Thai editorial: How much more DAMAGE can we afford?

[webfact]

EDITORIAL
How much more DAMAGE can we afford?

The rice price-pledging scheme has cost the taxpayer billions of Baht and lost Thailand its position as the world's leading rice exporter; it's time to reverse this populist policy before its too late

BANGKOK: -- Opposition is growing to the government's expensive and loss-making rice price-pledging scheme. Over the two latest harvest seasons the government has spent Bt678 billion buying rice at above market prices, and the scheme is estimated to have racked up at least Bt425 billion in losses.

Academics, opposition politicians and international organisations have cautioned the government against continuing this scheme at such a cost to taxpayers. They say the huge losses could severely weaken Thailand's financial status. The World Bank expressed concern, warning that Thailand will lose up to Bt150 billion per harvest if it continues buying rice at inflated prices.

The rice scheme is one of the populist policies that brought the Pheu Thai Party to power in 2011. The policy platform helped the party win support from farmers, who form a large proportion of voters in the provinces.

In the latest move against the controversial policy, three economics and rice experts on Tuesday attempted to convince the government to scrap it and find a replacement that is less costly. Former Bank of Thailand governor MR Pridiyathorn Devakula, leading senior researcher Ammar Siamwalla and Thailand Development Research Institute (TDRI) scholar Nipon Puapongsakorn called for changes to the policy.

By setting the pledging price much higher than the market price, the government has also been blamed for the fall in Thai exports of rice. Thailand has already lost its position as the world's top rice exporter, falling behind India and Vietnam last year. The Kingdom exported 6.9 million tonnes in 2012, down 35.5 per cent from 10.7 million tonnes in 2011, while India's exports exceeded 9.5 million tonnes and Vietnam's reached 7.6 million. The Thai Rice Exporters'

Association blamed the drop in exports on the pledging scheme. The government has stockpiled an estimated 15.5 million tonnes as the price of Thai rice on the international market rose by US$100 to $200 above those of its competitors.

Some experts warn that the quality and reputation of Thai rice could be at stake as well, since farmers have opted to grow low-quality rice that can be harvested quickly so they can sell more paddy under the scheme. In a recent survey of exporters, 70.6 per cent said the country stands to lose from the government's policy, given the distorted price. They said the scheme has damaged the quality of Thai rice and, even if the scheme were immediately terminated, it would take several years for Thailand to reclaim its position as the world's leading source of rice.

Corruption is another concern. A study by Pridiyathorn and the TDRI, based on data from the Finance Ministry's Post Audit Committee, showed that farmers gained only Bt210.12 billion from the scheme, while people who should not have benefited gained Bt115.8 billion. Those people include exporters and millers with connections to politicians in power. Pridiyathorn suggested that there were ways other than price pledging to help farmers - while also preventing irregularities - such as a direct payment to ensure that every farmer gets equal payment.

Government officials have questioned the credibility of the critics' estimates and other information, but they have refused to disclose key figures from the project, citing a need for confidentiality. If the government is sincere about helping rice farmers sell their produce at a fair price, there are alternatives to this scheme that are less costly and less likely to adversely affect Thailand's rice exports and the quality of Thai rice.


-- The Nation 2013-10-17

[chainarong]

Regardless of your political persuasion , you have to admit, the PTP do things , say things , without any regard for the out come, encourage no public comments or if there are, they are stifled or people are threatened, scrutiny is a thing the PTP don't want , as the piss poor performance brigade don't want to be caught with their dirty fingers in the cookie jar, the rice (buying votes scheme) is a long list of popular vote getting policies that have proved what they are , useless, the current flood control measures are worth noting, at this present time the measures in place are , useless, a word that describes the majority of PTP politicians superbly.

[ChrisY1]

"Corruption is another concern."

It's the main concern.......plebs!

[NongKhaiKid]

The headline is a great example of a rhetorical question as anyone who cares to think about the scheme can see it's a financial black hole, the country cannot afford to keep pouring money into such a scheme but the way out is unacceptable to PTP.

If the scheme is dropped or reduced to manageable levels, if there's such a thing, it would be massive loss of face having to admit the scheme failed and was a financial disaster. The loss of face would be exacerbated if the scheme was thought up in Dubai.

In addition the government knows the reaction from rice farmers and their supporters who include PTP MPs so will not take them on as they are core supporters and can make their displeasure clear in so many ways.

