRONIC shortage of Thai staff at certain times of the year, as do most manufacturing firms; there is almost zero unemployment and spiralling wages; that is why manufacturing and services are growing at agriculture's expense because these workers see a future doing this rather than farming. They earn more, they work in aircon, they get to eat every day, life is simpler in a factory than in the fields; according to our workers. The numerous industry insiders will say the same thing in Japan, China, Thaialand - rice farming is a dying occupation because the young generation don't want to do it.

Pledging is giving it a shot of cash...but not a future. Because it is eventually not sustainable simply because Thailand is sharing the same climate as its neighbours, every year that we have a great crop...so do most of our neighbours. So there is no way to set up the cartel or price control.

I am amazed anyone sees this as anything other than a vote grab, the question is whether it is a vote grab that is sustainable or not...I say....not.

Agriculture unless farmers are taught to increase yields, productivity and increase the size of plots, is destined for long term decay - the government is aware of these problems and the current PM (in exile) actually tried to convert farmers to be business people with the village funds with his microfinance scheme; as one of its architects said to me, "the scheme cannot really be considered a success using economic measures, we overestimated the capability of rural farmers to be SME business people, and we rolled it out way too fast with no infrastructure to guage if people could pay or not." I see it when I visit the family upcountry (we own quite a lot of land although I don't personally farm it myself); the industries with the least amount of government input longterm are the ones that the industry is developing the best and most sustainably.

Now rice is a tricky one, because it's so massive, but the amount of water going into rice is effectively exporting a scarce commodity. There's some interesting academic research on this in Australia.

I've seen the massive rice storage in person the last time we went through pledging; rice industry insiders told me that the wastage rate with the existing method of storage is around 10-15% per year in a good case scenario. Each additional handling step also creates more broken rice and damages the price you can achieve. Given the temporary nature of storage they are erecting now it would logically be worse than this. Just like whisky, you cannot get around an angel's share in most produce; you especially cannot avoid it when the ability to store this amount of rice is a growing problem that was never planned for.

I don't think you have grasped the nature or reason behind agricultural subsidies. They began in the USA (to name one country) after WWI. After almost 100 years of the same thing in the US as Thailand I don't find it odd. You do. I don't wish to teach a course here in the necessity of price supports to maintain a countries agricultural industry.

You might want to look at rice prduction in Japan, why they do it and how much they spend to do it and how they keep farmers in rice production.

In any event it is a government decision and not a free market choice. You write too many wrong ideas for me to try and educate you for example, "Agriculture unless farmers are taught to increase yields, productivity and increase the size of plots, is destined for long term decay." That is an odd idea that ecnomists realized was in error 100 years ago. People are not willing to pay the real cost of food. Sorry but they have not been willing to pay the real cost of food for a hundred years.

Almost all governments around the world intervene actively in the operation of their agricultural markets. The ways they intervene and the reasons they do so depend in large part on the wealth of the country. I really don't think I should spend more time explaining this. Google would be a good place to start. You might want to read, "Methods of Agricultural Price Support and Stabilization in Australia. or http://www.economicsonline.co.uk/Market_failures/Price_stabilisation.html

I've got some reading material for you.....

http://ciaranm.hubpages.com/hub/Ventriliquism-for-dummies--How-to-be-a-Ventriloquist

Although I think you or a close friend may already have read it,

(it's got the word hub in it, how cool is that)

Edited May 16, 2013 by Thaddeus

[Thai at Heart]

So by this measure, if we simply gave each farmer 100,000b in cash, and did not require them to do anything, and thus were able to save the money of storage of rice, then according to your criteria of success "If the billions are spent improving the GDP the rice scheme makes sense. If the money was getting to the farmers the rice pledging scheme makes sense." this would be a logical way to improve the scheme.

Methinks you never studied economics.

Methinks you never read the rice pledging scheme. Thailand will lose the ability to produce rice unless the government pays the farmers in addition to the market value of the rice. Same as Japan. Same as many crops in the EU. Look up, "Agricultural Subsidy."

Under the price guarantee scheme, there was no appreciable reduction in rice production nor export sales; so this blows the theory that it is required to subsidise rice farmers to make them grow rice.

