Thai Govt's Rice Pledging Scheme To Be Evaluated

[chiangmaikelly]

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

Yes they loan money to the farmers in Thailand. The brokers, co ops and the governmnet. The government rice pledging scheme is a loan pledging prices starting from 15,000 baht a tonne for paddy rice, 20,000 baht for Hom Mali in the Northeast, 18,000 baht for provincial fragrant rice and 16,000 baht for long-grain sticky rice as well as

fragrant rice from Pathum Thani. All the experts here are telling people that the government is throwing money away but it is a loan.

All the experts are talking about rice rotting but there are many uses for rice and ways to keep it. Parboiled rice is also sold and many other rice products. According to the World Bank, the Thai government spent around 376 billion baht (about $12.5 billion) or around 3.4% of GDP, to buy paddy from farmers in the first year of the rice mortgage program (October 2011 to September 2012). Now the government has to sell the rice but it is not 376 billion baht lost.

For a better picture read, http://oryza.com/

Edited May 17, 2013 by chiangmaikelly

[NeverSure]

Yes Kelly. Everyone knows the rice scheme is such a great deal for the government. it's just brilliant. When they are ready, they will sell all of the rotting or stolen rice that they paid double for and pay back all of the loans and make a huge profit.

Happy now?

[thaicbr]

CMK. If its a loan when are the farmers paying it back... oh I forgot they have already in the form of a x.

Whatever you say or think about the scheme many people disagree. The government is NOT selling sufficient stock to pay back loans putting pressure on the banks involved. The rice is deteriorating while in storage therefore making it an ever increasing likely hood that more money will be lost. Possibly the worst thing is that Thailand's rice exporters have actually LOST customers who are buying elsewhere.

it is a flawed project in so many ways which does NOT actually benefit the farmers in the long term. The whole farming system needs overhauling.

Sent from my i-mobile i-STYLE Q6

[chiangmaikelly]

CMK. If its a loan when are the farmers paying it back... oh I forgot they have already in the form of a x.

Whatever you say or think about the scheme many people disagree. The government is NOT selling sufficient stock to pay back loans putting pressure on the banks involved. The rice is deteriorating while in storage therefore making it an ever increasing likely hood that more money will be lost. Possibly the worst thing is that Thailand's rice exporters have actually LOST customers who are buying elsewhere.

it is a flawed project in so many ways which does NOT actually benefit the farmers in the long term. The whole farming system needs overhauling.

Sent from my i-mobile i-STYLE Q6

If you go back and look at my posts you will find I have never said anything positive about the rice pledging scheme. I asked the posters to verify numbers or put them in terms I could understand or stay on topic.

Every thread in the news forum turns into a Thai bashing thread after a page or two and I tried to actually discuss the issue instead of the personalities of the posters and government in this thread. What do you think I have said that people disagree with? Simple question really. What do you or what do you think the other posters disagree with that I am saying? My position is and was, No one knows how much the rice pledging scheme is going to cost. That's all.

[rubl]

It's simply amazing that this simple topic seems to be so difficult to understand. Information missing, not understood, links asked instead.br />
So, THB 500 billion in revolving fund spent. Fund to be filled again by selling rice which is bought with the money spent. The rice cannot be sold yet it seems as the government is somewhat reluctant to sell at a lesser price. With every month waiting the quality of the rice (especially that already more than a year in stock) will diminish and lower it's price again. While all wonder about the growing Thai rice mountain, the government is continuing pledging and with rice delivered paying. That's from a depleted fund. All this generates the need to 'borrow a wee bit more', 110 billion more this year alone.

Link? A link? Well, if some really want a link ...
http://www.thaivisa.com/forum/topic/639014-thai-govts-rice-pledging-scheme-to-be-evaluated/

[Thai at Heart]

They should have just surveyed and registered the farmers to receive a flat 450 baht a tonne and then let the buyers top it up on a quality basis.

[chiangmaikelly]

It's simply amazing that this simple topic seems to be so difficult to understand. Information missing, not understood, links asked instead. br />

So, THB 500 billion in revolving fund spent. Fund to be filled again by selling rice which is bought with the money spent. The rice cannot be sold yet it seems as the government is somewhat reluctant to sell at a lesser price. With every month waiting the quality of the rice (especially that already more than a year in stock) will diminish and lower it's price again. While all wonder about the growing Thai rice mountain, the government is continuing pledging and with rice delivered paying. That's from a depleted fund. All this generates the need to 'borrow a wee bit more', 110 billion more this year alone.

