The rice mountain: Thai govt sticks to its worst and most costly policy

[Thai at Heart]

The situation does not come as a surprise to me, it once again illustrates the insular backward thinking of the Thai government. Electing Yingluck to PM was a promise to disaster now unfolding on a grand scheme... The Thais deserve what they get.. Long live the King!

The problem is that Yingluck was never meant to be longer in office than a couple of months. Then they wanted Thaksin to take over, piggybacking on a Royal Pardon. You can be sure that the political pros in the PTP are only too aware of the fact that every day longer of KY in office is a step closer to disaster.

I am pretty sure that is the case. They never planned for her to be around this long, but it would appear that KY is rather enjoying her new role. Swanning here, swanning there, a real heavyweight on the world stage. lol

[NeverSure]

Along with its dismal failure to raise the income of farmers (but landlords are doing very nicely TYVM) is the lingering stench of corruption. As the loss rapidly approaches a trillion baht with SFA to show for it, I await Yingluk explaining why Thailand so badly needs to borrow 2 trillion for infrastructure development, a loan expected to take 50 years to repay.

Right on. As this debt to the government owned Agricultural Bank rapidly approaches 1 trillion baht, it is due now.

The only reason that the Agricultural Bank isn't showing itself bankrupt is that they are showing all of the collateral - the rice - as in good condition, accounted for, and worth 15,000 baht per ton.

If they actually counted the rice, and market it to market (corrected the bank's books to show what the collateral is actually worth on the market) the bank would have to go belly up as insolvent.

Edited August 9, 2013 by NeverSure

[yooyoo]

Along with its dismal failure to raise the income of farmers (but landlords are doing very nicely TYVM) is the lingering stench of corruption. As the loss rapidly approaches a trillion baht with SFA to show for it, I await Yingluk explaining why Thailand so badly needs to borrow 2 trillion for infrastructure development, a loan expected to take 50 years to repay.

Rice pledge scheme good for country ka. Infrastructure good for county ka, Amnesty bill good for country ka. No corruption anymore ka. 350 million and 2,2 trilion spend open and transparent ka. Why you farang no uderstan ka? We democratically elected can do what we want ka?

I'm guessing at the answers above, but based on performance and accountability so far .............................. alt=whistling.gif width=19 height=18>

Heheee... lets kap kap kap kap we all enjoying kap!

[jpeg]

I'm fascinated by the long-term implications of this policy. International buyers are just biding their time, waiting for the grand Thai-rice fire sale. There's no way Thailand will ever regain it's position as the world's top rice exporter. It's reputation for supplying high-quality jasmine rice has already gone if people are suspicious that old or foreign-sourced grain has been mixed in.

But are they really waiting? If so, it may be a long wait. In addition to low quality, dirty, spoiled produce, Thailand cannot be seen to dump rice below international market prices. It has a legal obligation to ASEAN, the WTO and the United Nations. No easy way out that I can see. And still there are some people who insist that Thaksin has vision - how very shortsighted.

You do realize this is Thailand they are talking about? The words 'legal' and 'obligation' do not compute.

[CIHUAHUA]

Make a short-sale, and move along. Don't cry over spilled rice.

[Thai at Heart]

Along with its dismal failure to raise the income of farmers (but landlords are doing very nicely TYVM) is the lingering stench of corruption. As the loss rapidly approaches a trillion baht with SFA to show for it, I await Yingluk explaining why Thailand so badly needs to borrow 2 trillion for infrastructure development, a loan expected to take 50 years to repay.

Right on. As this debt to the government owned Agricultural Bank rapidly approaches 1 trillion baht, it is due now.

The only reason that the Agricultural Bank isn't showing itself bankrupt is that they are showing all of the collateral - the rice - as in good condition, accounted for, and worth 15,000 baht per ton.

If they actually counted the rice, and market it to market (corrected the bank's books to show what the collateral is actually worth on the market) the bank would have to go belly up as insolvent.

If the government isn't willing to re-capitalise the bank, then who is going to lend them the money against the collateral? The government can't lend against something that it is already owning and guaranteeing?