There has been an ongoing shift in Thailand from being an agricultural based economy to a manufacturing and services economy. The rice scheme is now enabling more substandard and subscale farmers to stay in business a little longer, but their business model is dying simply because, the average farmer's age is increasing, the younger generation would rather earn more money working in an airconned factory rather than underpaid backbreaking work in the fields.

From a world global perspective, it is a basically a crime to waste so much water and resources growing and paying for something that is only being wasted. Surely, this is obvious. Much as I dislike the scheme, I would rather all the rice stockpiled were donated to Somalia, India and other places with massive malnourishment and lack of food, than the current scheme of sitting on it until it rots.

There are numerous examples of produce created without subsidies, such as NZ's agricultural/dairy sector. In Thailand, rubber, sugar, and numerous other crops survive without an equivalent of rice pledging. I hardly think picking the EU and Japan, two areas of the world in massive financial difficulty are best examples for Thailand. The world is moving away from protectionism and subsidies, not towards them.

I pay 1.5m in tax a year and get pretty much zero for that; I'd like to think that money would be used constructively; giving it to rice farmers as a windfall makes little sense from an economic perspective. It would actually be better if the land was left unharvested, and the water and materials used for something else, since there is no plan to actually sell the rice at this point, since it is like 'pushing water uphill' another idea that this government have also tried with the boats in the river solution to flooding, equally fruitless.

Paying them to do nothing, might be the only option this year. They can't possibly have enough storage to house one and a half years stock anyway.

[chiangmaikelly]

You wrote, "how else do you justify rewarding economically inefficient behaviour by using taxes from those who are productive to support the non productive."

Rice farmers will never make as much money as an automotive engineer but that does not mean they are non productive; it just means rice farmers are not paid as much as an automotive engineer. If you want your country to keep producing rice then you have to take some of the taxes from the engineer and give it to the rice farmer.

When we pay them to produce something that is likely to be worthless because it is left to rot (also incurring costs of storage, financing, processing), and also provide them with subsidised healthcare, education, interest free loans and the numerous elements of a social contract between the needy and the rich, then I would suggest that it is cheaper to have them do nothing, or something else, than to engage in a pointless activity which costs more.

The numerous examples of subsidies in the UK coal mining industry, farming the world over and other market distortions suggest that at a certain point, you stop doing pointless things. Subsistance farming is not a productive use of time or resources, and this pledging scheme is effectively designed to prop up 40 rai or smaller farms....that's subsistence farming or as close as you can get to it in Thailand today. It's a dying way of life, and the focus on volume production is exactly the way to kill it; the right way to make subsistence farming profitable is to move up the value chain...something that doesn't happen when you encourage people to grow low grade rice as fast as possible.

So no, I don't think we should be aiming to continue to produce rice in this manner, I don't see the point. And I am paying for it, personally and as a company.

In my line of work, we employ approximately 5000 counting direct and indirect employees. We have a CHRONIC shortage of Thai staff at certain times of the year, as do most manufacturing firms; there is almost zero unemployment and spiralling wages; that is why manufacturing and services are growing at agriculture's expense because these workers see a future doing this rather than farming. They earn more, they work in aircon, they get to eat every day, life is simpler in a factory than in the fields; according to our workers. The numerous industry insiders will say the same thing in Japan, China, Thaialand - rice farming is a dying occupation because the young generation don't want to do it.

Pledging is giving it a shot of cash...but not a future. Because it is eventually not sustainable simply because Thailand is sharing the same climate as its neighbours, every year that we have a great crop...so do most of our neighbours. So there is no way to set up the cartel or price control.

I am amazed anyone sees this as anything other than a vote grab, the question is whether it is a vote grab that is sustainable or not...I say....not.

Agriculture unless farmers are taught to increase yields, productivity and increase the size of plots, is destined for long term decay - the government is aware of these problems and the current PM (in exile) actually tried to convert farmers to be business people with the village funds with his microfinance scheme; as one of its architects said to me, "the scheme cannot really be considered a success using economic measures, we overestimated the capability of rural farmers to be SME business people, and we rolled it out way too fast with no infrastructure to guage if people could pay or not." I see it when I visit the family upcountry (we own quite a lot of land although I don't personally farm it myself); the industries with the least amount of government input longterm are the ones that the industry is developing the best and most sustainably.

Now rice is a tricky one, because it's so massive, but the amount of water going into rice is effectively exporting a scarce commodity. There's some interesting academic research on this in Australia.

