Foreign banks brand Thailand's rice-pledging scheme as 'risky'

[tingtongteesood]

And this is news why !? We all knew this for the last 2 years already....

[fab4]

The thing is, they need to attempt to keep up this illusion that it is all working nicely. This was probably the biggest populist vote buying agenda on their election manifesto when these deadbeats got elected.

Thaksin and Yingluck cobbled this together out of pure and typical Thailand insular thinking and their usual superiority complex. Their plan was of course to buy the popular vote with it, and with Thailand at the time being number one exporter of rice, would deliberately engineer a global rice shortage by stockpiling and driving up the price.

It was ludicrous to assume that they were the only country that has rice for sale. They got greedy and thought they could push the price back up to the levels of 2008 when there was a very real global shortage. Then cash in on the hiked price to cover the vote money.

As usual, it ended with an epic backfire.

Because of their overly inward thinking, they failed to gather 'intelligence'. After the 2008 rice famine in the east, almost all rice producing countries started their own rice stockpiling system, not only to cover its own domestic needs so it didn't need to import it an massively inflated prices, but also have an extra stock to trade.

These famines are few and far between. The next one has already been covered globally. So this scheme was a failure before it even started and now the government need to keep it going because they need it in place for the next election which could be just around the corner, or risk losing all those votes.

They took one of Thailand's strongest industries and floored it, not only are they losing money hand over fist, but they have created massive damage to their export capabilities, customers rightly went elsewhere and never came back. Once they close this scheme, the farmers will realize that the demand for there rice has been massacred.

They have already shit on the rubber farmers, and now the rice farmers, and next I can see the palm oil farmers getting shafted after the government urged many in the south to switch to palm oil in an effort to make Thailand.... you guessed it.... 'The hub of' palm oil production.

"and next I can see the palm oil farmers getting shafted after the government urged many in the south to switch to palm oil"

And just what government was that ?

Clean Technology for the Crude Palm Oil Industry in Thailand

Orathai Chavalparit

During 1975-2000, the palm oil industry in Thailand showed rapid growth (Table 1.2).

Since 1985 the area for oil palm cultivation in Thailand has more than doubled to 0.17 million

hectares in 1995. Under the government’s five-year plan (1996-2001) the area was doubled

again to 0.29 million hectares in 2004

https://cdm.unfccc.int/filestorage/D/Q/L/DQLOBS4EM5WK326NIHC1R9YZFAPJX7/Enclosure 12.pdf?t=N2p8bXdodDM3fDDqp1YzHHSJWMsGeNsbY8bv

It certainly wasn't one of Thaksins "regimes" as can be seen by the the manufactured "palm oil crisis" under abhisits' time in power.

• About 80 percent of palm oil is processed in the southern provinces of Surat Thani, Chumphon and Krabi by 65-67 factories. These factories are owned by just 10 individuals. And all 10 of them are either politicians or hua khanaen, powerful businessmen who secure votes for politicians in exchange for political favours.
• In November and December 2009, before any imports of palm oil entered the country, the monetary benefits to these 10 individuals from “pocketing the difference” amounted to between 4 and 5 billion baht.

http://asiancorrespondent.com/49900/thailands-palm-oil-crisis-mr-s-strikes-again/

And who was "chairman of the National Palm Oil Policy Committee" at the time. Why, our very own Suthep...................

[Henn]

The thing is, they need to attempt to keep up this illusion that it is all working nicely. This was probably the biggest populist vote buying agenda on their election manifesto when these deadbeats got elected.

Thaksin and Yingluck cobbled this together out of pure and typical Thailand insular thinking and their usual superiority complex. Their plan was of course to buy the popular vote with it, and with Thailand at the time being number one exporter of rice, would deliberately engineer a global rice shortage by stockpiling and driving up the price.

It was ludicrous to assume that they were the only country that has rice for sale. They got greedy and thought they could push the price back up to the levels of 2008 when there was a very real global shortage. Then cash in on the hiked price to cover the vote money.

As usual, it ended with an epic backfire.

Because of their overly inward thinking, they failed to gather 'intelligence'. After the 2008 rice famine in the east, almost all rice producing countries started their own rice stockpiling system, not only to cover its own domestic needs so it didn't need to import it an massively inflated prices, but also have an extra stock to trade.

