How Thailand's botched rice scheme blew a big hole in its economy

[webfact]

How Thailand's Botched Rice Scheme Blew a Big Hole in its Economy
By Dan Kedmey

BANGKOK: -- The plan was simple: Thailand’s government would buy rice from local farmers at a generous price, some 50 percent above the market rates. It would hold the rice in warehouses, cutting off exports to the rest of the world. The sudden shortage from the world’s heavyweight champion of rice exports would cause a spike in global prices.

Then, payday for the government as it swung open the warehouse doors and sold its stockpile to the world at a premium. Farmers win, the government wins, foreign consumers lose, but then they don’t vote in Thai elections, so what do they matter? The plan was a political no-brainer, except for one problem: Thailand’s government underestimated how quickly the market can kick back at any would-be puppeteers.

“If any government thinks they are living above the market, they are living in a fool’s paradise,” says Tejinder Narang, a former rice trader who now advises one of India’s largest grain exporters, Emmsons International. Narang reads a running stream of news reports, trade publications, monthly studies – any news that will keep him up to date on the latest machinations of the market.

Full story: http://world.time.com/2013/07/12/how-thailands-botched-rice-scheme-blew-a-big-hole-in-its-economy/

-- TIME 2013-07-13

[Stradavarius37]

Cue the TV Red Shirts to rise up and defend the honor of their besmirched champions of "the people"!!!!

[OzMick]

Tejinder thinks the rice scam was foolish, but he's only looking at the facade. A closer look reveals the waste of taxpayers' funds in a populist vote-buy. And you have to look even closer to see the criminal intent of self-enrichment for its proposers.

[bigbamboo]

It's not so easy to get rich quick when you aren't running the whole show.

[Tatsujin]

In one respect, the scheme has worked beautifully, it's lined the pockets by a huge amount of "some" of the people exactly as planned.

Unfortunately the outright arrogance and contempt they have for the "people" of Thailand doesn't translate well in the global marketplace.

[samran]

The people who needed to get rich got rich. Poor rural voters don't care about global markets as long as they get their trinkets.

[theblether]

"fool’s paradise"

That says it all on so many levels

[theblether]

Tejinder thinks the rice scam was foolish, but he's only looking at the facade. A closer look reveals the waste of taxpayers' funds in a populist vote-buy. And you have to look even closer to see the criminal intent of self-enrichment for its proposers.

He's right to say that it's foolish, that's a fair critique of the scheme.

It's not his job to be a Thai political analyst

[Thai at Heart]

But, it worked for years for AIS.....

[Soutpeel]

The governments are never rational. The governments are political,” suggesting that the rational politician is an oxymoron.

This sentence in the article, especially the last bit pretty much sums you the current Thai goverment and dear Yingluck to a tee...

[LuckyLew]

It was not a botched scheme

the PTP got what they wanted

- elected

- money syphoned off to their friends and families

by continuing this scheme they increase their odds

of being re-elected

How does this equal a botched scam?

[Bellweather]

"... Thai government underestimated how quickly the market can kick back... " which isn't a surprise given the Thai attitude to the rest of the world, it doesn't rate consideration other than giving YL places to visit.

[davejones]

I wonder what the rice farmers will say when they have to go back to selling on the market. It won't seem such a good then. But enough people think short-term for these policies to buy votes. Same in USA and UK - offer some freebies and people will vote for you, not matter what the long-term consequences.

[moe666]

Its a bit like the Hunt brothers trying to take over the silver market in the 80s, it just to big.

[Neilly]

Good article...summed it up well...loved this bit

It has completed part “A” of the plan, buy rice at a premium. It’s part “B,” selling it at a premium, that’s proving devilishly tricky.

[rametindallas]

Its a bit like the Hunt brothers trying to take over the silver market in the 80s, it just to big.

That was when I switched from film to video.

[rametindallas]

I got this quote today.