I've seen the massive rice storage in person the last time we went through pledging; rice industry insiders told me that the wastage rate with the existing method of storage is around 10-15% per year in a good case scenario. Each additional handling step also creates more broken rice and damages the price you can achieve. Given the temporary nature of storage they are erecting now it would logically be worse than this. Just like whisky, you cannot get around an angel's share in most produce; you especially cannot avoid it when the ability to store this amount of rice is a growing problem that was never planned for.

I don't think you have grasped the nature or reason behind agricultural subsidies. They began in the USA (to name one country) after WWI. After almost 100 years of the same thing in the US as Thailand I don't find it odd. You do. I don't wish to teach a course here in the necessity of price supports to maintain a countries agricultural industry.

You might want to look at rice prduction in Japan, why they do it and how much they spend to do it and how they keep farmers in rice production.

In any event it is a government decision and not a free market choice. You write too many wrong ideas for me to try and educate you for example, "Agriculture unless farmers are taught to increase yields, productivity and increase the size of plots, is destined for long term decay." That is an odd idea that ecnomists realized was in error 100 years ago. People are not willing to pay the real cost of food. Sorry but they have not been willing to pay the real cost of food for a hundred years.

Almost all governments around the world intervene actively in the operation of their agricultural markets. The ways they intervene and the reasons they do so depend in large part on the wealth of the country. I really don't think I should spend more time explaining this. Google would be a good place to start. You might want to read, "Methods of Agricultural Price Support and Stabilization in Australia. or http://www.economicsonline.co.uk/Market_failures/Price_stabilisation.html

I've got some reading material for you.....

http://ciaranm.hubpages.com/hub/Ventriliquism-for-dummies--How-to-be-a-Ventriloquist

Although I think you or a close friend may already have read it,

(it's got the word hub in it, how cool is that)

"Ventriliquism-for-dummies" what you recommend I read I think is a bit of a flame. What do you think Thad? Is it a flame?

[NeverSure]

"Ventriliquism-for-dummies" what you recommend I read I think is a bit of a flame. What do you think Thad? Is it a flame?

[NeverSure]

Successful or not, but it remains that the OP has "Luck said that in effect, the government had to release stockpiled rice so it could make enough money to repay the fund.".

The moment we know how much of the stockpile, from which year and to what price we'll be able to judge the possible profit or loss. Till now the government has been less than trasparent in this with a much touted 'chinese' G2G deal just a possible intention to maybe buy a bit.

Conclusion: if the revolving fund of THB 500 billions isn't revolving the government needs to borrow a few hundred billion more. The more pressure on regaining at least some to keep the funds revolving the more likely pressure on price and increasing losses.

BTW indeed old rice no longer fit for human consumption (strict standards) may still be used as animal fodder. Mind you this depends on the state of the 'old rice'. Even for animals we've got standards regarding their feed. A month ago the Commerce Minister said that about 40,000 tons of old paddy from 2003-05 will be released for use as animal feed with prices of these releases to be announced later. It's unclear who will buy as no price know, nor quality of this rice. To early to talk about wishful thinking I guess, but any particular reason why this 2003-2005 rice was left behind?

We have another problem and I posted links to it in another thread. The 500 bil is borrowed from the Agricultural Bank and right now the West would have to write it off as a loss. But this is Thailand. It's a "revolving fund" which apparently never has to be paid back.

Additionally, the government right now needs another 200 bil from the Ag Bank for the rice scheme. Now, that bank was said to belong to the Thai government. But it doesn't have that much capital (not customers' assets, but its own capital) to cover that either.

So basically the Thai government through its Ag Bank is upside down in this scheme 700 billion baht which is more than 1/3 of the massive spending they want to do for high speed rail just to put it into perspective.

Of course the Thai government's credit rating is so bad (BBB-) that 1. They haven't found a lender for the high speed rail despite the PM traveling around the world trying to sell it and 2. They have to pay such a high interest rate to borrow money compared to developed countries that it's catching up with them.

If they drop the policy rate at BOT, the yield won't be enough to sell bonds. If they don't, the value of the baht may stay high enough to cripple all exports.

They have found the classic rock and hard place, in a circular pattern.

Edited May 17, 2013 by NeverSure

[NeverSure]

Successful or not, but it remains that the OP has "Luck said that in effect, the government had to release stockpiled rice so it could make enough money to repay the fund.".

