Thailand cuts rice-buying subsidy after big losses

[webfact]

Thailand cuts rice-buying subsidy after big losses

BANGKOK, June 20, 2013 (AFP) - Thailand said Wednesday that it would slash the price paid to rice farmers under a controversial scheme that caused the kingdom to lose its place as the world's top exporter of the commodity last year.

The country has paid its farmers around 50 percent more than the market value for rice since 2011 in an effort to boost incomes in the rural heartlands of the ruling party.

The government tries to sell the rice in world markets but faces stiff competition from rival producers such as Vietnam and India, and lost about 137 billion baht ($4.5 billion) from the scheme in the year to January.

In an effort to reduce the cost, the price paid will be reduced by 20 percent, to 12,000 baht ($388) per ton, according to Prime Minister Yingluck Shinawatra's office.

"We have to lower the price because this scheme has cost a lot of money," said Varathep Rattanakorn, a minister attached to the PM's office.

While the policy has proved popular in impoverished rural areas, political opponents say the scheme is designed to curry favour with farmers in northeast Thailand whose support helped sweep Yingluck to power in 2011.

Her older brother Thaksin Shinawatra, who was ousted as prime minister by royalist generals in a coup in 2006, is hugely popular in rural Thailand thanks to his populist policies while in power.

Corruption allegations have also swirled around the rice scheme amid claims some farmers have not received full payment.

This year Thailand is forecast to buy 22 million tons of the grain at a cost of up to 500 billion baht, a cabinet statement said.

A cap of 500,000 baht will be introduced for each family per harvest.

The government has previously said it is confident that it can find buyers for its rice on world markets at a price that will raise the living standards of its farmers.

It says it has signed deals to sell rice directly to other countries, but exporters have reported a glut of unsold stocks.

Since Thailand began buying rice at inflated prices it has been overtaken by both India and Vietnam as a global rice exporter.

But a government spokesman denied the scheme had hurt growth or been a failure.

"The price revision is due to the fluctuation of the global economy and the weakening of the baht," Teerat Ratanasevi told reporters.

-- (c) Copyright AFP 2013-06-20

[webfact]

Farmers furious
Petchanet Pratruangkrai
The Nation

Anger over reduced rice price; TCC urges review of policy

BANGKOK: -- The government's decision to reduce the minimum price guarantee under its controversial rice-pledging scheme to Bt12,000 per tonne has run into immediate opposition on two fronts: from farmers who are to be directly affected, and from political opponents and critics of the administration.

Farmers' groups in several provinces said the abrupt lowering of the rate, which takes effect today after special Cabinet approval was granted yesterday, would affect their investments in the current crop, which were based on the previous guarantee of Bt15,000. A group of farmers based in Ayutthaya, a major rice-growing province, said there was a possibility of imminent rallies by farmers if the price remained at Bt12,000.

The opposition moved to capitalise on the issue immediately, saying the Bt3,000 price difference was significant and asking the government to show political responsibility. Democrat Party leader Abhisit Vejjajiva said the same group of rice traders would continue to benefit unfairly from this populist policy, while farmers would see the greatest impact from the Bt3,000 per tonne lost to them.

Government critics had earlier speculated that the change might be unconstitutional and that the government might have been required to declare a new policy to Parliament, as the Bt15,000 rate was announced to Parliament as a key policy when the government took power. The Council of State, which had initially raised similar doubts, said yesterday that the change was legitimate but the government needed to implement the rice scheme carefully.

The business sector and rice traders called for quick release of rice from the government's stockpiles, but in a transparent manner.

The Board of Trade of Thailand and the Thai Chamber of Commerce - influential business lobbies - also urged the government yesterday to review the loss-making rice-pledging scheme to restore public and investor confidence and promote the country's growth.

Chairman Isara Vongkusolkij said yesterday that unclear information on the rice-pledging figures, including spending and losses, has undermined the confidence of the private sector, which is greatly concerned that Moody's Investor Service could cut the country's credit rating.

"If Thailand is downgraded, it would create problems for investors. The government as well as private enterprises would face more difficulty in accessing loans and credit. The government needs to urgently provide clear information on rice-pledging spending and inventories to the public, as well as earn some income by releasing its rice stocks to fortify its finances," he said.

The two bodies called on the government to review the pledging mechanism to ensure minimum losses and impact on the market, and to adjust conditions in line with good governance principles.

They proposed three urgent measures that the government should take to boost confidence among the public and investors:

l Lower the pledging price to the current market price.

The government should cap payment to each farm household to keep the subsidy budget down to a minimum. The intervention project should be applied to only the main rice crop, or once a year.

l Delineate zones for rice growing to ensure sound development of rice farming and to promote quality rice varieties.

l Accelerate the sales of rice from stockpiles to maximise spending on the subsidy scheme.

