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

[laowai1960]

"The country’s $346 billion economy can handle the $4.4 billion the government blew on rice purchases last year."

I don't understand the relevance of that comment from Bloomberg.

The relevant issue is the impact of the wasted $4.4 billion on the government's $77 billion budget.

And according to information in another Bloomberg report, the Thai government is not going to be able to offload its ever-increasing rice stockpile anytime soon.

"Global rice stocks reach 12-year high as food costs drop

Bloomberg Jul 9, 2013

SINGAPORE/ BANGKOK: Rice stockpiles are expanding to the highest level in 12 years as production rises to a record, adding to a worldwide surge in agricultural output that is poised to diminish the $1.1 trillion global food-import bill.

Reserves will gain for a seventh year, rising 2.7% to 108.6 million metric tonne in 2013-2014, the US Department of Agriculture estimates. Output will climb 1.9% to 479.2 million tonne, exceeding demand by 2.8 million tonne."

[louse1953]

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?

Been going on for decades,and not just Thailand.

[gl555]

I'm awaiting the red apologists coming here to defend the PTP and why their policies aren't about vote buying and corruption!

[kimamey]

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.

I don't know about the USA but you're wrong about the UK.

At the last election the Labour party planned to reduce debt over a longer period than the Tories who planned severe cuts to cut the debt more quickly. The Tories were elected even though their plans would be harsher for the majority of voters.

[dickyknee]

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.

Is she at home?

[bkk_mike]

Thailand thought it would make money.

All it did was reproduce the equivalent of the EU's Common Agricultural Policy. And it's produced the same effect - mountains of unsold rice.

If it doesn't get scrapped, it will end up being like the C.A.P. - Farmers will get paid to NOT farm, because it's cheaper than paying for storage for food you can't sell. Thailand may well end up doing what the EU did - giving lots of it away as Food Aid, as nobody wanted to buy it.

[Thai at Heart]

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?

They stated that the losses aren't going to cause a downgrade, just that by keeping it all secret, it causes its own problems. This was a few weeks ago.

[Thai at Heart]

Thailand thought it would make money.

All it did was reproduce the equivalent of the EU's Common Agricultural Policy. And it's produced the same effect - mountains of unsold rice.

If it doesn't get scrapped, it will end up being like the C.A.P. - Farmers will get paid to NOT farm, because it's cheaper than paying for storage for food you can't sell. Thailand may well end up doing what the EU did - giving lots of it away as Food Aid, as nobody wanted to buy it.

The smallhold structure for a global commodity like this makes it essentially very difficult to provide a liveable income for so many.

The problems are complex because basically, family rice farmers can't do much else. Education and society has passed them by.

[Thai at Heart]

Thailand thought it would make money.

All it did was reproduce the equivalent of the EU's Common Agricultural Policy. And it's produced the same effect - mountains of unsold rice.

If it doesn't get scrapped, it will end up being like the C.A.P. - Farmers will get paid to NOT farm, because it's cheaper than paying for storage for food you can't sell. Thailand may well end up doing what the EU did - giving lots of it away as Food Aid, as nobody wanted to buy it.

The smallhold structure for a global commodity like this makes it essentially very difficult to provide a liveable income for so many.

The problems are complex because basically, family rice farmers can't do much else. Education and society has passed them by.

[deecee10]

So where is the big hole referred to in the headline?

[robertson468]

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.?

Nami, who are these @£$@ (sorry coudn't do a hash sign) traveling incognito.................and if they are whom I think you alluding to, they do in fact need the satang, otherwise how are they going to get so many votes in the next election?

[aussiebebe]

I thought the article was excellent and gave a fresh perspective on the story. The most thoughtful point was how we will only be able to calculate the waste after the rice has been sold (assuming it hasn't all rotted). You really never know when the next natural disaster will hit and affect global food prices, I was reading in National Geographic about some of the natural aquifers in the US running low, for example.

[SOTIRIOS]

...infantile....

...the outcome was probably the objective....the claim....just a pretext...these people are savvy....

[OzMick]

So where is the big hole referred to in the headline?

perhaps it should have referred to economic development. If PTP needs to borrow B2.2 trillion for the country's infrastructure development, why have they just wasted a trillion on this scam?

And that's only the latest guesstimates on this ongoing catastrophe. If the loss actually reaches 2.2 trillion, then the setback will be quantified as 50 years of repayments on their own figures.

[Anon999]

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.

Please say what the freebies are that were offered at the last election in the UK. Have I missed something?

[Utley]

"The country’s $346 billion economy can handle the $4.4 billion the government blew on rice purchases last year."

I don't understand the relevance of that comment from Bloomberg.

The relevant issue is the impact of the wasted $4.4 billion on the government's $77 billion budget.

And according to information in another Bloomberg report, the Thai government is not going to be able to offload its ever-increasing rice stockpile anytime soon.

"Global rice stocks reach 12-year high as food costs drop

Bloomberg Jul 9, 2013

SINGAPORE/ BANGKOK: Rice stockpiles are expanding to the highest level in 12 years as production rises to a record, adding to a worldwide surge in agricultural output that is poised to diminish the $1.1 trillion global food-import bill.

Reserves will gain for a seventh year, rising 2.7% to 108.6 million metric tonne in 2013-2014, the US Department of Agriculture estimates. Output will climb 1.9% to 479.2 million tonne, exceeding demand by 2.8 million tonne."

The relevance is that in Bloomberg's opinion the $4.4 billion the Thai Government is spending on it's rice support scheme, while relatively insignificant when compared to the Thai economy as a whole, is a misallocation of resources. The Thai Government should be taking a long term view and focus on education, not a short term view in an attempt to put a few more baht in the voter's pockets which will be spent by this afternoon.

[Sayonarax]

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.