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

[iancnx]

Also a plausible outcome of the rice policy (debacle?) ..... Call an election, wait for the new govt to publish the real loss figures, then rally the red troops, and make sure the new govt are slated as liars..... New election after a further 12 months...... And we go on and on in ever decreasing circles...... And then Beijing will offer their expertise and support; Siam will have nowhere else to go having already failed playing at ASEAN.

Edited June 7, 2013 by iancnx

[Thai at Heart]

assuming the government is paying 40% higher than market price then the minimum annual loss will be about 800000*12*1000*0.4 as i have used the government target of 800,000 tons per month for exports and an average market price of USD 1000 per ton for thai jasmine rice. So that adds up to about USD 3.84 billion per year being the loss incurred by the government due to the rice pledging scheme.

but if the actual production has been higher, with the farmers incentive to have produced as much as they can or/and or/and if the rice in storage is rotting then the losses may be substantially higher.

you can all argue with yourselves and split hairs, but this looks like a fair ballpark minimum figure to me. the actual loss to thailand though is debateable, as this is more about redistribution of wealth than actual loss. the government needs to make up for the costs through tax revenue or/and debt issuance. the gdp of thailand is about usd 350 billion, so the rice pledging scheme is quite modest in % terms.

Judas Priest. Will people please quit using the GDP as if it's the government's money? The cost of the rice pledging scheme is the government's expense, but the GDP is the private sector's output.

The number needs to be a percentage of the government's income, not the GDP. The latest figures I can find show that the government's income is only about 16% of GDP. Link Now if we only knew the truth about what the rice scheme has cost the government over the past few years, we could figure out what percentage of the government's income goes to that scheme. But they don't release those numbers and if they did, they would be corrupt.

All we know from news reports posted on this forum is that the rice pledging scheme has cost the Thai government about 700 billion baht. If we could subtract from that the money the government might be able to recoup from rice sales, we'd know the loss. But there's so much corruption that who could know? I wouldn't be surprised to learn that what isn't rotten has been sold via theft.

no, GDP is a perfectly reaonable yardstick to use. i estimated the cost of the progarm and i put that estimate in the context of gdp. that is what people do when they talk about economics. perhaps if you read more economic type analysis and get yourself a bit better educated you may get used to the concept of gdp. people compare all kinds of things to gdp...tax, debt, interest on debt, spending on x, y, z...rice programs....the rice scheme doesn't seem sensible but it won't by itself break thailand's back as it is too small a % of gdp top be able to do that.

and by the way, gdp is not just the private sector. even a communist state with no private sector would still have a gdp. so you are talking rubbish. instead of talking rubbish why don't you get off your high horse, donkey, kangeroo....wharever...and listen to what people have to say...

I agree that It is common to compare to GDP. However, 1.5% just doesn't seem to show the enormity of the cost. For example, China spends 2% of its GDP on military. So if this rice scheme shows even slightly larger losses, it would mean that in relation to its GDP, Thailand waists more money on rice, than china spends on its military!!

Affordability is measured in relative terms, and the relative damage is better measured against GDP.

[Robby nz]

It seem Yingluck is out in Don Muang electorate doing her thing for the PT candidate who is No 9 on the list.

She was bailed up by the press who asked her about the numbers of the rice scheme.

Her answer "I only see number 9 now"

When pressed she said she could not answer any questions on the rice policy as it was out of office hours.

So looks like we must wait till 9 Oclock Monday morning for her statement on the Rice Policy.

[waza]

Judas Priest. Will people please quit using the GDP as if it's the government's money? The cost of the rice pledging scheme is the government's expense, but the GDP is the private sector's output.

The number needs to be a percentage of the government's income, not the GDP. The latest figures I can find show that the government's income is only about 16% of GDP. Link Now if we only knew the truth about what the rice scheme has cost the government over the past few years, we could figure out what percentage of the government's income goes to that scheme. But they don't release those numbers and if they did, they would be corrupt.

All we know from news reports posted on this forum is that the rice pledging scheme has cost the Thai government about 700 billion baht. If we could subtract from that the money the government might be able to recoup from rice sales, we'd know the loss. But there's so much corruption that who could know? I wouldn't be surprised to learn that what isn't rotten has been sold via theft.

no, GDP is a perfectly reaonable yardstick to use. i estimated the cost of the progarm and i put that estimate in the context of gdp. that is what people do when they talk about economics. perhaps if you read more economic type analysis and get yourself a bit better educated you may get used to the concept of gdp. people compare all kinds of things to gdp...tax, debt, interest on debt, spending on x, y, z...rice programs....the rice scheme doesn't seem sensible but it won't by itself break thailand's back as it is too small a % of gdp top be able to do that.

and by the way, gdp is not just the private sector. even a communist state with no private sector would still have a gdp. so you are talking rubbish. instead of talking rubbish why don't you get off your high horse, donkey, kangeroo....wharever...and listen to what people have to say...