Link? A link? Well, if some really want a link ...

http://www.thaivisa.com/forum/topic/639014-thai-govts-rice-pledging-scheme-to-be-evaluated/

How can you say spent when the rice is in storage and not sold? If the rice has been sold and the account comes up 500 billion short then it has been spent.

[rubl]

450 Baht a ton, flat subsidy? Can't be done, that's too much like the Democrat Party did it before.

[Thai at Heart]

450 Baht a ton, flat subsidy? Can't be done, that's too much like the Democrat Party did it before.

Indeed. It's virtually identical to the CAP.

Problem is, in that context the confusion between rented land and owner is too much. But under that system it doesn't break WTO rules.

Now they have the worst of both worlds.

[rubl]

The difference between a government and a commercial company when encountering cash-flow problems?

A government borrows more before defaulting.

[metisdead]

A post containing an outdated news article has been removed. I would suggest to some members to calm down and post in a civil manner.

[steveromagnino]

It's simply amazing that this simple topic seems to be so difficult to understand. Information missing, not understood, links asked instead. br />

So, THB 500 billion in revolving fund spent. Fund to be filled again by selling rice which is bought with the money spent. The rice cannot be sold yet it seems as the government is somewhat reluctant to sell at a lesser price. With every month waiting the quality of the rice (especially that already more than a year in stock) will diminish and lower it's price again. While all wonder about the growing Thai rice mountain, the government is continuing pledging and with rice delivered paying. That's from a depleted fund. All this generates the need to 'borrow a wee bit more', 110 billion more this year alone.

Link? A link? Well, if some really want a link ...

http://www.thaivisa.com/forum/topic/639014-thai-govts-rice-pledging-scheme-to-be-evaluated/

How can you say spent when the rice is in storage and not sold? If the rice has been sold and the account comes up 500 billion short then it has been spent.

The rice has mostly NOT been sold, the money has been spent buying it and the rice is sitting mostly in various storage facilities dotted around Thailand.

When we account for this in typical accounting practice, this is a transfer of cash to inventory, no impact on p&L yet.

But if we are prudent, then accounting for cost of expenses of storage (estimate 1-5% of value of purchases based on running warehouses and paying off rice millers to hold inventory) and financing (estimate 3% of value of purchases) that's a cost of around 3-5% of the value of purchases based on governmental WACC. Financing stock and inventory is not free, it costs money, as money has a cost to it if it isn't being used (in this case it is being borrowed).

At year end, when we do a stocktake, we should recognise losses from theft or in this case, wastage. Estimated by industry experts around 10-20% per year for rice. But if we avoid a stocktake, we can value the stock at full price for ever. If the sale is conducted at a loss that is immediately recognised on the books, so best to leave it on the books at full value for years and years, and let another government recognise the loss later on. This is the same mindset as to why banks don't sell non performing loans at a fraction of what they are worth; as long as they sit on the books, sure they look like they might be worthless, but then again the person might pay it all back - so why realise the loss? better to leave it as someone else's problem later on.

With regards to the word 'spent' money has disappeared from the government, and reappeared in farmers' bank accounts. Yes, there is now a theoretical asset on the books (inventory) but there is no question that money has been spent by the government.

Of course, it all works fine perhaps running as a non profit organisation when the rice is sold at cost...but since the government is unable to sell it at cost and also cannot easily dump it on world markets at different prices than what it is sold for locally (breach of WTO anti-dumping regulations) it is a tricky position to be in.

Nevertheless, given the vast amount of skills the government has previously demonstrated attempting to swap chicken for fighter planes and other government to government sales, no doubt we should not worry that the scheme on paper appears to have run out of money and physical storage has run out of space. I'm sure it's fine.

There is an interesting article in a newspaper we can't mention regarding this issue today; perhaps someone in this thread is a writer for that paper too?

[rubl]

It would seem that out of the THB 320 billion the rice price pledging 'spent' over the 2011/2012 period the projected loss may reach 200 billion. instead of just 70 to 100 billion. All according to a source who is on the committee to keep an eye on all this for the government. Of course this ignores the fact that the rice is still in storage mostly :-)

[dcutman]

It's simply amazing that this simple topic seems to be so difficult to understand. Information missing, not understood, links asked instead. br />

So, THB 500 billion in revolving fund spent. Fund to be filled again by selling rice which is bought with the money spent. The rice cannot be sold yet it seems as the government is somewhat reluctant to sell at a lesser price. With every month waiting the quality of the rice (especially that already more than a year in stock) will diminish and lower it's price again. While all wonder about the growing Thai rice mountain, the government is continuing pledging and with rice delivered paying. That's from a depleted fund. All this generates the need to 'borrow a wee bit more', 110 billion more this year alone.