“It is hard to imagine a more stupid or more dangerous way of making decisions than putting those decisions in the hands of people who pay no price for being wrong” – Thomas Sowell

[ramrod711]

As for the Moody’s report, she has promised to rebut the findings with a government investigation into the true cost of the program.

Well, I think we would all be inclined to believe Yingluck and the boys in the cabinet over Moody's. After all, the cabinet has no worries about popularity, re-election or filling their pockets, whereas Moody's......oh, wait, sorry about that.

[Thai at Heart]

As for the Moodys report, she has promised to rebut the findings with a government investigation into the true cost of the program.

Well, I think we would all be inclined to believe Yingluck and the boys in the cabinet over Moody's. After all, the cabinet has no worries about popularity, re-election or filling their pockets, whereas Moody's......oh, wait, sorry about that.

Is it 30 days since Moody's raised the issue.

Yinglucks behind on her homework.

[soi41]

"fool’s paradise"

That says it all on so many levels

Blether. Has the rosetinted finally started to slide off?

The rat? The mercedes girl?

Welcome to the highly rated reality show, called living in Thailand!

[manxninja]

Botched scheme, I don't think so it permitted the red movement to gain power.

The yellow are considerably weakened for the future, giving stability to Thais.

Win win for all.

[OzMick]

Botched scheme, I don't think so it permitted the red movement to gain power.

The yellow are considerably weakened for the future, giving stability to Thais.

Win win for all.

So you believe thata policy costing hundreds of billions of baht that have been spent/siphoned off, having no effect in its stated purpose, was intentional theft of taxpayer's funds?

[drdoom6996]

The Hunt Brothers tried this in America some years back with Silver. They lost big time.

[nami]

They should sell the rice instead of storing it and trying to manipulate the global prices, which won't happen just because of a single country holding it. Also, food is a much more than a product, a necessity and people is dying in many countries because of no access to basic food like rice.

Anyway, I am with them on subsidizing the rice and helping the farmers, it happens in most developed countries for some crops. Just don't waste money in storing it and distributing it twice. I am happy to give part of my taxes to help the farmers to make a living, but that's it. Actually better than some @#$@ pocketing our taxes for themselves, who don't need it.

Edited July 13, 2013 by nami

[paulmw]

If I remember big brother Mr T did the same with rubber when he was in power and totally screwed up world rubber prices for years.

[Gulfsailor]

If I remember big brother Mr T did the same with rubber when he was in power and totally screwed up world rubber prices for years.

He obviously learned from the mistakes made there, and is now executing version 2.0 of his scheme on the rice commodity.

[pb1936]

It's a sad state of affairs when the government dare not make public the facts relating to the rice scheme and how much money and rice have been lost.

There seems now to be a similar event unfolding in relation to the water scheme.

Hope Mr Moody is watching........a downgrade would perhaps hurt the govt. more than the voting public are likely to do.

[Utley]

"[The rice subsidy] program isn’t bankrupting Thailand. The country’s $346 billion economy can handle the $4.4 billion the government blew on rice purchases last year."

"Look closer, though, at the thrust of Yingluck’s economic policies. Her government has subsidized rice prices, provided handouts to car buyers and favored megaprojects that will enrich the politically connected more than the masses. All this comes at the expense of long-term competitiveness and prosperity: Thailand should instead be investing in its future, especially education, if it wants to break out of the “middle-income trap” that befalls many developing nations."

Thailand Needs to Invest in People, Not Rice: http://www.bloomberg.com/news/2013-07-11/thailand-need-to-invest-in-people-not-rice.html

[up-country_sinclair]

Moody is watching........a downgrade would perhaps hurt the govt. more than the voting public are likely to do.

Has there been any indication if / when Moody's might make a decision on Thailand?

[Soutpeel]

If I remember big brother Mr T did the same with rubber when he was in power and totally screwed up world rubber prices for years.

He obviously learned from the mistakes made there, and is now executing version 2.0 of his scheme on the rice commodity.

bit like the Thai elite card system...seems we have version 2.0 as well...are we not starting to see a pattern here