I agree that It is common to compare to GDP. However, 1.5% just doesn't seem to show the enormity of the cost. For example, China spends 2% of its GDP on military. So if this rice scheme shows even slightly larger losses, it would mean that in relation to its GDP, Thailand waists more money on rice, than china spends on its military!!

Yes agree 100%, GDP is a common yardstick. But using it in this particular context really does not show the magnitude of things. Thailand spends only 0.75% of its GDP on "defense"....

I think your underestimating the gravity of the situation.

The economist says that high purchase prices of about 50-60% above the prevailing market price combined with failure to cap purchases, has made the Thai government the world’s largest rice trader. Rice stockpiles have reached record highs of over 12.5 million tons, and the cost of procurement, handling and storage is likely to cause a loss equivalent to 5% of its GDP, he adds. http://www.oryza.com/content/southeast-asia-expert-rice-mortgage-scheme-may-cost-thailand-5-gdp

"While financing of Thailand's budget deficits is supported by the country's deep onshore capital markets, the growing losses from the rice buying scheme and the potential need for additional government funding resulting from the continuation of the scheme increasingly jeopardise a reduced deficit, which we previously forecast will be 3.1 per cent of GDP in fiscal 2013," the statement said. http://www.nationmultimedia.com/business/Rice-petition-to-be-filed-tomorrow-Warong-30207546.html

Last month the World Bank said that Thailand spent 376 billion baht (U.S.$12.5 billion) or 3.4 percent of GDP on the rice scheme during the 2011/2012 harvest season (October 2011 to September 2012). It further estimated that the Thai government will spend 450 billion ($15 billion) or around 3.8 percent of GDP for the 2012/2013 harvest season. #

Edited June 7, 2013 by waza

[chiangmaikelly]

no, GDP is a perfectly reaonable yardstick to use. i estimated the cost of the progarm and i put that estimate in the context of gdp. that is what people do when they talk about economics. perhaps if you read more economic type analysis and get yourself a bit better educated you may get used to the concept of gdp. people compare all kinds of things to gdp...tax, debt, interest on debt, spending on x, y, z...rice programs....the rice scheme doesn't seem sensible but it won't by itself break thailand's back as it is too small a % of gdp top be able to do that.

and by the way, gdp is not just the private sector. even a communist state with no private sector would still have a gdp. so you are talking rubbish. instead of talking rubbish why don't you get off your high horse, donkey, kangeroo....wharever...and listen to what people have to say...

I agree that It is common to compare to GDP. However, 1.5% just doesn't seem to show the enormity of the cost. For example, China spends 2% of its GDP on military. So if this rice scheme shows even slightly larger losses, it would mean that in relation to its GDP, Thailand waists more money on rice, than china spends on its military!!

Yes agree 100%, GDP is a common yardstick. But using it in this particular context really does not show the magnitude of things. Thailand spends only 0.75% of its GDP on "defense"....

I think your underestimating the gravity of the situation.

The economist says that high purchase prices of about 50-60% above the prevailing market price combined with failure to cap purchases, has made the Thai government the world’s largest rice trader. Rice stockpiles have reached record highs of over 12.5 million tons, and the cost of procurement, handling and storage is likely to cause a loss equivalent to 5% of its GDP, he adds. http://www.oryza.com/content/southeast-asia-expert-rice-mortgage-scheme-may-cost-thailand-5-gdp

"While financing of Thailand's budget deficits is supported by the country's deep onshore capital markets, the growing losses from the rice buying scheme and the potential need for additional government funding resulting from the continuation of the scheme increasingly jeopardise a reduced deficit, which we previously forecast will be 3.1 per cent of GDP in fiscal 2013," the statement said. http://www.nationmultimedia.com/business/Rice-petition-to-be-filed-tomorrow-Warong-30207546.html

Last month the World Bank said that Thailand spent 376 billion baht (U.S.$12.5 billion) or 3.4 percent of GDP on the rice scheme during the 2011/2012 harvest season (October 2011 to September 2012). It further estimated that the Thai government will spend 450 billion ($15 billion) or around 3.8 percent of GDP for the 2012/2013 harvest season. #

How much does Thailand spend on government in comparison to other countries? What is average? Australia is 34.3% of the GDP. Thailand is 17.7%. Germany is 43.7% . France is 52.8% https://en.wikipedia.org/wiki/Government_spending

I wonder looking at the above if Thailand is getting a bum rap. Maybe Thailand government spending at 17.7% of GDP is not so bad?