Link? A link? Well, if some really want a link ...

http://www.thaivisa.com/forum/topic/639014-thai-govts-rice-pledging-scheme-to-be-evaluated/

How can you say spent when the rice is in storage and not sold? If the rice has been sold and the account comes up 500 billion short then it has been spent.

The rice has mostly NOT been sold, the money has been spent buying it and the rice is sitting mostly in various storage facilities dotted around Thailand.

When we account for this in typical accounting practice, this is a transfer of cash to inventory, no impact on p&L yet.

But if we are prudent, then accounting for cost of expenses of storage (estimate 1-5% of value of purchases based on running warehouses and paying off rice millers to hold inventory) and financing (estimate 3% of value of purchases) that's a cost of around 3-5% of the value of purchases based on governmental WACC. Financing stock and inventory is not free, it costs money, as money has a cost to it if it isn't being used (in this case it is being borrowed).

At year end, when we do a stocktake, we should recognise losses from theft or in this case, wastage. Estimated by industry experts around 10-20% per year for rice. But if we avoid a stocktake, we can value the stock at full price for ever. If the sale is conducted at a loss that is immediately recognised on the books, so best to leave it on the books at full value for years and years, and let another government recognise the loss later on. This is the same mindset as to why banks don't sell non performing loans at a fraction of what they are worth; as long as they sit on the books, sure they look like they might be worthless, but then again the person might pay it all back - so why realise the loss? better to leave it as someone else's problem later on.

With regards to the word 'spent' money has disappeared from the government, and reappeared in farmers' bank accounts. Yes, there is now a theoretical asset on the books (inventory) but there is no question that money has been spent by the government.

Of course, it all works fine perhaps running as a non profit organisation when the rice is sold at cost...but since the government is unable to sell it at cost and also cannot easily dump it on world markets at different prices than what it is sold for locally (breach of WTO anti-dumping regulations) it is a tricky position to be in.

Nevertheless, given the vast amount of skills the government has previously demonstrated attempting to swap chicken for fighter planes and other government to government sales, no doubt we should not worry that the scheme on paper appears to have run out of money and physical storage has run out of space. I'm sure it's fine.

There is an interesting article in a newspaper we can't mention regarding this issue today; perhaps someone in this thread is a writer for that paper too?

I thought I would add some of the more interesting points in the other paper, so CMK can say that is peanuts compared to GDP and its all wonderful. It is now estimated that this scam is going to loose Bt200 billion up from Bt70 billion just for the 2011/2012 growing season. The other is, out of the Bt587 billion spent/borrowed, the government is only going to be able to get Bt220 billion for all the rice in its stock pile to date.

[slapout]

Some of the early projections of this boondoggle costing taxpayers 800 billion over a 4 or 5 year time span may be much closer to a true figure than anyone wants to admit. The storage fees being paid is enough to bring out the best of the flim flam artists.

[bigbamboo]

So will this go down as Thaksin's biggest loss making business enterprise ever? There have been a few.

Lucky he wasn't risking his own money though.

Edited May 23, 2013 by bigbamboo

[apetley]

Some of the early projections of this boondoggle costing taxpayers 800 billion over a 4 or 5 year time span may be much closer to a true figure than anyone wants to admit. The storage fees being paid is enough to bring out the best of the flim flam artists.

Judging by the number of brand new storage facilities being built just nearby to where we live storing the rice must pay very well indeed.

Sent from my GT-I9003 using Thaivisa Connect Thailand mobile app

[slapout]

A storage cost figure that slipped out of one of the "I am not authorized to talk to the press" several months ago was....... 800 baht per month per ton.

With the figure of 20 million tons as a storage figure, this is not a small cut bleeding the Thai taxpayer, but a major life supporting loss of blood. But have no fear, anyone who can find the peanut under the walnut shells, real cost, (apparently the chances have been increased for the house, by several walnut shells being added) but no additional peanuts. will be rewarded with a plum position in the current government.

[chiangmaikelly]

If there is so much rice around why isn't the price going down? It has been about the same for the past two years.

Edited May 30, 2013 by chiangmaikelly

[thaicbr]

If there is so much rice around why isn't the price going down?  It has been about the same for the past two years. 

