Warning On Rice Policy A Wake-Up Call For Thai Govt

[webfact]

Warning on rice policy a wake-up call for govt
The Nation

TDRI says losses from rice-pledging scheme may exceed estimates

BANGKOK: -- A warning by credit-rating agency Moody's about the government's controversial rice-pledging scheme is "worth listening to", and the loss from the scheme this year is expected to exceed estimates, a senior Thailand Development Research Institute (TDRI) official said yesterday.

An earlier forecast of the scheme estimated an accumulated loss of about Bt150 billion to Bt170 billion in the first year, said Somchai Jitsuchon, the TDRI's research director. "The scheme may see another Bt200 billion lost this year, which is quite a huge amount, as it is equivalent to nearly 10 per cent of the annual budget," he added.

He said the TDRI estimate of the scheme's loss last year was close to the amount cited in a report by a Finance Ministry committee tasked with handling the scheme, at Bt210 billion to Bt260 billion. Many government figures said this estimate was possibly used by Moody's, unfairly against the government, in its criteria, threatening a possible downgrade of Thailand's credit ratings.

The government yesterday challenged the Bt260-billion loss estimate by Moody's, which referred to the Finance Ministry panel report on the rice-pledging scheme. PM's Office Minister Nivatthamrong Boonsongpaisal, freshly assigned to lead a fact-finding team and verify the viability of the scheme, said the loss could be a bit higher than Bt100 billion.

The Bt260-billion figure may have been based on the entire quantity of rice bought or pledged through the scheme, not on the actual loss, he said.

"The official figures will be revealed by Commerce Minister Boonsong Teriyapirom, on Friday [tomorrow]," he said, after a Cabinet meeting on economic issues yesterday. Later, he said the scheme was not only about pledging rice, but also other farm products. He did not elaborate.

Boonsong said later that a per-corp loss to the scheme should not exceed Bt60 billion to Bt80 billion.

The government made concerted efforts to counter Moody's warning yesterday. Nivatthamrong said later there would be no budget increase for the scheme until the year-end. It would rely on a total of Bt500 billion - Bt410 billion from a government subsidy and another Bt90 billion from a subsidy by the Bank for Agriculture and Agricultural Cooperatives (BAAC).

Government Spokesman Wim Rungwattanajinda said the government and Yingluck had not been informed properly and sufficiently about the scheme's operation by the Commerce Ministry with regards to three key areas - the quantity of rice in government custody, the stock in custody resold to buyers, and the amount of money spent under the scheme.

The Commerce Ministry is required to submit initial figures to Yingluck by today, and the figures would be revised and finalised before being made public tomorrow, and later communicated to Moody's, Wim said.

The ministers attending the meeting left Government House without making comments after yesterday's session. Only Nivatthamrong spoke to reporters later at his office. He said the losses could have been even in the region of "tens of billions of baht", but he did not have any official information available to support his claim until the Finance and Commerce ministries made the figures public tomorrow.

Apart from assigning Nivatthamrong to jointly take charge of the verification of Moody's figures, the Cabinet economic meeting, which was attended by key government figures on economic affairs and central bank executives, also discussed the baht situation following a recent decision by the Bank of Thailand's Monetary Policy Committee to cut the interest rate by 0.25 percentage point.

Vasin Vanichvoranun, an executive vice president at Kasikornbank, said the Moody's downgrade of Thailand's credit rating may go to the Baa1 level after it decided to issue the warning. He said the warning, coupled with the US deactivation of quantitative easing, would likely influence Thai commercial banks to consider further cutting interest rates, in addition to the recent 25 basis points.

The price of Thai rice is being hit by negative factors like the Moody's warning and the decision of Vietnam - the world's second-largest rice exporter after India - to lower export prices of the grain to boost demand as fresh supplies begin to roll in, news agencies quoted traders as saying yesterday.

The Vietnam Food Association has set a floor price for 25 per cent broken grain at US$365 (Bt11,1100) a tonne and cut the floor for 35 per cent broken rice by 1.4 per cent to $360 a tonne, Vietnamese traders said. The new floor prices are on a free-on-board basis. The Yingluck government buys from farmers at a minimum price of $500 per tonne, making sales to foreign buyers even more difficult.


-- The Nation 2013-06-06

[kurnell]

Has anybody been upcountry and seen rice farmers driving around in BMWs?