The moment we know how much of the stockpile, from which year and to what price we'll be able to judge the possible profit or loss. Till now the government has been less than trasparent in this with a much touted 'chinese' G2G deal just a possible intention to maybe buy a bit.

Conclusion: if the revolving fund of THB 500 billions isn't revolving the government needs to borrow a few hundred billion more. The more pressure on regaining at least some to keep the funds revolving the more likely pressure on price and increasing losses.

BTW indeed old rice no longer fit for human consumption (strict standards) may still be used as animal fodder. Mind you this depends on the state of the 'old rice'. Even for animals we've got standards regarding their feed. A month ago the Commerce Minister said that about 40,000 tons of old paddy from 2003-05 will be released for use as animal feed with prices of these releases to be announced later. It's unclear who will buy as no price know, nor quality of this rice. To early to talk about wishful thinking I guess, but any particular reason why this 2003-2005 rice was left behind?

We have another problem and I posted links to it in another thread. The 500 bil is borrowed from the Agricultural Bank and right now the West would have to write it off as a loss. But this is Thailand. It's a "revolving fund" which apparently never has to be paid back.

Additionally, the government right now needs another 200 bil from the Ag Bank for the rice scheme. Now, that bank was said to belong to the Thai government. But it doesn't have that much capital (not customers' assets, but its own capital) to cover that either.

So basically the Thai government through its Ag Bank is upside down in this scheme 700 billion baht which is more than 1/3 of the massive spending they want to do for high speed rail just to put it into perspective.

Of course the Thai government's credit rating is so bad (BBB-) that 1. They haven't found a lender for the high speed rail despite the PM traveling around the world trying to sell it and 2. They have to pay such a high interest rate to borrow money compared to developed countries that it's catching up with them.

If they drop the policy rate at BOT, the yield won't be enough to sell bonds. If they don't, the value of the baht may stay high enough to cripple all exports.

They have found the classic rock and hard place, in a circular pattern.

Probably not a good idea to use Rubi as a source. List the terms of the 500 billion loan and when it it due. I need a better link than Rubi before I respond.

Why bother. You won't listen to anything that isn't published by the Thai government which you don't think is corrupt to the core. I posted a link to the story in the earlier thread about 2 Thai banks in trouble. My link made it 3. Try to keep up.

[chiangmaikelly]

Successful or not, but it remains that the OP has "Luck said that in effect, the government had to release stockpiled rice so it could make enough money to repay the fund.".

The moment we know how much of the stockpile, from which year and to what price we'll be able to judge the possible profit or loss. Till now the government has been less than trasparent in this with a much touted 'chinese' G2G deal just a possible intention to maybe buy a bit.

Conclusion: if the revolving fund of THB 500 billions isn't revolving the government needs to borrow a few hundred billion more. The more pressure on regaining at least some to keep the funds revolving the more likely pressure on price and increasing losses.

BTW indeed old rice no longer fit for human consumption (strict standards) may still be used as animal fodder. Mind you this depends on the state of the 'old rice'. Even for animals we've got standards regarding their feed. A month ago the Commerce Minister said that about 40,000 tons of old paddy from 2003-05 will be released for use as animal feed with prices of these releases to be announced later. It's unclear who will buy as no price know, nor quality of this rice. To early to talk about wishful thinking I guess, but any particular reason why this 2003-2005 rice was left behind?

We have another problem and I posted links to it in another thread. The 500 bil is borrowed from the Agricultural Bank and right now the West would have to write it off as a loss. But this is Thailand. It's a "revolving fund" which apparently never has to be paid back.

Additionally, the government right now needs another 200 bil from the Ag Bank for the rice scheme. Now, that bank was said to belong to the Thai government. But it doesn't have that much capital (not customers' assets, but its own capital) to cover that either.

So basically the Thai government through its Ag Bank is upside down in this scheme 700 billion baht which is more than 1/3 of the massive spending they want to do for high speed rail just to put it into perspective.

Of course the Thai government's credit rating is so bad (BBB-) that 1. They haven't found a lender for the high speed rail despite the PM traveling around the world trying to sell it and 2. They have to pay such a high interest rate to borrow money compared to developed countries that it's catching up with them.

If they drop the policy rate at BOT, the yield won't be enough to sell bonds. If they don't, the value of the baht may stay high enough to cripple all exports.