Vichai Assarasakorn, secretary-general of the chamber, said that the government should release rice stocks quickly, because the existing stockpile would only expand as rice output was added to it, and custodial cost would only increase.

"The government's present releasing method by secretly selling to a few traders has created doubts among the public of whether it is fair for all involved. The government needs to release rice under fair bidding to all involved," he said.

A Finance Ministry subcommittee handling the rice scheme's accounting found that the scheme had incurred a loss of Bt130 billion.

The chairwoman of the subcommittee, deputy Finance Ministry permanent secretary Supa Piyajitti, proposed simultaneous searches at 150 warehouses, both government- and privately run, across the country to verify a claim by the Commerce Ministry that there was still 2.9 million tonnes that could contribute to future revenues under the scheme.

She said the simultaneous searches would minimise the chance of rice being distributed among warehouses to fool inspectors.

The Thai Agriculturist Association will today make a public statement declaring its opposition to the reduction in the minimum rate to Bt12,000 per tonne, said association chairman Wichian Puanglamjiak.


-- The Nation 2013-06-20

[A Member]

An article in the Post outlines the opposite views of this issue as the Rice Farmers' Association is angry at the drop in profits which will not meet the needs of a farmer's " extended family " whereas the Rice Exporters' Association are rejoicing they can " sell, sell, sell " !

As another populist policy fails the PTP may suffer a backlash from the type of people they rely on and it's the price they pay for a scheme that was never meant to viable only a vote getter, it's so easy to throw money around when it's not yours.

Meanwhile the author of the scheme will sit back in luxury in Dubai while his puppets in Bangkok flounder and his sister has to go into training to increase her acceleration to get away from reporters.

[kurnell]

Just ask the "politicians" to give the money they stole back to the country/farmers. Job done

[waza]

You can practically hear the PTP led governments supporter base crumbling. That's the problem with populist policies that aren't mutually inclusive, there is always derision from those not benefitting.

Give him more rope

[Siripon]

'Thaksin thinks, Pheua Thai does'.

Another policy by the mentor fails, another dent in his reputation. The party better come up with a few more thinkers, but from the ludicrous remarks of Chalerm and Plodprasop to the silence of the PM it's clear they haven't a clue.

An idiotic policy from the beginning. along with the first car tax reduction policy, aggravating Bangkok's traffic jams. Everybody knows there are not enough roads in Bangkok for the vehicles present, but the fools in government increase the number of vehicles.

Is it possible to be so foolish?

[Thai at Heart]

Didn't she say only a day or two ago that the price was staying?

What a mess.

[NongKhaiKid]

There's a news report that PTP MPs in the North East are angry the government is now going back on election promises.

... and the cracks are starting to widen.

[smedly]

ok so one day it's the best thing since sliced bread according to YS

and the very next day ......... http://www.thaivisa.com/forum/topic/647625-pm-yingluck-rice-pledge-scheme-a-boon-to-economy-farmers/

am I missing something here

[OzMick]

"The price revision is due to .......... the weakening of the baht," Teerat

Oh, please.

[Thai at Heart]

If this was slated to be voted upon yesterday, didn't she just barefaced lie about the price staying?

[tartempion]

The country has paid its farmers around 50 percent more than the market value for rice since 2011 in an effort to boost incomes in the rural heartlands of the ruling party.

Wrong: The country has paid the rice mills around 50% more than the market value.

The rice farmers selling their crop to the rice mills received the same pittance as the years before.

[smedly]

they just don't get it

the price they are paying to the farmers is important but the price they sell in the world market is key - they need to start shifting the stock pile now even if it is only going to fetch 6-8k a tonne, it has to go

Then a full audit of all money lost and where it went so YS can jail half the cabinet

[OzMick]

If ever Thailand needed a RICO style law, it is right now. But it's hard to get the criminals to vote for it.

[AleG]

And just like that add another 30% loss from the stocked rice from previous crops. Nobody is going to buy the old rice at a higher price than the new one.

[iancnx]

Well I was thinking months before an election..... Now I am thinking weeks. BUT Abhisit has to remain calm, and play his cards very very carefully if the slippery one in Dubai is to be outwitted.

[Thai at Heart]

And just like that add another 30% loss from the stocked rice from previous crops. Nobody is going to buy the old rice at a higher price than the new one.

Exactly. Now, the pricing is all screwed up. The old stuff is just going to sit there and fester away for ever. Their only hope is that the proposed limit in value of subsidy cuts production. But seems to me that by limiting the value to 500k, they aren't exactly removing much volume from the system.

[otherstuff1957]

Has anyone noticed the price of rice in the local markets? As far as I can tell, it has not risen by a significant amount since this scheme began. If the price that the wholesalers has risen by 40 or 50%, why hasn't the price of retail rice gone up by the same amount?