[notmyself]

Blame everyone else.

[NeverSure]

The amazing thing is that they really have no idea where it stands. None. Yet it's big enough to break them as it's all borrowed from a government owned bank which can't afford the loss.

They can't answer a simple straightforward question about where it all stands because no one knows.

It's possible that they "can't" answer because a lot has been stolen both money and rice.

[notmyself]

The amazing thing is that they really have no idea where it stands. None. Yet it's big enough to break them as it's all borrowed from a government owned bank which can't afford the loss.

They can't answer a simple straightforward question about where it all stands because no one knows.

It's possible that they "can't" answer because a lot has been stolen both money and rice.

In all honesty, the best thing for the government to do is say nothing at all.

[Payboy]

Many government figures said this estimate was possibly used by Moody's, unfairly against the government, in its criteria, threatening a possible downgrade of Thailand's credit ratings.

About time Moody's was banned from reporting on Thai figures.

[Bellweather]

IN Channel has just reported that a government spokesperson said that Moody's Rating Agency has it's figures all wrong and losses will ONLY be in tens of billions of Baht not hundreds. The report went on to say the Finance and Commerce Ministries have not yet finalised their figures but still the government can say everybody else is wrong. What else would we expect ?

[bigbamboo]

Can you see the government's dream of that 2.2 trillion baht loan disappearing further and further into the distance.......

[A Member]

Transparency government style, we can't give final figures on the rice scheme yet as we haven't finished fiddling, sorry compiling them, but we know they will be accurate and everybody else will be completely wrong.

[notmyself]

It could be argued that no money has been lost since the government still own some (most) of the rice. If you buy 1000 mangos at 100 baht each then sell 999 at 1 Baht each you have not made a loss until you sell the final mango.

[A Member]

Many government figures said this estimate was possibly used by Moody's, unfairly against the government, in its criteria, threatening a possible downgrade of Thailand's credit ratings.

About time Moody's was banned from reporting on Thai figures.

The government may run out of many things but it's unlikely to include those to be criticised, banned, sued, blocked, shutdown or otherwise dealt with.

[tomross46]

Many government figures said this estimate was possibly used by Moody's, unfairly against the government, in its criteria, threatening a possible downgrade of Thailand's credit ratings.

About time Moody's was banned from reporting on Thai figures.

It is time for the government to take action against people that give false information to Moody's and for Moody's to only use the information provided by the government.

[waza]

You can hear the pencil sharpeners working overtime to try some creative arithmetic to hide the actual losses and substitute a doctored number.

I seem to recall Thaksin saying Yingluck should be kept in the dark about the rice scam to give her credible deniability, well lets see if that tactic works.

September 26, 2011 12:00 am: "Pridiyathorn warned that the government would face big trouble - corruption in its huge rice stockpile, and loss of budget spending to subsidise the programme. Losing the No 1 position also means losing foreign-exchange earnings," Pridiyathorn said while pointing out that the unrealistically high price of Thai rice will make exports difficult. http://www.nationmultimedia.com/business/Pridiyathorn-warns-against-rice-pledging-scheme-30166099.html

September 25, 2012 1:00 am: Former PM Thaksin Shinawatra voiced support yesterday for the government’s controversial rice price-pledging programme, saying it should be extended for several more years. He rebuffed critics who say the policy has increased public debt, encouraged corruption, distorted the market and eroded Thailand's position as a leading rice exporter. The programme, under which the government buys rice from farmers at well above market rates, reaps economic gains that are about three times the programme's cost, Thaksin claimed. http://www.nationmultimedia.com/business/Rice-scheme-good-for-a-few-years-30191053.html

Pridiyathorn was sacked for his opinions and Thaksin is uncharacteristically quiet.

Edited June 6, 2013 by waza

[winstonc]

i sure hope they dont get that 2.2trillion loan it would be a disaster,,you know it dont you,,,,

[bkkgriz]

"Government Spokesman Wim Rungwattanajinda said the government and Yingluck had not been informed properly and sufficiently about the scheme's operation by the Commerce Ministry with regards to three key areas - the quantity of rice in government custody, the stock in custody resold to buyers, and the amount of money spent under the scheme."

I can sense a few people being moved to inactive posts very soon.