They have found the classic rock and hard place, in a circular pattern.

Probably not a good idea to use Rubi as a source. List the terms of the 500 billion loan and when it it due. I need a better link than Rubi before I respond.

Why bother. You won't listen to anything that isn't published by the Thai government which you don't think is corrupt to the core. I posted a link to the story in the earlier thread about 2 Thai banks in trouble. My link made it 3. Try to keep up.

Try responding to an on topic question that I raised. I don't think this thread is about Thai banks in trouble is it? Lets try, if I read a post with this written, " If they drop the policy rate at BOT, the yield won't be enough to sell bonds. If they don't, the value of the baht may stay high enough to cripple all exports. They have found the classic rock and hard place, in a circular pattern. What would the topic be?

[NeverSure]

The topic of the thread is evaluating the rice pledging scheme. The topic of my reply you quoted was about how it has the Agricultural Bank in trouble, and about you questioning the character of my source. My reply was to the effect that you won't listen to anything that conflicts with what the Thai government says. The implication is that it didn't, doesn't, and won't do any good to supply you with any more links because you poo-poo them if they are at odds with your heroes, the Thai government.

Pretty simple, isn't it?

[Thai at Heart]

Successful or not, but it remains that the OP has "Luck said that in effect, the government had to release stockpiled rice so it could make enough money to repay the fund.".

The moment we know how much of the stockpile, from which year and to what price we'll be able to judge the possible profit or loss. Till now the government has been less than trasparent in this with a much touted 'chinese' G2G deal just a possible intention to maybe buy a bit.

Conclusion: if the revolving fund of THB 500 billions isn't revolving the government needs to borrow a few hundred billion more. The more pressure on regaining at least some to keep the funds revolving the more likely pressure on price and increasing losses.

BTW indeed old rice no longer fit for human consumption (strict standards) may still be used as animal fodder. Mind you this depends on the state of the 'old rice'. Even for animals we've got standards regarding their feed. A month ago the Commerce Minister said that about 40,000 tons of old paddy from 2003-05 will be released for use as animal feed with prices of these releases to be announced later. It's unclear who will buy as no price know, nor quality of this rice. To early to talk about wishful thinking I guess, but any particular reason why this 2003-2005 rice was left behind?

We have another problem and I posted links to it in another thread. The 500 bil is borrowed from the Agricultural Bank and right now the West would have to write it off as a loss. But this is Thailand. It's a "revolving fund" which apparently never has to be paid back.

Additionally, the government right now needs another 200 bil from the Ag Bank for the rice scheme. Now, that bank was said to belong to the Thai government. But it doesn't have that much capital (not customers' assets, but its own capital) to cover that either.

So basically the Thai government through its Ag Bank is upside down in this scheme 700 billion baht which is more than 1/3 of the massive spending they want to do for high speed rail just to put it into perspective.

Of course the Thai government's credit rating is so bad (BBB-) that 1. They haven't found a lender for the high speed rail despite the PM traveling around the world trying to sell it and 2. They have to pay such a high interest rate to borrow money compared to developed countries that it's catching up with them.

If they drop the policy rate at BOT, the yield won't be enough to sell bonds. If they don't, the value of the baht may stay high enough to cripple all exports.

They have found the classic rock and hard place, in a circular pattern.

As I wrote elsewhere, the only hope is to have a crop holiday to shorten the market. There is no way to drive the price up with a commodity such as this by holding the market to ransom.

They could have achieved something by growing LESS, but instead they have more or the same amount, whilst everyone else has been having good crops also. It is only a rare commodity if it is rare. And to those up top, yes rice does deterioriate and rot.

Even long term storage in silos is very difficult and expensive to achieve in Thailand because of the changes in relative humidity through the year. Beyond that, they would need more silos than you or I could ever comprehend to store however million TONNES of stock they have sitting around. There are some good warehouses around, but the system was never set up to store 10's of millions of tonnes for more than one year. Product was in, and product was out, with a relatively small percentage kept on hand year on year in the better warehouses.

Now everything is completely full, so, those warehouses that were used for short term storage are now being used for long term storage, and they are in no way set up to be sealed well enough to keep out moisture and pests. I wish I had a fumigation company.