According to articles in the other paper, a significant amount of rice is missing from the rice warehouses and rice wholesalers who are connected with the government (like Siam Indicia) have bought that missing rice for as little as 5,000 baht/ton and then resold it at the normal market price. This may sound like a conspiracy theory, but it does explain the price of rice in the supermarkets!

[Thai at Heart]

Has anyone noticed the price of rice in the local markets? As far as I can tell, it has not risen by a significant amount since this scheme began. If the price that the wholesalers has risen by 40 or 50%, why hasn't the price of retail rice gone up by the same amount?

According to articles in the other paper, a significant amount of rice is missing from the rice warehouses and rice wholesalers who are connected with the government (like Siam Indicia) have bought that missing rice for as little as 5,000 baht/ton and then resold it at the normal market price. This may sound like a conspiracy theory, but it does explain the price of rice in the supermarkets!

It must be being taken out the back door. However, could you imagine if the price in the shops had rocketed up the moment that they implemented the system?

That would have been too obvious, and the system would have fallen down on the first day.

[Naam]

they just don't get it

the price they are paying to the farmers is important but the price they sell in the world market is key - they need to start shifting the stock pile now even if it is only going to fetch 6-8k a tonne, it has to go

Then a full audit of all money lost and where it went so YS can jail half the cabinet

6-8k/ton would invoke WTO dumping sanctions.

[notmyself]

they just don't get it

the price they are paying to the farmers is important but the price they sell in the world market is key - they need to start shifting the stock pile now even if it is only going to fetch 6-8k a tonne, it has to go

Then a full audit of all money lost and where it went so YS can jail half the cabinet

6-8k/ton would invoke WTO dumping sanctions.

They can sell for 5% less as I remember

[webfact]

Cutting paddy pledging price fails to end losses
By English News

BANGKOK, June 20 – The government’s decision to lower the pledging price of paddy to Bt12,000 per tonne will minimise losses from the subsidy scheme but the new stock will add a blow to the remaining stockpiles from the two previous harvest seasons which have yet to be sold to buyers, a senior official said.

Supa Piyajitti, deputy permanent secretary for finance, said the additional purchase from the 2013/2014 harvest season will add to the stockpiles from the 2011/2012 and 2012/2013 crops.

If that is the case, the announced losses of Bt130 billion for the first harvest season will be higher, she said.

The National Rice Policy Committee on Tuesday decided to reduce the pledging price of paddy from Bt15,000 per tonne to Bt12,000 per tonne, hoping to quell widespread criticisms against the controversial rice pledging programme.

Ms Supa said warehouse inspection officials will be requested to hold a one-day simultaneous check at 1,500 rice mills under the rice pledging scheme to prevent grain transport from one rice mill to another.

The Commerce Ministry informed the Finance Ministry that 2.9 million tonnes of rice were missing from an official survey – a volume which Ms Supa described as impossible.

This is a huge amount which is significant in terms of accounting and it must be sorted out, she said. (MCOT online news)


-- TNA 2013-06-20

[Thai at Heart]

The Commerce Ministry informed the Finance Ministry that 2.9 million tonnes of rice were missing from an official survey – a volume which Ms Supa described as impossible.

This is a huge amount which is significant in terms of accounting and it must be sorted out, she said. (MCOT online news)

Ooooops. Another 10%+ loss.

[OzMick]

Seems the public service are no longer prepared to lie in support of the government's BS. Soon there will be a mad scramble to get on the upwind side of the stench.

Edited June 20, 2013 by OzMick

[Tatsujin]

Seems the public service are no longer prepared to lie in support of the government's BS. Soon there will be a mad scramble to get on the upwind side of the stench.

It's already started . . . wait and see how far the various "bodies" can distance themselves from this complete and utter farce.

[Thai at Heart]

Seems the public service are no longer prepared to lie in support of the government's BS. Soon there will be a mad scramble to get on the upwind side of the stench.

If the Dems do their job properly, this one will be virtually impossible for any of them to get away with.

[OzMick]

You picked a fine time to leave me Lucille...................

[Thait Spot]

"The price revision is due to .......... the weakening of the baht," Teerat

 

Oh, please.

Its around the same rate as when they made the promise

[Robby nz]

Also have to remember that Thailand is now Cambodia's forth biggest market for rice.

So not only are they buying from the farmers but from next door as well.

I wonder if they are also importing from Vietnam and India.

We know that Lao rice has been coming across the river to be sold into the scheme and probably from Malaysia as well.

Thailand the hub of Asian rice imports.

[sscsamui]

What a bunch of hillbilly goat roping lame butt government fouls... What's next?