[Nickymaster]

You can hear the pencil sharpeners working overtime to try some creative arithmetic to hide the actual losses and substitute a doctored number.

I seem to recall Thaksin saying Yingluck should be kept in the dark about the rice scam to give her credible deniability, well lets see if that tactic works.

September 26, 2011 12:00 am: "Pridiyathorn warned that the government would face big trouble - corruption in its huge rice stockpile, and loss of budget spending to subsidise the programme. Losing the No 1 position also means losing foreign-exchange earnings," Pridiyathorn said while pointing out that the unrealistically high price of Thai rice will make exports difficult. http://www.nationmultimedia.com/business/Pridiyathorn-warns-against-rice-pledging-scheme-30166099.html

September 25, 2012 1:00 am: Former PM Thaksin Shinawatra voiced support yesterday for the government’s controversial rice price-pledging programme, saying it should be extended for several more years. He rebuffed critics who say the policy has increased public debt, encouraged corruption, distorted the market and eroded Thailand's position as a leading rice exporter. The programme, under which the government buys rice from farmers at well above market rates, reaps economic gains that are about three times the programme's cost, Thaksin claimed. http://www.nationmultimedia.com/business/Rice-scheme-good-for-a-few-years-30191053.html

Pridiyathorn was sacked for his opinions and Thaksin is uncharacteristically quiet.

If you assume (try to convince the public) that the rice you have stored for months/years (imagine the storage cost) can be sold far above the world market price, yes then the losses might eventually be less.... Sadly, I believe many Thais will believe it..

THAT'S how this government is manipulating the numbers and the population...

[moe666]

In the past few months I have travelled from Chiang Mai to Hua Hin and from Chiang Mai to Plok, khoen Kaen, Surin, Pattaya, Bangkok and back to Chiang Mai. Along the way I have passed many rice storage facilities and the rice is piled in buildings and in the open air as high as 10 meters high. The stench is beyond description I would not want to live near one of these facilities because of the smell. For the government not to know the condition and quality of what they have spent billions on is criminal.

Between Khoen Kaen and Surin there was rice stored in a football field sized area in heaps about 2 to 5 meters in height there were puddles of water scattered in the area as well as a white power piled around as well, this looked like a dumping area as opposed to a storage areas that are usually on concrete slabs. Good luck to these folks getting a handle on this situation as it appears to be a total mess

[JetsetBkk]

"The scheme may see another Bt200 billion lost this year, which is quite a huge amount, as it is equivalent to nearly 10 per cent of the annual budget," he added.

Quite huge? Jesus H.

[GentlemanJim]

It could be argued that no money has been lost since the government still own some (most) of the rice. If you buy 1000 mangos at 100 baht each then sell 999 at 1 Baht each you have not made a loss until you sell the final mango.

But the law of probability tells an intelligent person that you are not going to find someone to give you 99 001 baht for your last Mango (and that would be break even )

"Government Spokesman Wim Rungwattanajinda said the government and Yingluck had not been informed properly and sufficiently about the scheme's operation by the Commerce Ministry with regards to three key areas - the quantity of rice in government custody, the stock in custody resold to buyers, and the amount of money spent under the scheme."

I can sense a few people being moved to inactive posts very soon.

Well why not, Yingluck appears to be in one already, she could do with some company.

[GentlemanJim]

In the past few months I have travelled from Chiang Mai to Hua Hin and from Chiang Mai to Plok, khoen Kaen, Surin, Pattaya, Bangkok and back to Chiang Mai. Along the way I have passed many rice storage facilities and the rice is piled in buildings and in the open air as high as 10 meters high. The stench is beyond description I would not want to live near one of these facilities because of the smell. For the government not to know the condition and quality of what they have spent billions on is criminal.

Between Khoen Kaen and Surin there was rice stored in a football field sized area in heaps about 2 to 5 meters in height there were puddles of water scattered in the area as well as a white power piled around as well, this looked like a dumping area as opposed to a storage areas that are usually on concrete slabs. Good luck to these folks getting a handle on this situation as it appears to be a total mess

Wow! Did you get any photo's?