I wonder if the government will dream up more ' mega-projects ' that will of course require more massive borrowing simply as a cover to keep funding the nightmare they have caused for themselves /

[A1Str8]

Just another gov. that makes an entire country suffer.

[varun]

No point stating the obvious, the bigger question is; how do you stop this scheme?

This is where everything falls apart.

To stop would mean acceptance of failure of the scheme, which would mean loss of face.

In short, never going to happen.

[Spalpeen]

I'm not one of the usual suspects who take every opportunity here to knock PTP, but if they have 15.5 million tonnes of rice in storage while exports in 2012 fell to 6.9 million tonnes, then there's something seriously wrong here. When they release all that stored rice onto the market, as they eventually must, it will drive the price of rice way down.

This isn't just a Thai problem. Western governments do it too. Every time an election comes around they buy votes by handing out welfare goodies in exchange for votes and in return you get lowest common denominator government.

[klauskunkel]

How much more DAMAGE can we afford?

Answer: you can and will afford as much damage until you are totally bankrupt.

Shouldn't the question rather be: How much more DAMAGE will we allow?

[gemini81]

How much more DAMAGE can we afford?

Answer: you can and will afford as much damage until you are totally bankrupt.

Shouldn't the question rather be: How much more DAMAGE will we allow?

Like you said, a slow, soft war freedom of speech, increased tax heavy and debt centered socialist programs, increasing dependency, creating debt and bankruptcy, causing economic disparity-and that doesn't even touch on graft and lawlessness. Like you said, it will require people to take a stand, like a real revolution, to stop this fiefdom being put into place by Thaksin.

Edited October 17, 2013 by gemini81

[PeVee1st]

The damage has been done and now cannot be undone, the unfortunate things is the poor farmer did not gain from this damage.

Other suppliers have made up the shortfall from not buying Thai rice, as all businesses do when a market shortfall existed.

PTP must not have too many economists as they do not understand the basics of supply and demand, they should visit any Thai market and see the free market in action.

As is usual in these situations is the middle men make the money and the farmer misses out because he is only important at election time.

I wonder if PTP also wonder why business's have stock sales.

Nothing changes here, in the past votes were bought with money at the polling booth, but that was outlawed, now the votes are bought a different way.

Until the average Thai person can no longer afford the cost of living, will he maybe question the politics of government and rid this country of bad government.

[sawadee1947]

the price should be fixed every year new according to the international market...or create a floating price, but this will implement the end of Yingluck...

[flyingdoc]

Every thinking person knows the scheme was flawed right from the beginning. As so many correspondents have stated, accepting a loss of face now, is not a Thai way of doing things, so the debacle will continue !

[indyuk]

I have my own theory and it goes like this.....

This isn't a the first time that there has been a national scandal over Thailand's rice industry. The PTP are trying to find a new way to manage the commercial side of Thailand's rice business that ensures more of the income from rice is paid to the farmers.

I suspect that Thai farmers have been victim's of the corrupt millers, warehouses, and politicians, since the beginning of time.

It was always was understood that Thai politicians cut themselves into the cash flow from rice corruption through arms length agreements with the rice mills and the distribution warehouses.

The endemic corruption in the Thai rice industry grew deep roots in Thailand long before the Puea Thai Party, or for that matter the Thai Rak Thai party existed.

In the past the corruption of the rice industry was much worse. The corruption was focused on the operation of government warehouses that stocked and distributed Thai rice Nationwide and internationally. An earlier government sold many of the government warehouses hoping that the corruption would stop as the new owners, often being the earlier government warehouse operators, would cease to be corrupt while running a Bona Fide business and trading for profit, under sufferance of government supervision.

It didn't work because the books of the warehouses continued to get cooked and the rice continued to vanish with the crime now being committed at a different point in the supply chain. However the politicians continued their former arms length agreements with each warehouse and rice Mill in order maintain their stipend from corruption.

Allegedly the PTP rice pledging system is intended to curtail rice corruption by eliminating the the scalping being carried out at the rice mills and warehouses while redirecting the benefit to the Thai farmers.

However it has all gone wrong because the rice mills and warehouses seem to have managed to beat the system and are maintaining corrupt scalping for themselves and their arms length partners in crime enabling them to feed off of the farmers PTP benefit plan called rice pledging.

Thailand appears to have many other agricultural industry corruption scams and together they probably affect everything that Thailand's farmers produce from rice to cassava, sugar and palm oil.

