TDRI proposes disposal of rotten pledged Thai rice

[Old Man River]

Better the government lose a few billion on a pledging scheme than 30 million rice farmers lose money on each harvest. Imagine if there were 30 plus million rice farmers protesting losing money on each crop. It costs them more to grow rice than the farmers would make without government buying it. Lets think again, 30 million farmers with no income for two years just loses from growing rice. They would protest in mass and burn the country to the ground.

Aside from the absurd numbers, the basic concept of supporting people because they are putting a great deal of effort into growing something of little value is equally stupid. But you are correct that when the subsidies stop there will be pain and civil unrest. Now, who should we blame for giving those people unrealistic expectations that their uneconomic industry is sustainable?

They would almost be better off to take a whole village and tell them they couldn't grow more than a certain volume as a village in return for every adult in the village receiving a monthly wage.

Job done. Everyone is fed. Volume is set.

Job is not done. It leaves limited room for the guys that really count. Your way, most of the money would go to the farmers. That won't work.

Edited December 17, 2013 by Old Man River

[Robby nz]

It had to happen

I see it reported elsewhere that Kittiratt has blamed the late (non) payment to farmers for their rice on the protests.

These people have no shame at all, that transends all other white lies.

[drdoom6996]

BANGKOK, 17 December 2013 (NNT) – The Ministry of Agriculture and Cooperatives predicts that Thailand will export 7 million tons of rice next year, while rice production in the country will be as high as 38 million tons.

This from the other humorous thread. Export 7 million tons out of god only knows how many million tons already in storage

PLUS "rice production in the country will be as high as 38 million tons.

Thailand, drowning in an ocean of rice and millions in the world starving to death. "Well, let 'em die"!

cras.jpg

Taksin said "Thailand is for Thai's". To heck with the rest of the world unless they want to come and spend their money and then go home when it is gone.

Now that everybody is rich from the "Rice Scam" they should all be able to afford a small loss on the current stockpiles. PS: Satire

[Spare]

Thailand aka "Rice bowl of the world"

[EyesWideOpen]

Now am starting to wonder if some proportion of this rice even existed. Now looking

like a magical act, with items being shifted from one hand to the other hand....

I really hope PTP is removed from power, and the full extent of this scam is

revealed......

[tominbkk]

Better the government lose a few billion on a pledging scheme than 30 million rice farmers lose money on each harvest. Imagine if there were 30 plus million rice farmers protesting losing money on each crop. It costs them more to grow rice than the farmers would make without government buying it. Lets think again, 30 million farmers with no income for two years just loses from growing rice. They would protest in mass and burn the country to the ground.

Why aren't they encouraging rice farmers to grow something that they can actually sell rather than just be subsidized for?

[notmyself]

Storing vast quantities of rice which then starts to rot and then burning it. Beyond contemptible.

[cooked]

Better the government lose a few billion on a pledging scheme than 30 million rice farmers lose money on each harvest. Imagine if there were 30 plus million rice farmers protesting losing money on each crop. It costs them more to grow rice than the farmers would make without government buying it. Lets think again, 30 million farmers with no income for two years just loses from growing rice. They would protest in mass and burn the country to the ground.

Who told you there were 30 million people farming rice in Thailand??

Get your facts right.

Also, nobody tells them to farm rice, they choose to do it, who helps the garlic farmer or the palm oil farmer when they discovered they made a boo boo by choosing their preferred crop?

There are literally hundreds of crops that can be farmed and money made without having to take the simple LAZY route of plant and forget, then beg huge returns from the tax payer.

Thaksin and his ill thought out policies has taken Thailand's second largest industry after tourism, and wrecked it by offering out freely the tax payer's money to buy votes. Thailand was the biggest global exporter, and if farmers were not making money, they should not have planted rice, and chosen something else instead. But they just don't want to work hard, so why should anyone care.

Thaksin has ended up shafting them, and prices will fall through the floor when eventually this scam is closed off. Then maybe millions of these farmers will realize and go and plant something that they CAN make money from, especially to cover the huge debts they have incurred when they took out all those loans, credit cards and new cars and homes all riding on 'rice is gonna pay'.

Well.... now we all know that it isn't.

30,000,000 or 20,000,000 million Issan families, the point was the total number but what do you think the protest will be like when all the rice farmers have no income. Remember the rubber tappers?

By capping the system to only a certain amount of tonnes per farm and force them to sell the rest on the open market.

By educating them away from rice planting because it is on the way to becoming the most uneconomical crop in Thailand.

By not pampering them into a cushy existence on the back of a rice scam.

Or we can choose the other route. Continue with the scheme till he country is bankrupt and then have the whole 68 million on the rampage.

But the most sensible is to set aside a separate budget for the entire north and northeast, and pay for their rice scheme out of their own budget, and if that means health and education and all the other infrastructure suffers, then that is their problem. It is time they woke up to the reality of what these policies do to their country.

They choose rice, so they choose their own ...

I see that you know a lot about farming in Isaan. We get rain for about 4 months a year, there is insufficient water over large areas to cultivate anything else outside of this season apart from small vegetable plots.