Who the hell is going to finance this? If they try to force other government banks to get in on it, that will be very very bad in the eyes of the ratings agencies.

[Thai at Heart]

I'm fascinated by the long-term implications of this policy. International buyers are just biding their time, waiting for the grand Thai-rice fire sale. There's no way Thailand will ever regain it's position as the world's top rice exporter. It's reputation for supplying high-quality jasmine rice has already gone if people are suspicious that old or foreign-sourced grain has been mixed in.

But are they really waiting? If so, it may be a long wait. In addition to low quality, dirty, spoiled produce, Thailand cannot be seen to dump rice below international market prices. It has a legal obligation to ASEAN, the WTO and the United Nations. No easy way out that I can see. And still there are some people who insist that Thaksin has vision - how very shortsighted.

You do realize this is Thailand they are talking about? The words 'legal' and 'obligation' do not compute.

Issue is, no one wants to by it. Some it 2 years old, some is mouldy, some is bug infested, no one is telling the reality of how good or bad the condition is. They can try to dump it all they want, but there are very few homes for it now.

[dcutman]

The rice mountain:

The nearest i can figure what PTP's rice mountain looks like if all in one big pile. .78 metric tons of milled rice in a cube3, it would be a half a kilo in circumference and 100 meters tall. Can that be right?

Edited August 9, 2013 by dcutman

[dcutman]

Along with its dismal failure to raise the income of farmers (but landlords are doing very nicely TYVM) is the lingering stench of corruption. As the loss rapidly approaches a trillion baht with SFA to show for it, I await Yingluk explaining why Thailand so badly needs to borrow 2 trillion for infrastructure development, a loan expected to take 50 years to repay.

Right on. As this debt to the government owned Agricultural Bank rapidly approaches 1 trillion baht, it is due now.

The only reason that the Agricultural Bank isn't showing itself bankrupt is that they are showing all of the collateral - the rice - as in good condition, accounted for, and worth 15,000 baht per ton.

If they actually counted the rice, and market it to market (corrected the bank's books to show what the collateral is actually worth on the market) the bank would have to go belly up as insolvent.

If the government isn't willing to re-capitalise the bank, then who is going to lend them the money against the collateral? The government can't lend against something that it is already owning and guaranteeing?

Who the hell is going to finance this? If they try to force other government banks to get in on it, that will be very very bad in the eyes of the ratings agencies.

Article in the other paper has the BAAC setting aside another 90 billion for the next crop.

[Thai at Heart]

The rice mountain:

The nearest i can figure what PTP's rice mountain looks like if all in one big pile. .78 metric tons of milled rice in a cube3, it would be a half a kilo in radius and 100 meters tall. Can that be right?

Indeed, I am really struggling to imagine where they have stored all this stuff. I worked in an industry where we used to export 20,000 mt per year and for that we needed 3 large warehouses of 100 x 20, once it had been processed. Where the hell they are keeping 20,000,000 mn tonnes god only knows.

[edwinchester]

 

Rice Pledging Scam to help poor farmers, in the BP recently a piece says that the scam actually only helps rich farmers as the ones needing help do not qualify to participate

Most farmers do qualify for the scheme but get nowhere near the 15k bht per tonne.

The guy who rents some of my wifes paddy got 13k last crop and 12.5k for the crop before that.

With the increase in labour and fertiliser costs he says he is only getting as much as he did before the scheme was introduced.

Taking into account inflation he is actually worse off.

Sent from my GT-I9003 using Thaivisa Connect Thailand mobile app

 

 

maybe you could reduce  his rent,to help like a good neighbour would do,

 

Wifey actually charges 500bht less per rai than the going rate in the village.

Sent from my GT-I9003 using Thaivisa Connect Thailand mobile app

[Thai at Heart]

Along with its dismal failure to raise the income of farmers (but landlords are doing very nicely TYVM) is the lingering stench of corruption. As the loss rapidly approaches a trillion baht with SFA to show for it, I await Yingluk explaining why Thailand so badly needs to borrow 2 trillion for infrastructure development, a loan expected to take 50 years to repay.

Right on. As this debt to the government owned Agricultural Bank rapidly approaches 1 trillion baht, it is due now.