Corruption in the agricultural sector will probably never end because the beneficiaries are probably from the same families as the lawmakers.

Edited October 17, 2013 by indyuk

[ramrod711]

n the latest move against the controversial policy, three economics and rice experts on Tuesday attempted to convince the government to scrap it and find a replacement that is less costly. Former Bank of Thailand governor MR Pridiyathorn Devakula, leading senior researcher Ammar Siamwalla and Thailand Development Research Institute (TDRI) scholar Nipon Puapongsakorn called for changes to the policy.

They may be experts, but none of them are named Shiniwatra so they can be ignored. The fate of the country is the least, and last concern of the people who are plundering the treasury of this country.

[Bokchoi]

First it was the rice pledge scheme which soaks up tax payer dollars with no benefit to show for "sustainable growth" or "wealth creation" long term.

Next one has the "car buyer" scheme which has choked Bangkok's traffic with new cars owned by people struggling to repay banks. When will bank write offs and bad debt provisioning escalate to become an issue (like the rice scheme) ?

Then there is the first home buyer loans which again have seen people buy units they discover cannot be repaid unless one has a full time job long term. Again when will bank write off and bad debt provisioning become a big news story.

Populist policies win votes but can damage an economy and everyday folk eventually. Sadly the party of Thaksin in chasing votes throws morals to the wind. shame.

[ratcatcher]

I have my own theory and it goes like this.....

This isn't a the first time that there has been a national scandal over Thailand's rice industry. The PTP are trying to find a new way to manage the commercial side of Thailand's rice business that ensures more of the income from rice is paid to the farmers.

I suspect that Thai farmers have been victim's of the corrupt millers, warehouses, and politicians, since the beginning of time.

It was always was understood that Thai politicians cut themselves into the cash flow from rice corruption through arms length agreements with the rice mills and the distribution warehouses.

The endemic corruption in the Thai rice industry grew deep roots in Thailand long before the Puea Thai Party, or for that matter the Thai Rak Thai party existed.

In the past the corruption of the rice industry was much worse. The corruption was focused on the operation of government warehouses that stocked and distributed Thai rice Nationwide and internationally. An earlier government sold many of the government warehouses hoping that the corruption would stop as the new owners, often being the earlier government warehouse operators, would cease to be corrupt while running a Bona Fide business and trading for profit, under sufferance of government supervision.

It didn't work because the books of the warehouses continued to get cooked and the rice continued to vanish with the crime now being committed at a different point in the supply chain. However the politicians continued their former arms length agreements with each warehouse and rice Mill in order maintain their stipend from corruption.

Allegedly the PTP rice pledging system is intended to curtail rice corruption by eliminating the the scalping being carried out at the rice mills and warehouses while redirecting the benefit to the Thai farmers.

However it has all gone wrong because the rice mills and warehouses seem to have managed to beat the system and are maintaining corrupt scalping for themselves and their arms length partners in crime enabling them to feed off of the farmers PTP benefit plan called rice pledging.

Thailand appears to have many other agricultural industry corruption scams and together they probably affect everything that Thailand's farmers produce from rice to cassava, sugar and palm oil.

Corruption in the agricultural sector will probably never end because the beneficiaries are probably from the same families as the lawmakers.

Your theory is right on, IMHO.

The beneficiaries of this madcap scheme scam are from both sides of the political divide. but they have on thing in common------------greed. Unfortunately the average poor farmer and his family for whom this was originally (I assume) intended, are at the mercy of the corrupt middlemen, millers and landowners from whom a large portion of the farming community rent land..

But, as many posters have mentioned, because of the huge losses accumulated in the past and in future transactions, the government is deaf both to criticism and investigation.

Everyone is wrong except them. The man in Dubai could stop this madness with a phone call, but will not.

[MaxLee]

"How much more DAMAGE can we afford?"

Until Mother nature has washed away Thailand for good in the soon to becoming next few years, ...

Edited October 17, 2013 by MaxLee

[cpofc]

Just another gov. that makes an entire country suffer.

Sad but true. Governments all around the world are letting their people down.

Hey, Diogenes, need a light mate?

[Nanfarang]

Absolutely spot on. Bank rescue subsidies, motor car manufacture subsidies and discounts abound throughout the so called 'developed world'. More debt being created by banks and governments than before the 2008 crash. The least able in society end up paying the bills through tax and debt service costs whilst the wealthy avoid tax and don't need to borrow. What a twisted world where social support, healthcare and education are the ultimate sufferers.