During season the fields are frequently under water

And thus unsuitable for other crops apart from fish.

The farmers here are getting 12 B. a kilo now, best quality Hom mali. We ourselves have a little storage space so can hang on for 15B. I talked to a Lao rice farmer on Sunday and he also gets 12B. a kg.

Maybe you should come help us when we start cultivating, you won't think that 1000B. per sack is too much.

Of course we could just abandon the fields to snakes and crocodiles...

[Moruya]

They should charge the losses to person who came up with the idea - or dump alll the rotten rice in the Bimbo's back yard

[MJP]

Ferment the rice into a liquid fuel or biogas or both.

Or turn it into Lao Khao.

[Robby nz]

BAAC union proposes end to rice scheme

BANGKOK: -- Bank for Agriculture and Agricultural Cooperatives' labour union Wednesday hosted a press conference, saying the bank now has only Bt12 billion cash to cover the rice-pledging scheme.

The union said that the amount would be sufficient to cover the pledging until the end of this month.

It also urged for the abolition of the scheme and proposed rice mortgages. Some farmers may be enlisted for rice pledging. It said that this would lower the rice price, to be more in line with market prices.

Now see what the Bank union has to say :

[Thait Spot]

Ferment the rice into a liquid fuel or biogas or both.

Or turn it into Lao Khao.

Same thing - make a brew and distill it

[Old Man River]

Better the government lose a few billion on a pledging scheme than 30 million rice farmers lose money on each harvest. Imagine if there were 30 plus million rice farmers protesting losing money on each crop. It costs them more to grow rice than the farmers would make without government buying it. Lets think again, 30 million farmers with no income for two years just loses from growing rice. They would protest in mass and burn the country to the ground.

Gosompoi, where did you get the figure that there are 30 million rice farmers in Thailand?

At of the beginning of 2013, the Thai labor force in the entire agricultural sector (ages 15 and up) was 13.3 million. The agricultural sector includes all crops, plus forestry plus fishing. The source for this information is The National Statistics Organization of Thailand.

Next time you make up numbers, at least make them believable.

[Old Man River]

http://tdri.or.th/en/tdri-insight/accounting-for-govts-rice-pledging-scheme-losses/

[noikrit]

They should charge the losses to person who came up with the idea - or dump alll the rotten rice in the Bimbo's back yard

Then you got to Freight it to Dubai ..... or is it Montenegro ??? And that " Bimbo" probably dines on cavier not rice ... but good thought

[SOTIRIOS]

...corruption was the cause of this in the first place......

...it never had anything to do with helping the farmers or the country....

[englishoak]

Thailand Hub of carbohydrates.

[citizen33]

This thread comes straight out of the Fox News school of economics. It may well be the case that the rice pledging scheme hasn’t turned out well, but one gets the sense that there aren’t many Keynesians posting on TVF. A lot of Western governments pump money into depressed regions, as well as maintaining demand in a period of economic recession through measures such as quantitative easing, selective infrastructure investments and yes, subsidies. For many who live in the European Union that is not such a strange concept; it is the impact on the macro economy that counts rather than break-even on a particular project. Of course, many will say that PT’s electoral strength is in the North and NE, but while they are thus taking care of their own constituency, this is the very constituency that had been marginalised and stigmatised until things started to change after 2000. That is when the genie got out of the bottle and these people realised their votes could be cast for a party that would improve their lives. And economic growth in the NE is presently very encouraging, something that is a major boost for the whole Thai economy. It may be that the IMF was right when it suggested recently that the emphasis should shift from the shaky rice pledging scheme to other measures to support low-income rural families, but I imagine many ‘small government’ advocates on TVF would oppose this approach for the same reason. It is not as though the Democratic Party would not introduce policies favouring certain business and corporate interests. That is electoral politics. Such policies are most definitely not the same as vote buying, which as anybody outside the Bangkok bubble knows affects all sides.

Edited December 18, 2013 by citizen33

[steveromagnino]

This thread comes straight out of the Fox News school of economics. It may well be the case that the rice pledging scheme hasnt turned out well, but one gets the sense that there arent many Keynesians posting on TVF. A lot of Western governments pump money into depressed regions, as well as maintaining demand in a period of economic recession through measures such as quantitative easing, selective infrastructure investments and yes, subsidies. For many who live in the European Union that is not such a strange concept; it is the impact on the macro economy that counts rather than break-even on a particular project. Of course, many will say that PTs electoral strength is in the North and NE, but while they are thus taking care of their own constituency, this is the very constituency that had been marginalised and stigmatised until things started to change after 2000. That is when the genie got out of the bottle and these people realised their votes could be cast for a party that would improve their lives. And economic growth in the NE is presently very encouraging, something that is a major boost for the whole Thai economy. It may be that the IMF was right when it suggested recently that the emphasis should shift from the shaky rice pledging scheme to other mechanisms to support low-income rural families, but I imagine many small government advocates on TVF would oppose this approach for the same reason. It is not as though the Democratic Party would not introduce policies favouring certain business and corporate interests. That is electoral politics. Such policies are most definitely not the same as vote buying, which as anybody outside the Bangkok bubble knows affects all sides.