These famines are few and far between. The next one has already been covered globally. So this scheme was a failure before it even started and now the government need to keep it going because they need it in place for the next election which could be just around the corner, or risk losing all those votes.

They took one of Thailand's strongest industries and floored it, not only are they losing money hand over fist, but they have created massive damage to their export capabilities, customers rightly went elsewhere and never came back. Once they close this scheme, the farmers will realize that the demand for there rice has been massacred.

They have already shit on the rubber farmers, and now the rice farmers, and next I can see the palm oil farmers getting shafted after the government urged many in the south to switch to palm oil in an effort to make Thailand.... you guessed it.... 'The hub of' palm oil production.

And just what government was that ?

.

Prime Minister Thaksin Shinawatra is preparing to lay the foundations for Thailand to switch to using alternative energy sources. Emphasis will be placed on the production of palm oil for use in bio-diesel fuel. The government would begin by increasing the amount of land area available for planting palm. Mr. Thaksin said palm oil has a more "promising future" than rice as a fuel source. "In the long run, palm oil will be more profitable than rice and have more security in terms of marketing."

He ruled out concerns that heavy promotion of palm oil could lead to a surplus in output that could send its price tumbling.

Agriculture Minister Somsak Thepsuthin, meanwhile, said the ministry would increase production of oil palm said oil palm plantations were being expanded in the Central Region, adding that there are plans to double the cultivation area within the next five years.

http://www.cogen3.net/presscuts/thailand/PMoutlinesstepstowardnewfuels.htm

.

Edited November 19, 2013 by Henn

[indyuk]

I may finally get a chance at the plot of land that the farmer now wants to sell for 300,000 baht a rai

That is incredibly expensive land. What is so special about it?

[shaurene]

Foreign Banks no understand Thailand. It is not a very wise comment you made typical Thai comment, sorry. The program is a complete idiotic concept, is it something you would do in a business. Running a country is just like running a business it has to cut back on losses and create new concepts to make it profitable.

The rice concept is not being run correctly, there is not stringent controls on the purchases or the payments to the farmers so many of them have not been paid but the money is being withdrawn from the kitty, where has it gone.

A lot of the rice in the stock piles will be wasted and un useable as time goes on.

[belg]

risky ?

what 5+ year old rotten rice

and sprayed dozen of times with even more dangerous chemicals ?

[Muhendis]

Maybe this is all a cleaver ruse by YS.

First the PTP gives up power.

Then the other lot get in and scrap the rice pledging scheme and increase taxes to recoup losses.

Redshirt farmers (et al) mobilise again and bingo! YS is back....

[Thai at Heart]

Time to ready the foriegn cash reserves to buy the baht when the ar$e falls out of it like in 1997.

That's not likely to happen. They are in a much better position this time around.

But are they? I personally believe that the deficits that the government has owned up to from their various populist policies will prove to be merely the tip of the iceberg. When they are finally ousted and an audit of their time in office is carried out, the final bill may prove to be ruinous for this country.

Well hiding massive deficits is extremely difficult. particularly post 2008.,

[Muhendis]

Time to ready the foriegn cash reserves to buy the baht when the ar$e falls out of it like in 1997.

That's not likely to happen. They are in a much better position this time around.

In '97 the baht was tied to the US$ and we all got happy with 75 to the £. This time the Baht is not tied so it's value is determined by the Fx buyers who will decide amongst themselves whether to buy or to sell. That will result in much smaller fluctuations but we all live in hope

[Ricardo]

risky ?

what 5+ year old rotten rice

and sprayed dozen of times with even more dangerous chemicals ?

And in breaking-news, Thailand to become Hub of Amazing New Health-Food !

[Bagwan]

Foreign banks no understand Thailand.

Who does?

[Bagwan]

The best thing we can all do is sit back and watch this collapse unfold, it will be the end of Peua Thai's electoral party. This is the healthiest and most likely means of getting rid of the Thaksin nightmare, let him engineer it himself. The BAAC is weeks away from closing it's doors with empty coffers and nowhere to raise money. Farmers will be peeved no doubt.