Because the rice isn't around. Most of the rice is being bought by the government rice pledging scheme and put into warehouses and stored. The local rice millers are having to pay a premium to get rice for the Thai market or wait for the occasional local auction release of government stock.

Sent from my i-mobile i-STYLE Q6

[thaicbr]

Some of the early projections of this boondoggle costing taxpayers 800 billion over a 4 or 5 year time span may be much closer to a true figure than anyone wants to admit. The storage fees being paid is enough to bring out the best of the flim flam artists.

Judging by the number of brand new storage facilities being built just nearby to where we live storing the rice must pay very well indeed.

Sent from my GT-I9003 using Thaivisa Connect Thailand mobile app

I believe it's 50b per ton per month (but it could be per large Hessian sack)

Sent from my i-mobile i-STYLE Q6

[thaicbr]

Good editorial about the rice pledging. New York times.

http://www.nytimes.com/2013/03/29/business/global/thailand-set-to-sell-off-huge-stockpile-of-rice.html?_r=0&adxnnl=1&adxnnlx=1369922524-Vr3PoWbDnH237hPjzFzfqw

Sent from my i-mobile i-STYLE Q6

[chiangmaikelly]

If there is so much rice around why isn't the price going down? It has been about the same for the past two years.

Because the rice isn't around. Most of the rice is being bought by the government rice pledging scheme and put into warehouses and stored. The local rice millers are having to pay a premium to get rice for the Thai market or wait for the occasional local auction release of government stock.

Sent from my i-mobile i-STYLE Q6

Stocks of rice in India, Vietnam, Pakistan, Thailand and the U.S. will rise 3.8% to 38.2 million metric tons in the aggregate 2012-13 marketing year. Major rice exporter India, despite dry weather hitting output in 2012, has built up huge government-owned stocks due to high production from the use of better quality hybrid seeds and rising acreage. As of Feb. 1, it held 35.4 million tons, only slightly less than the total volume of rice traded globally last year. Nigeria, the world’s largest rice importer, is likely to import 15% less this year due to higher import duties, while China’s domestic production will be high enough to permit a 35% fall in its imports.

http://blogs.wsj.com/searealtime/2013/02/26/global-rice-prices-expected-to-drop/

Edited May 30, 2013 by chiangmaikelly

[Thai at Heart]

If there is so much rice around why isn't the price going down? It has been about the same for the past two years.

Because the rice isn't around. Most of the rice is being bought by the government rice pledging scheme and put into warehouses and stored. The local rice millers are having to pay a premium to get rice for the Thai market or wait for the occasional local auction release of government stock.

Sent from my i-mobile i-STYLE Q6

Stocks of rice in India, Vietnam, Pakistan, Thailand and the U.S. will rise 3.8% to 38.2 million metric tons in the aggregate 2012-13 marketing year. Major rice exporter India, despite dry weather hitting output in 2012, has built up huge government-owned stocks due to high production from the use of better quality hybrid seeds and rising acreage. As of Feb. 1, it held 35.4 million tons, only slightly less than the total volume of rice traded globally last year. Nigeria, the worlds largest rice importer, is likely to import 15% less this year due to higher import duties, while Chinas domestic production will be high enough to permit a 35% fall in its imports.

http://blogs.wsj.com/searealtime/2013/02/26/global-rice-prices-e

xpected-to-drop/

Really begs the question, is this the most unfortunately/ incompetently timed agricultural intervention policy ever

[whybother]

Good editorial about the rice pledging. New York times.

http://www.nytimes.com/2013/03/29/business/global/thailand-set-to-sell-off-huge-stockpile-of-rice.html?_r=0&adxnnl=1&adxnnlx=1369922524-Vr3PoWbDnH237hPjzFzfqw

Sent from my i-mobile i-STYLE Q6

Commerce Minister Boonsong Teriyapirom said in October that 7.3 million metric tons had been sold in government-to-government deals, but the foreign countries he named have not confirmed that, and exporters have seen no port activity to back it up.

More white lies? Oh ... it's a different minister!

[MikeOboe57]

Good editorial about the rice pledging. New York times.

http://www.nytimes.com/2013/03/29/business/global/thailand-set-to-sell-off-huge-stockpile-of-rice.html?_r=0&adxnnl=1&adxnnlx=1369922524-Vr3PoWbDnH237hPjzFzfqw

Sent from my i-mobile i-STYLE Q6

>Commerce Minister Boonsong Teriyapirom said in October that 7.3 million metric tons had been sold in government-to-government deals, but the foreign countries he named have not confirmed that, and exporters have seen no port activity to back it up.