[Nickymaster]

In the past few months I have travelled from Chiang Mai to Hua Hin and from Chiang Mai to Plok, khoen Kaen, Surin, Pattaya, Bangkok and back to Chiang Mai. Along the way I have passed many rice storage facilities and the rice is piled in buildings and in the open air as high as 10 meters high. The stench is beyond description I would not want to live near one of these facilities because of the smell. For the government not to know the condition and quality of what they have spent billions on is criminal.

Between Khoen Kaen and Surin there was rice stored in a football field sized area in heaps about 2 to 5 meters in height there were puddles of water scattered in the area as well as a white power piled around as well, this looked like a dumping area as opposed to a storage areas that are usually on concrete slabs. Good luck to these folks getting a handle on this situation as it appears to be a total mess

Be careful what you see, Nathawut might have you arrested for spying. He earlier threatened a Dem MP to have him arrested for visiting a storage facility.

Its top secret...

Edited June 6, 2013 by Nickymaster

[GentlemanJim]

In the past few months I have travelled from Chiang Mai to Hua Hin and from Chiang Mai to Plok, khoen Kaen, Surin, Pattaya, Bangkok and back to Chiang Mai. Along the way I have passed many rice storage facilities and the rice is piled in buildings and in the open air as high as 10 meters high. The stench is beyond description I would not want to live near one of these facilities because of the smell. For the government not to know the condition and quality of what they have spent billions on is criminal.

Between Khoen Kaen and Surin there was rice stored in a football field sized area in heaps about 2 to 5 meters in height there were puddles of water scattered in the area as well as a white power piled around as well, this looked like a dumping area as opposed to a storage areas that are usually on concrete slabs. Good luck to these folks getting a handle on this situation as it appears to be a total mess

Be careful what you see, Nathawut might have you arrested for spying. He earlier threatened a Dem MP to have him arrested for visiting a storage facility.

Its top secret...

Is that true? ...that he threatened a Dem MP for visiting a storage facility. Where are all the worlds decent investigative journalists when you need them?

It is also funny that these buffoons are stating that Moody's are completely wrong. This is team Shiniwatra that had export figures at 10.8% when it should have been 2.8% and budgets 100% over the amount needed because of a typing error. I guess the team of global economic specialists who have worked the worlds financial markets for decades are all wrong. I bet they're having some laughs over coffee today.

[scorecard]

In the past few months I have travelled from Chiang Mai to Hua Hin and from Chiang Mai to Plok, khoen Kaen, Surin, Pattaya, Bangkok and back to Chiang Mai. Along the way I have passed many rice storage facilities and the rice is piled in buildings and in the open air as high as 10 meters high. The stench is beyond description I would not want to live near one of these facilities because of the smell. For the government not to know the condition and quality of what they have spent billions on is criminal.

Between Khoen Kaen and Surin there was rice stored in a football field sized area in heaps about 2 to 5 meters in height there were puddles of water scattered in the area as well as a white power piled around as well, this looked like a dumping area as opposed to a storage areas that are usually on concrete slabs. Good luck to these folks getting a handle on this situation as it appears to be a total mess

Be careful what you see, Nathawut might have you arrested for spying. He earlier threatened a Dem MP to have him arrested for visiting a storage facility.

Its top secret...

Is that true? ...that he threatened a Dem MP for visiting a storage facility. Where are all the worlds decent investigative journalists when you need them?

It is also funny that these buffoons are stating that Moody's are completely wrong. This is team Shiniwatra that had export figures at 10.8% when it should have been 2.8% and budgets 100% over the amount needed because of a typing error. I guess the team of global economic specialists who have worked the worlds financial markets for decades are all wrong. I bet they're having some laughs over coffee today.

Yes it's true, there were photos of the incident in parliament in both Thai and English newspapers, and video on TV, Went as follows:

- Dems were informed that there were many storage places with thousands of big hemp bags full of rotting rice.

- Dems brought one or two of these big bags into parliament, open the bag(s) and poured some rice out onto a big tray - all rotten and very discoloured.

- Someone states what storage facility the bags had come from.

- Nattawut steps into the scene all angry and says he will be contacting the police and have the Dems arrested for trespass.

- Great laughs ensure.

[scorecard]

It could be argued that no money has been lost since the government still own some (most) of the rice. If you buy 1000 mangos at 100 baht each then sell 999 at 1 Baht each you have not made a loss until you sell the final mango.

Can you teach risk management?