The only reason that the Agricultural Bank isn't showing itself bankrupt is that they are showing all of the collateral - the rice - as in good condition, accounted for, and worth 15,000 baht per ton.

If they actually counted the rice, and market it to market (corrected the bank's books to show what the collateral is actually worth on the market) the bank would have to go belly up as insolvent.

If the government isn't willing to re-capitalise the bank, then who is going to lend them the money against the collateral? The government can't lend against something that it is already owning and guaranteeing?

Who the hell is going to finance this? If they try to force other government banks to get in on it, that will be very very bad in the eyes of the ratings agencies.

Article in the other paper has the BAAC setting aside another 90 billion for the next crop.

The other paper reported a month or so ago, that the capital adequacy ratio had dipped below 10% and they would need to raise capital. How does one explain to someone lending you money that the asset you have currently valued at full whack, is now reduced in price but you should stil lend them money.

The article I see, says they have leant already 650bn in two years, so 90bn is a much reduced amount. Amazingly, they say they have 100bn in liquid assets, but plan to have 90bn for the next pledge. How can this work? It is claimed to have been already repaid 120bn, and hope to repay 220bn this year. All the best laid plans of mice and men. That is a complete and utter thumbsuck. If they don't sell it, a massive volume of rice fast, the bank will be bust surely

[waza]

Why is it absolutely necessary to have the "exporters" in the middle of this deal? Why can't the government offer FOB pricing and allow foreign companies to bid directly FOB?

What exactly does an exporter bring to this deal? Just another layer of necessary profiLogistics

This government couldn't organise a drink in a brewery, they need someone to do the thinking and organising for them, and they have debts to pay.

Edited August 9, 2013 by waza

[Thai at Heart]

Why is it absolutely necessary to have the "exporters" in the middle of this deal? Why can't the government offer FOB pricing and allow foreign companies to bid directly FOB?

What exactly does an exporter bring to this deal? Just another layer of necessary profiLogistics

Logistics

Are you kidding? So why not just pay them a flat fee? Why does the product have to be sold to an exporter to conduct the final transaction? Does the government not know how to get rice from a warehouse to a boat? Maybe the government doesn't know where the port is?

[waza]

Why is it absolutely necessary to have the "exporters" in the middle of this deal? Why can't the government offer FOB pricing and allow foreign companies to bid directly FOB?

What exactly does an exporter bring to this deal? Just another layer of necessary profiLogistics

Logistics

Are you kidding? So why not just pay them a flat fee? Why does the product have to be sold to an exporter to conduct the final transaction? Does the government not know how to get rice from a warehouse to a boat? Maybe the government doesn't know where the port is?

Its easier to sit back and take the kickback rather than working for the 30% corruption fee

[Thai at Heart]

Why is it absolutely necessary to have the "exporters" in the middle of this deal? Why can't the government offer FOB pricing and allow foreign companies to bid directly FOB?

What exactly does an exporter bring to this deal? Just another layer of necessary profiLogistics

Logistics

Are you kidding? So why not just pay them a flat fee? Why does the product have to be sold to an exporter to conduct the final transaction? Does the government not know how to get rice from a warehouse to a boat? Maybe the government doesn't know where the port is?

Its easier to sit back and take the kickback rather than working for the 30% corruption fee

It has to be the most utterly corrupt system known to man. Just look at it from the perspective of selling a house.

I own a house, employan agent to sell the house, and i tell them I will sell it by auction with a target price of 10mn baht. I say, lets put it on the internet and you get 3%, and they say, ohhh, nooo, that would be really bad, why don't we have an auction between all the us and al the other estate agents in town to see how much they all think it's worth.

Then the agents conduct the bidding, not real final buyers, collude to only pay me 9mn baht, and then one sells it to a client for 11mn. I must be missing something, because lordy lord, NO ONE would ever think to sell something that way. Does the government get to see the final price at which the product is delivered to the customer?

Edited August 9, 2013 by Thai at Heart

[kimamey]

Why is it absolutely necessary to have the "exporters" in the middle of this deal? Why can't the government offer FOB pricing and allow foreign companies to bid directly FOB?