There must be huge numbers of people in the countryside with their savings in BAAC. It would be a catastrophe if they went bankrupt.

That's the kicker. Ptp can't let them go bust. There could be a run on the bank soon. I for one will be telling relatives to pull any cash they have.

Thankfully my family took my advice and took their bread out of BAAC 6 months ago. I'm expecting a few crates of Chang by way of a thank you any day soon.

[Ulic]

Rice farmers overpaid by 50% first 2 years, on third year complain the have not been paid yet. Some my argue

they were paid in advance. Personally when the whole thing comes crashing down I would confiscate the family

assets of everyone who voted for it. Can't blame the farmers what do they know. Someone in government saying

they should get a 50% premium on there rice. The politicians knew this was a plan doomed to failure and should

be held personally liable. Just an opinion.

[Muhendis]

The best thing we can all do is sit back and watch this collapse unfold, it will be the end of Peua Thai's electoral party. This is the healthiest and most likely means of getting rid of the Thaksin nightmare, let him engineer it himself. The BAAC is weeks away from closing it's doors with empty coffers and nowhere to raise money. Farmers will be peeved no doubt.

There must be huge numbers of people in the countryside with their savings in BAAC. It would be a catastrophe if they went bankrupt.

That's the kicker. Ptp can't let them go bust. There could be a run on the bank soon. I for one will be telling relatives to pull any cash they have.

Thankfully my family took my advice and took their bread out of BAAC 6 months ago. I'm expecting a few crates of Chang by way of a thank you any day soon.

I don't think there is any likelihood of any Thai bank suffering because of the farmers/rice pledge. Any loans made to them [farmers] are based on land documents being lodged as a loan guarantee. After a suitable period of time the banks will sell the land and recoup their losses. The farmers will be pretty peed of about it but that is the way it works here. Bye bye Peu Thai.

[Ricardo]

I don't think there is any likelihood of any Thai bank suffering because of the farmers/rice pledge. Any loans made to them [farmers] are based on land documents being lodged as a loan guarantee. After a suitable period of time the banks will sell the land and recoup their losses. The farmers will be pretty peed of about it but that is the way it works here. Bye bye Peu Thai.

Thankfully my family took my advice and took their bread out of BAAC 6 months ago. I'm expecting a few crates of Chang by way of a thank you any day soon.

That's the kicker. Ptp can't let them go bust. There could be a run on the bank soon. I for one will be telling relatives to pull any cash they have.

But the money paid by the BAAC to farmers are not secured-loans, but are payments due to them from the government, due under the rice-pledging scam scheme, for the purchase of the rice which they have delivered to the mills ?

I think that advance-loans, to purchase fertiliser to help farmers grow a bigger crop, or for other purposes, are a totally different matter.

It might be better to ask, what security did the government have to lodge with the bank, before the bank paid-out to farmers under the government's scheme, I suspect that the only thing backing the government's debts & the bank's increased-borrowing to fund those payments which have been made, is Hot Air !

Oh, and faith in the government's integrity, which seems to be at some risk of being downgraded, now that they're refusing to accept the law, unless it suits them ?

Edited November 20, 2013 by Ricardo

[Robby nz]

See reported elsewhere today that the BAAC is about to issue 75 billion in bonds to help pay for the 270 billion for this seasons crop.

I also see on my morning rounds that the farmers around here are getting in crops as fast as they can.

Plenty of irrigation, so as soon as one crop is harvested the paddy is worked up and another crop planted.

Appears to be less than a month between one crop harvest and another growing.

Don't know how many they can get in a year.

[JRSoul]

The rice pledging scheme is definitely risky, not in terms of money lost as that was obviously going to happen from its inception, because those who proposed and instigated it may one day be brought to account for their actions. As the scheme has never achieved anything but a pretense of helping poor farmers, they could have their assets seized or even be jailed for their corruption.

OTOH the financial returns have been outstanding.

[Thai at Heart]

The best thing we can all do is sit back and watch this collapse unfold, it will be the end of Peua Thai's electoral party. This is the healthiest and most likely means of getting rid of the Thaksin nightmare, let him engineer it himself. The BAAC is weeks away from closing it's doors with empty coffers and nowhere to raise money. Farmers will be peeved no doubt.