[bigbamboo]

The World Bank is not impressed by this ill thought out scheme or the rebuttals of their own estimation of it's losses.

As it is that same World Bank that Thailand's government intends to go to cap in hand for their mega loan then I'd say they will just have to take the shame and admit they got it all wrong on this one.

Edited October 17, 2013 by bigbamboo

[Ulic]

No new information in the article but some interesting comments.

[Thai at Heart]

I have my own theory and it goes like this.....

This isn't a the first time that there has been a national scandal over Thailand's rice industry. The PTP are trying to find a new way to manage the commercial side of Thailand's rice business that ensures more of the income from rice is paid to the farmers.

I suspect that Thai farmers have been victim's of the corrupt millers, warehouses, and politicians, since the beginning of time.

It was always was understood that Thai politicians cut themselves into the cash flow from rice corruption through arms length agreements with the rice mills and the distribution warehouses.

The endemic corruption in the Thai rice industry grew deep roots in Thailand long before the Puea Thai Party, or for that matter the Thai Rak Thai party existed.

In the past the corruption of the rice industry was much worse. The corruption was focused on the operation of government warehouses that stocked and distributed Thai rice Nationwide and internationally. An earlier government sold many of the government warehouses hoping that the corruption would stop as the new owners, often being the earlier government warehouse operators, would cease to be corrupt while running a Bona Fide business and trading for profit, under sufferance of government supervision.

It didn't work because the books of the warehouses continued to get cooked and the rice continued to vanish with the crime now being committed at a different point in the supply chain. However the politicians continued their former arms length agreements with each warehouse and rice Mill in order maintain their stipend from corruption.

Allegedly the PTP rice pledging system is intended to curtail rice corruption by eliminating the the scalping being carried out at the rice mills and warehouses while redirecting the benefit to the Thai farmers.

However it has all gone wrong because the rice mills and warehouses seem to have managed to beat the system and are maintaining corrupt scalping for themselves and their arms length partners in crime enabling them to feed off of the farmers PTP benefit plan called rice pledging.

Thailand appears to have many other agricultural industry corruption scams and together they probably affect everything that Thailand's farmers produce from rice to cassava, sugar and palm oil.

Corruption in the agricultural sector will probably never end because the beneficiaries are probably from the same families as the lawmakers.

Your theory is right on, IMHO.

The beneficiaries of this madcap scheme scam are from both sides of the political divide. but they have on thing in common------------greed. Unfortunately the average poor farmer and his family for whom this was originally (I assume) intended, are at the mercy of the corrupt middlemen, millers and landowners from whom a large portion of the farming community rent land..

But, as many posters have mentioned, because of the huge losses accumulated in the past and in future transactions, the government is deaf both to criticism and investigation.

Everyone is wrong except them. The man in Dubai could stop this madness with a phone call, but will not.

Of course they could just sell the whole industry to publicly quoted foreign firms and threaten to kill the executives family's if they engaged in any corruption.

All exports to be carried out at cost plus 10% or below.

Basically it's corrupt because it's a massive industry completely in the hands of Thais. It was created to be corrupt and screw farmers.

Edited October 17, 2013 by Thai at Heart

[MaiChai]

I think its pretty clear that there is no socialism or democracy in Thailand. Society revolves around money, and there is a constant clamoring to collect as much money as possible, at any cost. Poorer people can have a better life in a western democracy where they get treated more fairly. Hence these government schemes to corrupt, and why most Thais find corruption acceptable if they get a piece of the action. As a foreigner living in Thailand, you have to make a decision of whether you want to live in this environment, or live in a western democracy where there is fairer treatment for those less privileged.

[Thai at Heart]

I think its pretty clear that there is no socialism or democracy in Thailand. Society revolves around money, and there is a constant clamoring to collect as much money as possible, at any cost. Poorer people can have a better life in a western democracy where they get treated more fairly. Hence these government schemes to corrupt, and why most Thais find corruption acceptable if they get a piece of the action. As a foreigner living in Thailand, you have to make a decision of whether you want to live in this environment, or live in a western democracy where there is fairer treatment for those less privileged.

You have hit that nail very much on the head. Choosing to live in Thailand involves taking those rose tints off and deciding or choosing to remain ignorant.

Thailand is not the place it claims to be on the pack.

[bangon04]

Whatever happens, just make sure that nobody teaches the peasants to count.....