What exactly does an exporter bring to this deal? Just another layer of necessary profit.

If the rice is sold outside the country then it has to be exported. I assume the exporter has expertise in the technicalities of exporting. If you got rid of them you would still have to export the rice and would have to go through the same procedures. Whether they add more to the cost than needed for their work is another matter.

[Thai at Heart]

Why is it absolutely necessary to have the "exporters" in the middle of this deal? Why can't the government offer FOB pricing and allow foreign companies to bid directly FOB?

What exactly does an exporter bring to this deal? Just another layer of necessary profit.

If the rice is sold outside the country then it has to be exported. I assume the exporter has expertise in the technicalities of exporting. If you got rid of them you would still have to export the rice and would have to go through the same procedures. Whether they add more to the cost than needed for their work is another matter.

Expert ability in fumigation, loading stuff into containers and boats, and preparing documents that have to be stamped by the government anyway? I just don't get it. Still can't work out why they needed to be in the loop at all.

[kimamey]

Why is it absolutely necessary to have the "exporters" in the middle of this deal? Why can't the government offer FOB pricing and allow foreign companies to bid directly FOB?

What exactly does an exporter bring to this deal? Just another layer of necessary profiLogistics

Logistics

Are you kidding? So why not just pay them a flat fee? Why does the product have to be sold to an exporter to conduct the final transaction? Does the government not know how to get rice from a warehouse to a boat? Maybe the government doesn't know where the port is?

I think exporting is a bit more complicated than just taking rice from a warehouse to a boat. There's an awful lot of government bureaucracy to go through and you know how Thailand loves it's paperwork. Once you've got it to the boat what then? Who is paying the shipping company. Where is it going to and what documentation is needed at the other end.

I'm not saying the exporters don't make excess profit but I think there's more to it than you suggest. I also don't doubt that there is corruption involved but getting the government to take the rice from the warehouse to the boat is hardly likely to stop that is it?

[kimamey]

Why is it absolutely necessary to have the "exporters" in the middle of this deal? Why can't the government offer FOB pricing and allow foreign companies to bid directly FOB?

What exactly does an exporter bring to this deal? Just another layer of necessary profit.

If the rice is sold outside the country then it has to be exported. I assume the exporter has expertise in the technicalities of exporting. If you got rid of them you would still have to export the rice and would have to go through the same procedures. Whether they add more to the cost than needed for their work is another matter.

Expert ability in fumigation, loading stuff into containers and boats, and preparing documents that have to be stamped by the government anyway? I just don't get it. Still can't work out why they needed to be in the loop at all.

I don't think they fumigate or load stuff themselves but they employ people who do. If these G2G deals exist then they possibly have less involvement or at least they should do but of course if they have friends in government then that may not be the case. As I've said there is almost certainly corruption and would be whoever did this.

I'm guessing that exporters do much of the selling when it comes to smaller consignments and they have contacts and know where to try to sell and the price they can get. If the government did this moving of rice they would have to employ someone to do it and since they have no expertise in this they would end up paying more and skimming anyway.

I'm certain that there are a lot of extra cost included to make the exporter rich as that seems to be the way here. It's the same everywhere but to differing degrees. There will be profiteering amongst exporters as there is amongst all from the farmer onwards. Some will get more than others. It's the corruption that needs to be got rid of not the necessary involvement of exporters.

I'm hoping there will be someone on here who knows from personal experience what an exporter does.

[kimamey]

The situation does not come as a surprise to me, it once again illustrates the insular backward thinking of the Thai government. Electing Yingluck to PM was a promise to disaster now unfolding on a grand scheme... The Thais deserve what they get.. Long live the King!

The problem is that Yingluck was never meant to be longer in office than a couple of months. Then they wanted Thaksin to take over, piggybacking on a Royal Pardon. You can be sure that the political pros in the PTP are only too aware of the fact that every day longer of KY in office is a step closer to disaster.

I am pretty sure that is the case. They never planned for her to be around this long, but it would appear that KY is rather enjoying her new role. Swanning here, swanning there, a real heavyweight on the world stage. lol

But she isn't around most of the time is she, unless you mean around the world. It seems highly likely that Thaksin is doing most of the governing anyway.