There must be huge numbers of people in the countryside with their savings in BAAC. It would be a catastrophe if they went bankrupt.

That's the kicker. Ptp can't let them go bust. There could be a run on the bank soon. I for one will be telling relatives to pull any cash they have.

Thankfully my family took my advice and took their bread out of BAAC 6 months ago. I'm expecting a few crates of Chang by way of a thank you any day soon.

I don't think there is any likelihood of any Thai bank suffering because of the farmers/rice pledge. Any loans made to them [farmers] are based on land documents being lodged as a loan guarantee. After a suitable period of time the banks will sell the land and recoup their losses. The farmers will be pretty peed of about it but that is the way it works here. Bye bye Peu Thai.

Well I don't think a back would claim their land when they haven't paid out the farmers their money???????

I think u you have the cart in front of the horse. At this point the farmers dont owe the bank. It is the bank that owes the farmers.

[edwinchester]

See reported elsewhere today that the BAAC is about to issue 75 billion in bonds to help pay for the 270 billion for this seasons crop.

 

I also see on my morning rounds that the farmers around here are getting in crops as fast as they can.

 

Plenty of irrigation, so as soon as one crop is harvested the paddy is worked up and another crop planted.

 

Appears to be less than a month between one crop harvest and another growing.

 

Don't know how many they can get in a year.

Where we are in Kanchanaburi three sometimes four crops per year. You need good irrigation and plenty of chemicals for that though!

[Muhendis]

The best thing we can all do is sit back and watch this collapse unfold, it will be the end of Peua Thai's electoral party. This is the healthiest and most likely means of getting rid of the Thaksin nightmare, let him engineer it himself. The BAAC is weeks away from closing it's doors with empty coffers and nowhere to raise money. Farmers will be peeved no doubt.

There must be huge numbers of people in the countryside with their savings in BAAC. It would be a catastrophe if they went bankrupt.

That's the kicker. Ptp can't let them go bust. There could be a run on the bank soon. I for one will be telling relatives to pull any cash they have.

Thankfully my family took my advice and took their bread out of BAAC 6 months ago. I'm expecting a few crates of Chang by way of a thank you any day soon.

I don't think there is any likelihood of any Thai bank suffering because of the farmers/rice pledge. Any loans made to them [farmers] are based on land documents being lodged as a loan guarantee. After a suitable period of time the banks will sell the land and recoup their losses. The farmers will be pretty peed of about it but that is the way it works here. Bye bye Peu Thai.

Well I don't think a back would claim their land when they haven't paid out the farmers their money???????

I think u you have the cart in front of the horse. At this point the farmers dont owe the bank. It is the bank that owes the farmers.

Thank you for your clarification however the farmers need to borrow from a bank to finance their farms as a step to growing their rice crop. I understand that, having grown their crop, many farmers have not yet been paid. That tells me the BAAC is not releasing funds to the farmers until after they have received it from the government. Is my understanding correct?

[Ricardo]

Thank you for your clarification however the farmers need to borrow from a bank to finance their farms as a step to growing their rice crop. I understand that, having grown their crop, many farmers have not yet been paid. That tells me the BAAC is not releasing funds to the farmers until after they have received it from the government. Is my understanding correct?

The government-backed BAAC has initially used its own spare capital, to make payments on behalf of the government to the farmers, for rice delivered under the scheme to the mills.

However the government has then failed to reimburse the BAAC in-full, there is a trickle of funds as some of the rice is sold (below cost), but the BAAC has been left holding the bag.

The government has graciously voted to allow the BAAC to increase capital available for onward-payment, by raising their permitted borrowing-limit, at least a couple of times. I'm not sure how many times, as there are frequently more-than-one officials from more-than-one ministries, making the announcements. It's a confused situation, which is in itself a cause for concern.

There is no suggestion that "BAAC is not releasing funds to the farmers until after they have received it from the government", only that having exhausted their own funds, the bank is now reliant on the delayed-cashflow from the government, or on further borrowing once approved to fund further payments as they fall due.

This is a classic cashflow problem, the government appears unable to fund the scheme properly, and the farmers aren't getting paid on-time.

Edited November 20, 2013 by Ricardo