[scorecard]

Many government figures said this estimate was possibly used by Moody's, unfairly against the government, in its criteria, threatening a possible downgrade of Thailand's credit ratings.

About time Moody's was banned from reporting on Thai figures.

Or about time Moodys refused to construction ratings and comments on Thailand because

information and data is unreliable and possibly subject to manipulation by the 'elected' government.

[catmac]

People shouldn't be too negative about this fiasco, there could actually be some real benefits for Thailand once the full cost is known, and by "known" I don't mean the nonsense figures from any Government source!

For a start, it may bring the Baht back to reality giving a welcome boost to manufacturing and tourism. Then we can say good-bye to that 2.2 trillion infrastructure loan with its inevitable scams and corruption and decades of debt repayments.

Long term, it may make future Governments less keen to interfere with the free market and may even knock some common sense into them, e.g. to stop thinking that the World will pay any price you name, just because it says "Made in Thailand".

Wishful thinking, I know, but the old saying "Every cloud has a silver lining" may be true in this case.

[Nickymaster]

In the past few months I have travelled from Chiang Mai to Hua Hin and from Chiang Mai to Plok, khoen Kaen, Surin, Pattaya, Bangkok and back to Chiang Mai. Along the way I have passed many rice storage facilities and the rice is piled in buildings and in the open air as high as 10 meters high. The stench is beyond description I would not want to live near one of these facilities because of the smell. For the government not to know the condition and quality of what they have spent billions on is criminal.

Between Khoen Kaen and Surin there was rice stored in a football field sized area in heaps about 2 to 5 meters in height there were puddles of water scattered in the area as well as a white power piled around as well, this looked like a dumping area as opposed to a storage areas that are usually on concrete slabs. Good luck to these folks getting a handle on this situation as it appears to be a total mess

Be careful what you see, Nathawut might have you arrested for spying. He earlier threatened a Dem MP to have him arrested for visiting a storage facility.

Its top secret...

Is that true? ...that he threatened a Dem MP for visiting a storage facility. Where are all the worlds decent investigative journalists when you need them?

It is also funny that these buffoons are stating that Moody's are completely wrong. This is team Shiniwatra that had export figures at 10.8% when it should have been 2.8% and budgets 100% over the amount needed because of a typing error. I guess the team of global economic specialists who have worked the worlds financial markets for decades are all wrong. I bet they're having some laughs over coffee today.

It is true.

Please Google:

democrat mp shows rotten rice in parliament

[Thai at Heart]

People shouldn't be too negative about this fiasco, there could actually be some real benefits for Thailand once the full cost is known, and by "known" I don't mean the nonsense figures from any Government source!

For a start, it may bring the Baht back to reality giving a welcome boost to manufacturing and tourism. Then we can say good-bye to that 2.2 trillion infrastructure loan with its inevitable scams and corruption and decades of debt repayments.

Long term, it may make future Governments less keen to interfere with the free market and may even knock some common sense into them, e.g. to stop thinking that the World will pay any price you name, just because it says "Made in Thailand".

Wishful thinking, I know, but the old saying "Every cloud has a silver lining" may be true in this case.

Indeed. The funny thing is, the fact that they are undertaking all of these spending projects and need to squeeze as much revenue out of taxes as possible is leading to an odd effect. The authorities are starting to make the tiniest first steps to jumping on fraud. Just look at the other thread about the invoicing scandal. 3bn bahts worth of dodgy invoices, and everyone moaning about how much supposed revenue they have lost on car imports.

Who would have thought huh?

[Neilly]

The Vietnam Food Association has set a floor price for 25 per cent broken grain at US$365 (Bt11,1100) a tonne and cut the floor for 35 per cent broken rice by 1.4 per cent to $360 a tonne, Vietnamese traders said. The new floor prices are on a free-on-board basis. The Yingluck government buys from farmers at a minimum price of $500 per tonne,

making sales to foreign buyers even more difficult.

Even my six year old daughter could work out the maths on this ...surely to gawd someone in the government can see where this will end????

[thaicbr]

It could be argued that no money has been lost since the government still own some (most) of the rice. If you buy 1000 mangos at 100 baht each then sell 999 at 1 Baht each you have not made a loss until you sell the final mango.

As long as that final mango is still a mango rather than a lump of rotten fruit!

Sent from my i-mobile i-STYLE Q6