[kimamey]

The rice mountain:

The nearest i can figure what PTP's rice mountain looks like if all in one big pile. .78 metric tons of milled rice in a cube3, it would be a half a kilo in radius and 100 meters tall. Can that be right?

Indeed, I am really struggling to imagine where they have stored all this stuff. I worked in an industry where we used to export 20,000 mt per year and for that we needed 3 large warehouses of 100 x 20, once it had been processed. Where the hell they are keeping 20,000,000 mn tonnes god only knows.

In warehouses owned by their friends?

[Thai at Heart]

Why is it absolutely necessary to have the "exporters" in the middle of this deal? Why can't the government offer FOB pricing and allow foreign companies to bid directly FOB?

What exactly does an exporter bring to this deal? Just another layer of necessary profit.

If the rice is sold outside the country then it has to be exported. I assume the exporter has expertise in the technicalities of exporting. If you got rid of them you would still have to export the rice and would have to go through the same procedures. Whether they add more to the cost than needed for their work is another matter.

Expert ability in fumigation, loading stuff into containers and boats, and preparing documents that have to be stamped by the government anyway? I just don't get it. Still can't work out why they needed to be in the loop at all.

I don't think they fumigate or load stuff themselves but they employ people who do. If these G2G deals exist then they possibly have less involvement or at least they should do but of course if they have friends in government then that may not be the case. As I've said there is almost certainly corruption and would be whoever did this.

I'm guessing that exporters do much of the selling when it comes to smaller consignments and they have contacts and know where to try to sell and the price they can get. If the government did this moving of rice they would have to employ someone to do it and since they have no expertise in this they would end up paying more and skimming anyway.

I'm certain that there are a lot of extra cost included to make the exporter rich as that seems to be the way here. It's the same everywhere but to differing degrees. There will be profiteering amongst exporters as there is amongst all from the farmer onwards. Some will get more than others. It's the corruption that needs to be got rid of not the necessary involvement of exporters.

I'm hoping there will be someone on here who knows from personal experience what an exporter does.

But why does the government sell the product to the exporter first for this service? Why shouldnt it be done on a commission basis since the government owns the rice itself? Don't worry, I did some business similar to this, and it was structured exactly like this, and the middle man makes a massive cut......for providing the buyer and sorting out some paperwork. That's it.

[kimamey]

If the rice is sold outside the country then it has to be exported. I assume the exporter has expertise in the technicalities of exporting. If you got rid of them you would still have to export the rice and would have to go through the same procedures. Whether they add more to the cost than needed for their work is another matter.

Expert ability in fumigation, loading stuff into containers and boats, and preparing documents that have to be stamped by the government anyway? I just don't get it. Still can't work out why they needed to be in the loop at all.

I don't think they fumigate or load stuff themselves but they employ people who do. If these G2G deals exist then they possibly have less involvement or at least they should do but of course if they have friends in government then that may not be the case. As I've said there is almost certainly corruption and would be whoever did this.

I'm guessing that exporters do much of the selling when it comes to smaller consignments and they have contacts and know where to try to sell and the price they can get. If the government did this moving of rice they would have to employ someone to do it and since they have no expertise in this they would end up paying more and skimming anyway.

I'm certain that there are a lot of extra cost included to make the exporter rich as that seems to be the way here. It's the same everywhere but to differing degrees. There will be profiteering amongst exporters as there is amongst all from the farmer onwards. Some will get more than others. It's the corruption that needs to be got rid of not the necessary involvement of exporters.

I'm hoping there will be someone on here who knows from personal experience what an exporter does.

But why does the government sell the product to the exporter first for this service? Why shouldnt it be done on a commission basis since the government owns the rice itself? Don't worry, I did some business similar to this, and it was structured exactly like this, and the middle man makes a massive cut......for providing the buyer and sorting out some paperwork. That's it.

Well you're right they could do that and it may well be better but it has to be done by someone. I don't know how much the exporters make in Thailand but I suspect they'd make a lot however it was done.