[rubl]

Now I'm confused. What has the 'rice policy' to do with spending on government? Is a possible 260 billion loss spent on government? Is the famous Thai special (aka 30% rule) money spent on government?

The topic is a wake-up call to the government related to the 'rice policy'. That's enough disaster for on topic, no need to go into corruption here.

[chiangmaikelly]

Now I'm confused. What has the 'rice policy' to do with spending on government? Is a possible 260 billion loss spent on government? Is the famous Thai special (aka 30% rule) money spent on government?

The topic is a wake-up call to the government related to the 'rice policy'. That's enough disaster for on topic, no need to go into corruption here.

Moodys says the Thai government is spending too much money. I am saying in relationship to other countries with better credit ratings maybe it is not.

The topic is a warning by Moodys about the government expenditures for rice pledging not just rice pledging alone. So I am saying perhaps Moodys should look at the total expenditures for government in light of what other governments spend.

Moodys said, "These recent losses, and any further losses from the unmodified rice-buying scheme, increase the difficulty of the government's task of reaching its goal of a balanced budget by2017, and are credit negative for the Thai sovereign." http://uk.reuters.com/article/2013/06/05/uk-thailand-rice-idUKBRE9540MK20130605

So Moodys point is really about a balanced budget by 2017 which is about the total Thai budget not just rice pledging.

Edited June 7, 2013 by chiangmaikelly

[rubl]

So maybe Moody's worries are about this, as I posted more than five hours ago in this topic. Maybe snowed under all rubbish rice?

Interestingly enough end of April 2013 Moody's said
"While Moody's does not anticipate a material deterioration in Thailand's fiscal metrics in 2013-14, populist measures pose a risk to fiscal discipline and increased off-budget financing impairs transparency."
Maybe they referred to various off-budget shenanigans like the THB 350 billion so urgently needed we had a decree in January 2012, or the THB 1.14 trillion under BoT's carpet, or the billions state banks lent for government projects, or the upcoming triffling 2.4 trillion.
Proposed National Budget for 2013/2014 THB 2.52 trillion with THB 250 billion deficit. Extra budgets not included. Unknown if financing (i.e. interest and repayment) is included.
http://www.thaivisa.com/forum/topic/644587-warning-on-rice-policy-a-wake-up-call-for-thai-govt/page-8#entry6483960

[waza]

Now I'm confused. What has the 'rice policy' to do with spending on government? Is a possible 260 billion loss spent on government? Is the famous Thai special (aka 30% rule) money spent on government?

The topic is a wake-up call to the government related to the 'rice policy'. That's enough disaster for on topic, no need to go into corruption here.

Moodys says the Thai government is spending too much money. I am saying in relationship to other countries with better credit ratings maybe it is not.

The topic is a warning by Moodys about the government expenditures for rice pledging not just rice pledging alone. So I am saying perhaps Moodys should look at the total expenditures for government in light of what other governments spend.

Moodys said, "These recent losses, and any further losses from the unmodified rice-buying scheme, increase the difficulty of the government's task of reaching its goal of a balanced budget by2017, and are credit negative for the Thai sovereign." http://uk.reuters.com/article/2013/06/05/uk-thailand-rice-idUKBRE9540MK20130605

So Moodys point is really about a balanced budget by 2017 which is about the total Thai budget not just rice pledging.

wow makes me wonder why Thailand is running a deficit then

[EyesWideOpen]

Exactly correct. I have felt for a while now that the rushed and mysterious 2.2 trillion baht loan was to cover up the looting that has occurred on the rice program. As people on TV have said before, this will all end in a trail of tears. Unless......the Thai people raise up in rage when they see how they were tricked, and sweep away PTP and Thaksin forever.

[rubl]

When Moody's says "increased off-budget financing impairs transparency." it's interesting to note that after the 1997 meltdown the PM Chuan government took measures to move off budget financing to in budget financing to enable a more transparent view of debt. Probably inspired (i.e. urged) by the I.M.F.

Since their start in August 2011 this government has come with various reasons to undo that transparency move in order to keep on borrowing without 'appearently overdoing things'.