More white lies? Oh ... it's a different minister!

Yes, this one hasn't yet admitted that he is telling white lies.

[steveromagnino]

I think we are now all in complete agreement.

1. the scheme has failed to cause a substantial decrease in world supply and thus has failed to cause any increase in world price; therefore the Mingkwan abhorrent rice cartel plan (denying people food basically) first proposed in 2007/8 and then regurgitated again in 2011 has not delivered

2. the costs of financing, storage and degree of corruption in the scheme were not planned, and therefore the scheme is running out of money/space the same as 30b healthcare, village fund, TAMC, buying Liverpool etc all failed because they were back of envelope ideas....not planned executions

3. the general public don't know or care, since at the moment coincidentally we have better news with DSI, competing amnesty bills from the same party, whether Um Patcharapa will get married etc

4. the mindset that the government should look after the poor (pen por liang hai) continues for another sad generation....

[AleG]

Good editorial about the rice pledging. New York times.

http://www.nytimes.com/2013/03/29/business/global/thailand-set-to-sell-off-huge-stockpile-of-rice.html?_r=0&adxnnl=1&adxnnlx=1369922524-Vr3PoWbDnH237hPjzFzfqw

Sent from my i-mobile i-STYLE Q6

In questions seen by Reuters, the U.S. delegation said Thailand had previously said that data on the program, including figures on rice exports, were on government Web sites, but that the data had been discontinued.

So much for the promised transparency then. And still people support the government when they say "trust me" in other matters, such as the 5+ trillion rail scheme.

[waza]

The news they didn't want you to know............

"Thailand’s Finance Ministry has reassigned a deputy finance permanent secretary after leaked media reports last week that the much disparaged populist-policy
Thailand rice pledging scheme was likely to cost up to Bt100 billion (about US$3.348 billion) more than expected, exceeding the schemes budget by up to 186 per cent..........with the Thailand rice pledging scheme estimated to have already cost the government Bt587 billion (US$19.655 billion*) over the last two harvest years, while only Bt220 billion (US$7.366 billion) is expected to be generated from sales." http://www.establishmentpost.com/thailand-rice-pledging-scheme-leak-sees-finance-secretary-moved/

"The outlook was offered at the "Thailand Rice Convention 2013", attended this week in Chiang Mai by more than 400 experts and traders from 40 countries......David Dawe, senior economist at the Agricultural Development Economics Division of the United Nations' Food and Agriculture Organisation (FAO), said that although global rice trading had increased due to world trade liberalisation, Thai exports could well face more difficulties because of high prices under the government's pledging policy.

"The rice-pledging scheme of the Thai government has challenged the country's trading, as it means higher stocks each year. The scheme is also a challenge in terms of budgetary losses, since the government needs to spend a high amount each year. As a result, the country's spending for other projects, such as on infrastructure, education and agricultural development, will be less," he said. http://www.nationmultimedia.com/business/Bleak-future-seen-for-Thai-rice-exporters-30207006.html

Edited May 30, 2013 by waza

[apetley]

If there is so much rice around why isn't the price going down?  It has been about the same for the past two years. 

Because the rice isn't around. Most of the rice is being bought by the government rice pledging scheme and put into warehouses and stored. The local rice millers are having to pay a premium to get rice for the Thai market or wait for the occasional local auction release of government stock.

Sent from my i-mobile i-STYLE Q6

Stocks of rice in India, Vietnam, Pakistan, Thailand and the U.S. will rise 3.8% to 38.2 million metric tons in the aggregate 2012-13 marketing year.  Major rice exporter India, despite dry weather hitting output in 2012, has built up huge government-owned stocks due to high production from the use of better quality hybrid seeds and rising acreage. As of Feb. 1, it held 35.4 million tons, only slightly less than the total volume of rice traded globally last year.  Nigeria, the worlds largest rice importer, is likely to import 15% less this year due to higher import duties, while Chinas domestic production will be high enough to permit a 35% fall in its imports.

 

http://blogs.wsj.com/searealtime/2013/02/26/global-rice-prices-e

xpected-to-drop/

Really begs the question, is this the most unfortunately/ incompetently timed agricultural intervention policy ever

Well it certainly hasn't helped farmers. Figures released by the Central Bank today say their income has gone down nearly 8% over the last year.

Sent from my GT-I9003 using Thaivisa Connect Thailand mobile app