[chiangmaikelly]

The topic of the thread is evaluating the rice pledging scheme. The topic of my reply you quoted was about how it has the Agricultural Bank in trouble, and about you questioning the character of my source. My reply was to the effect that you won't listen to anything that conflicts with what the Thai government says. The implication is that it didn't, doesn't, and won't do any good to supply you with any more links because you poo-poo them if they are at odds with your heroes, the Thai government.

Pretty simple, isn't it?

700 billion baht? Oh come on. Stop making up numbers. Stop making up problems. No one outside of you thinks the Agriculture bank is in trouble. No one else but you thinks Thailand has lost 700 billion baht on the rice scheme. If I am wrong provide some links.

[rubl]

The 'non-revolving fund is THB 500 billion and empty. The government needs to repay at least 110 billion this year assumingly from selling of rice stocks as the money was used to procure rice. The BAAC is government property.

Government lends from self and promises to revolve paying back. Allegedly. Provide links to prove me wrong.

[chiangmaikelly]

The 'non-revolving fund is THB 500 billion and empty. The government needs to repay at least 110 billion this year assumingly from selling of rice stocks as the money was used to procure rice. The BAAC is government property.

Government lends from self and promises to revolve paying back. Allegedly. Provide links to prove me wrong.

By empty you mean represented by rice not sold I think. So not really empty is it?

[rubl]

Rice pledging scheme to be evaluated as revolving fund exhausted. The fund may be filled (revolved ?) by putting money into it. Rice not accepted. Billions of Baht no problem though. Just borrow some more.

[NeverSure]

The 'non-revolving fund is THB 500 billion and empty. The government needs to repay at least 110 billion this year assumingly from selling of rice stocks as the money was used to procure rice. The BAAC is government property.

Government lends from self and promises to revolve paying back. Allegedly. Provide links to prove me wrong.

The 'non-revolving fund is THB 500 billion and empty. The government needs to repay at least 110 billion this year assumingly from selling of rice stocks as the money was used to procure rice. The BAAC is government property.

Government lends from self and promises to revolve paying back. Allegedly. Provide links to prove me wrong.

By empty you mean represented by rice not sold I think. So not really empty is it?

Empty means they've used it up. They owe it. they paid about double for the rice what it WAS worth before it began to deteriorate in storage. While it was fresh and marketable. Then they thought that withholding it from the market would drive up the world's rice price. But the world is awash in rice, having stocks of 35% more than it needs and bumper crops everywhere. So the value of the rice went down.

If the government sells the rice at a loss, the collateral to cover the loan at the bank will be insufficient. The loss will be realized and they'll have to cough up the difference. But they don't have the difference. They are already running deficits and borrowing money to operate by selling bonds in baht to suckers foreigners.

Now the 500 bil baht is borrowed and they need more to pay for more rice. They will need at least another 200 bil baht. I posted the link but you didn't like it. I think you just didn't like bad news.

[chiangmaikelly]

The 'non-revolving fund is THB 500 billion and empty. The government needs to repay at least 110 billion this year assumingly from selling of rice stocks as the money was used to procure rice. The BAAC is government property.

Government lends from self and promises to revolve paying back. Allegedly. Provide links to prove me wrong.

>

The 'non-revolving fund is THB 500 billion and empty. The government needs to repay at least 110 billion this year assumingly from selling of rice stocks as the money was used to procure rice. The BAAC is government property.

Government lends from self and promises to revolve paying back. Allegedly. Provide links to prove me wrong.

By empty you mean represented by rice not sold I think. So not really empty is it?

Empty means they've used it up. They owe it. they paid about double for the rice what it WAS worth before it began to deteriorate in storage. While it was fresh and marketable. Then they thought that withholding it from the market would drive up the world's rice price. But the world is awash in rice, having stocks of 35% more than it needs and bumper crops everywhere. So the value of the rice went down.

If the government sells the rice at a loss, the collateral to cover the loan at the bank will be insufficient. The loss will be realized and they'll have to cough up the difference. But they don't have the difference. They are already running deficits and borrowing money to operate by selling bonds in baht to suckers foreigners.

Now the 500 bil baht is borrowed and they need more to pay for more rice. They will need at least another 200 bil baht. I posted the link but you didn't like it. I think you just didn't like bad news.

I don't believe you. Do you have any data from a reputable source to back up your claims?