[Robby nz]

Exactly correct. I have felt for a while now that the rushed and mysterious 2.2 trillion baht loan was to cover up the looting that has occurred on the rice program. As people on TV have said before, this will all end in a trail of tears. Unless......the Thai people raise up in rage when they see how they were tricked, and sweep away PTP and Thaksin forever.

Its happening E W O and the MR's is a great example of this.

A year ago she had very little interest in politics but in the last 6 months she has spending an increasing amount of time on the Thai social networking sites with her 'friends' discussing what is going on.

In the last month she has been telling me she gets so angry when she sees news items and video clips of what PT is up to that it is like a lump in her chest.

Yesterday evening she was watching a press conference with the Minister of Commerce and his deputy and she kept saying to me "Come and look at them, you can see they are telling lies"

And you could too, neither of them would answer questions and refused to even look at the reporters who were asking the questions.

They must have gone there with the expectation of reading out a statement and having it accepted but instead they got a right grilling.

In the particular instance of the Rice Policy we have the great defenders of the Govt and Thaksin saying 'its only a small percentage of GDP' and similar statements.

But that's not the point.

The point is that it is money lost, gone, wasted and can never be retrieved, can never be used for the good of the country and the people.

Whether it is one baht, one hundred baht or 260 billion baht it is still a loss which need not have been incurred, the fact that its closer, or possibly more than the high number only makes it so much worse.

There are so many things that need doing, improving, in this country.

In education and health alone, how many new hospitals, new schools could that money have built? How many teachers or Doctors could it have trained?

I repeat the money is LOST, no matter how much of the rice is sold that money will never come back.

They might as well have made a pile of it in front of parliament building and set fire to it the result would have been the same it is gone forever.

[waza]

Exactly correct. I have felt for a while now that the rushed and mysterious 2.2 trillion baht loan was to cover up the looting that has occurred on the rice program. As people on TV have said before, this will all end in a trail of tears. Unless......the Thai people raise up in rage when they see how they were tricked, and sweep away PTP and Thaksin forever.

Its happening E W O and the MR's is a great example of this.

A year ago she had very little interest in politics but in the last 6 months she has spending an increasing amount of time on the Thai social networking sites with her 'friends' discussing what is going on.

In the last month she has been telling me she gets so angry when she sees news items and video clips of what PT is up to that it is like a lump in her chest.

Yesterday evening she was watching a press conference with the Minister of Commerce and his deputy and she kept saying to me "Come and look at them, you can see they are telling lies"

And you could too, neither of them would answer questions and refused to even look at the reporters who were asking the questions.

They must have gone there with the expectation of reading out a statement and having it accepted but instead they got a right grilling.

In the particular instance of the Rice Policy we have the great defenders of the Govt and Thaksin saying 'its only a small percentage of GDP' and similar statements.

But that's not the point.

The point is that it is money lost, gone, wasted and can never be retrieved, can never be used for the good of the country and the people.

Whether it is one baht, one hundred baht or 260 billion baht it is still a loss which need not have been incurred, the fact that its closer, or possibly more than the high number only makes it so much worse.

There are so many things that need doing, improving, in this country.

In education and health alone, how many new hospitals, new schools could that money have built? How many teachers or Doctors could it have trained?

I repeat the money is LOST, no matter how much of the rice is sold that money will never come back.

They might as well have made a pile of it in front of parliament building and set fire to it the result would have been the same it is gone forever.

It is a really distressing situation to sit and watch this train wreck unfolding in slow motion. You keep hoping it will end but it just keeps getting increasing more horrible and the most soul destroying thing is they are ignoring the "wake up call" and continuing this nightmare for another year.

[iancnx]

Slightly off topic but related. It would be interesting to find out who are the actual owners of all of the storage facilities, silo's, warehouses, sheds, the owners of the related transport/haulage, the owners of the guards/\security companies, and the owners of any other related business concerning the mass storage of the rice. It may be that persons unknown may have a vested interest in keeping the mountain growing! Lets not forget the likely huge costs incurred on a monthly basis over and above the headline figures.

[waza]

Slightly off topic but related. It would be interesting to find out who are the actual owners of all of the storage facilities, silo's, warehouses, sheds, the owners of the related transport/haulage, the owners of the guards/\security companies, and the owners of any other related business concerning the mass storage of the rice. It may be that persons unknown may have a vested interest in keeping the mountain growing! Lets not forget the likely huge costs incurred on a monthly basis over and above the headline figures.

Don't be surprised if it the Yingluck boys from the Four Seasons