I think you need to separate exporters in general from exporters in Thailand and other countries where corruption is a way of life. The issue isn't what exporters do as that will have to be done anyway it's the way in which they get paid and does it represent value for money? The warehouse owners and the owners of rice fields who rent out their land and the government officials and customs officers are in many cases the same.

Do exporters in other countries get paid a lot for doing very little? If they do then why don't we all do that. I expect that without corruption and connections being an exporter is as challenging as anything else.

[animatic]

From the link comes this pinpoint assessment of the rice pledging scheme by The Economist:

It is a fiasco.

Well done Thaksin and company.

Time to Ban The Economist, again...

[Robby nz]

I would suspect that it is the exporters who have the customers.

Most if not all of them will have built up a business selling to people who now have confidence in them.

Confidence that they will get the quality and quantity of rice that the want.

It would be the same as me wanting to buy something I would go to someone I trust and if I ordered a product and did not get what I wanted or an inferior product I would go elsewhere next time.

The Govt obviously does not inspire the same confidence with its G 2 G deals.

A great example of this is the Ivory Coast and now it seems Iraq.

[Thai at Heart]

I would suspect that it is the exporters who have the customers.

Most if not all of them will have built up a business selling to people who now have confidence in them.

Confidence that they will get the quality and quantity of rice that the want.

It would be the same as me wanting to buy something I would go to someone I trust and if I ordered a product and did not get what I wanted or an inferior product I would go elsewhere next time.

The Govt obviously does not inspire the same confidence with its G 2 G deals.

A great example of this is the Ivory Coast and now it seems Iraq.

Very common to do it for a commission. Does the government get to see what price the final buyer pays? No way no how. It's invoiced to Singapore and traded from there anyway..

[hansnl]

Well, the rice plan made some people very very rich. PTP, Yingluck, Thaksin, all in it for themselves and to hell with everyone else and the country. It is how Thaksin has always operated and always will. If T actually gets back here and in power he'll strip the country down so far that Angola will start looking good. Greedy family that uses and abuses their power and privilege at every chance they can get.

There were prime examples tp emulate.

Suharto family in Indonesia

Marcos family in the Phillipines.

Next in the list?

[CBR250]

I agree with the negative perspective of the Shinawatra clan and resent the disastrous impact of the populist rice subsidy. But I also think that the farmers who gave Yingluck the numbers to take over are not ignorant country bumpkins who fell for a 3 card trick.

The history of farmers in Thailand shows they have been exploited and abused (and murdered when they protested) by the social elite of large landowners for many years. The land laws are today designed for the large landowner, not for the hard working small farmers. Naturally these farmers want to vote for someone who opposes the Bangkok based hi-so elites. The elites had many years in which to develop fair agricultural and economic policies. That they did not has come back to bite them on the bum, and unfortunately has led to a situation where a megalomaniac is seen by the farmers as their best hope for the future, even if the rest of us think he is a disaster. If the Democrats want to win government, they could start with proposing some serious land reforms rather than offering their own version of rice subsidies. But as most MPs on both sides are big landowners, I won't hold my breath.

[Thai at Heart]

I agree with the negative perspective of the Shinawatra clan and resent the disastrous impact of the populist rice subsidy. But I also think that the farmers who gave Yingluck the numbers to take over are not ignorant country bumpkins who fell for a 3 card trick.

The history of farmers in Thailand shows they have been exploited and abused (and murdered when they protested) by the social elite of large landowners for many years. The land laws are today designed for the large landowner, not for the hard working small farmers. Naturally these farmers want to vote for someone who opposes the Bangkok based hi-so elites. The elites had many years in which to develop fair agricultural and economic policies. That they did not has come back to bite them on the bum, and unfortunately has led to a situation where a megalomaniac is seen by the farmers as their best hope for the future, even if the rest of us think he is a disaster. If the Democrats want to win government, they could start with proposing some serious land reforms rather than offering their own version of rice subsidies. But as most MPs on both sides are big landowners, I won't hold my breath.

There is nothing new in the world.

What did Mao do? Lead the peasants to overthrow the land owners. Maybe Mao had some principle, I go with he was a political monster.