[thaicbr]

The 'non-revolving fund is THB 500 billion and empty. The government needs to repay at least 110 billion this year assumingly from selling of rice stocks as the money was used to procure rice. The BAAC is government property.

Government lends from self and promises to revolve paying back. Allegedly. Provide links to prove me wrong.

By empty you mean represented by rice not sold I think. So not really empty is it?

Xxxx! Banks take rice for payments.... bit more difficult than internet banking though isn't it?

Sent from my i-mobile i-STYLE Q6

Edited May 17, 2013 by metisdead

[chiangmaikelly]

The 'non-revolving fund is THB 500 billion and empty. The government needs to repay at least 110 billion this year assumingly from selling of rice stocks as the money was used to procure rice. The BAAC is government property.

Government lends from self and promises to revolve paying back. Allegedly. Provide links to prove me wrong.

By empty you mean represented by rice not sold I think. So not really empty is it?

Xxxx! Banks take rice for payments.... bit more difficult than internet banking though isn't it?

Sent from my i-mobile i-STYLE Q6

Banks all over the world loan money on future crops. That's how seed gets bought and crops planted. They also buy insurance for the crop being harvested

[NeverSure]

>

The 'non-revolving fund is THB 500 billion and empty. The government needs to repay at least 110 billion this year assumingly from selling of rice stocks as the money was used to procure rice. The BAAC is government property.

Government lends from self and promises to revolve paying back. Allegedly. Provide links to prove me wrong.

By empty you mean represented by rice not sold I think. So not really empty is it?

Empty means they've used it up. They owe it. they paid about double for the rice what it WAS worth before it began to deteriorate in storage. While it was fresh and marketable. Then they thought that withholding it from the market would drive up the world's rice price. But the world is awash in rice, having stocks of 35% more than it needs and bumper crops everywhere. So the value of the rice went down.

If the government sells the rice at a loss, the collateral to cover the loan at the bank will be insufficient. The loss will be realized and they'll have to cough up the difference. But they don't have the difference. They are already running deficits and borrowing money to operate by selling bonds in baht to suckers foreigners.

Now the 500 bil baht is borrowed and they need more to pay for more rice. They will need at least another 200 bil baht. I posted the link but you didn't like it. I think you just didn't like bad news.

I don't believe you. Do you have any data from a reputable source to back up your claims?

I posted a link. You didn't like it. That's all you get. I really don't care if you believe me, or if you believe Rubl's statement above.

You don't deserve this much attention.

[thaicbr]

 

The 'non-revolving fund is THB 500 billion and empty. The government needs to repay at least 110 billion this year assumingly from selling of rice stocks as the money was used to procure rice. The BAAC is government property.

Government lends from self and promises to revolve paying back. Allegedly. Provide links to prove me wrong.

By empty you mean represented by rice not sold I think.  So not really empty is it?

 

Shit! Banks take rice for payments.... bit more difficult than internet banking though isn't it?

Sent from my i-mobile i-STYLE Q6

Banks all over the world loan money on future crops.  That's how seed gets bought and crops planted.  They also buy insurance for the crop being harvested

But do they do that here in Thailand?

The point is that yes there should be change in agriculture but maybe that should be in education and infrastructure to enable the farmers to fend for themselves were possible instead of being increasingly dependent on the government and third parties.

CMK. What do you think?

Sent from my i-mobile i-STYLE Q6

[NeverSure]

The 'non-revolving fund is THB 500 billion and empty. The government needs to repay at least 110 billion this year assumingly from selling of rice stocks as the money was used to procure rice. The BAAC is government property.

Government lends from self and promises to revolve paying back. Allegedly. Provide links to prove me wrong.

By empty you mean represented by rice not sold I think. So not really empty is it?

Shit! Banks take rice for payments.... bit more difficult than internet banking though isn't it?

Sent from my i-mobile i-STYLE Q6

Banks all over the world loan money on future crops. That's how seed gets bought and crops planted. They also buy insurance for the crop being harvested

He was joking. You're so wound up you don't know a joke when you see it.

I'll bet you didn't know that I can get 2 kilos of rice out of an ATM machine, did you?

[chiangmaikelly]

I posted a link. You didn't like it. That's all you get. I really don't care if you believe me, or if you believe Rubl's statement above.

You don't deserve this much attention.

Up to you but you didn't post a link that confirmed your very high fictitous numbers.