If you want to promote Keynesian economics, it is about adjusting monetary policy and investment in infrastructure, not just priming the pump investment willy nilly on any idiotic idea. Giving me 1 trillion baht to invest in memberships at every nightclub in Thailand is not really an example of Keynesian economic theory. Rice pledgeing is effectively burning through our water resources for zero benefit.

Sure, deficit spending in a recession is a logical way to smooth out expansion, contraction....but this is a policy of throwing money FOREVER by implementing a policy where people are paid to do something worthless (grow rice, mill it, store it, throw it away) as we have now with rice pledging. bear in mind this is not a policy which is sustainable or logical on any measure other than securing votes. We would be better off to pay the rice farmers to do nothing, and have them go work in a factory or something else, it is not a way to solve unemployement because Thailand does not have an unemployment problem, quite the reverse!

Actually, if you look at corporate interests, PT is actually a business party (which leverages the vote winning power of crumbs to the masses), and that's why the biggest gainers from PT being elected are the richest people in Thailand who together own most of the businesses; the drop in tax from 30% to 20% was what, until recently, lead to the huge upwards spiral in share prices. The reason for all these PM visits to other countries, has nothing to do with the rural poor. It is all about securing FTAs and business agreements to support the big families who back PT. e.g. Thai Summit in the automotive industry. Or the rail system to Hua HIn...benefiting Thaksin ally and regional godfather (in the negative sense)

I have heard this old chestnut that PT/TRT were the first to deliver benefits to the poor in Isaan. So let's list out some examples.

- schools NO

- healthcare ARGUABLE

- access to financing NO (hasn't changed from the old days of loan sharks and godfathers with a hand on the shoulder)

- roads NO

- electricity NO

- access to internet/mobile/telephones NO

- marketing and promotion expertise NO (one tambon one product was a con and DEP anyhow had more successful policies that worked already before OTOP came around)

So I think to summarise what we really mean when we say that more money is going upcountry is this. More money is going to the regional godfathers, much more, to build whatever they feel will enrich them; that's how PT gets them to be part of the PT enterprise. This has some flow on effect for the people in the area (new roads, etc) albeit at a cost of 1.5 - 3X the cost of what it should have been due to skim. We have short term policy aimed to directly securing votes - diesel subsidies, tablets, rice pledging - none of which actually long term increase competitiveness of the province or the people in that province, but it makes them better off today.

Comparing crop pledging to price guarantee floor, the price guarantee floor price to avoid people operating at a loss is a far more logical and fairer result for the country.

[khunken]

This thread comes straight out of the Fox News school of economics. It may well be the case that the rice pledging scheme hasn’t turned out well, but one gets the sense that there aren’t many Keynesians posting on TVF. A lot of Western governments pump money into depressed regions, as well as maintaining demand in a period of economic recession through measures such as quantitative easing, selective infrastructure investments and yes, subsidies. For many who live in the European Union that is not such a strange concept; it is the impact on the macro economy that counts rather than break-even on a particular project. Of course, many will say that PT’s electoral strength is in the North and NE, but while they are thus taking care of their own constituency, this is the very constituency that had been marginalised and stigmatised until things started to change after 2000. That is when the genie got out of the bottle and these people realised their votes could be cast for a party that would improve their lives. And economic growth in the NE is presently very encouraging, something that is a major boost for the whole Thai economy. It may be that the IMF was right when it suggested recently that the emphasis should shift from the shaky rice pledging scheme to other measures to support low-income rural families, but I imagine many ‘small government’ advocates on TVF would oppose this approach for the same reason. It is not as though the Democratic Party would not introduce policies favouring certain business and corporate interests. That is electoral politics. Such policies are most definitely not the same as vote buying, which as anybody outside the Bangkok bubble knows affects all sides.

Before putting finger to keyboard it would help if you learned a bit more about the scheme and previous schemes.

Yes, governments subsidise agriculture as well as industries if it helps the country & themselves. I have no problem with subsidies provided they are implemented for the right reasons and reach the needful growers/manufacturers.

This particular scheme fails on both counts. It doesn't reach the poorest farmers (those who grow rice for their own consumption) and the reason it was implemented was buying votes. In addition the previous Democrat government did implement a rice subsidy scheme that was much less costly and did reach the intended growers. I can't deny that there was an element of vote buying in it but it was far less prone to corruption.

It became obviously a vote buying scheme when they tried to reduce the amounts paid and the maximum volume because they back-tracked when their voters protested. It is just crazy to plough the astronomical sums of money into a single scheme - unless cronies are benefitting hugely from it. Millers, warehouse owners, rice field landlords are the main beneficiaries and the commerce & finance ministries continually tell lies or refuse to tell the truth about the amounts in storage and the real cost.

[Luuk Chaai]

maybe yingy and big bro should open a shell company in the ....US. export all the rotten ri e to the us and then donate it to some " charity. And take the taseduction.... right up their alley !

[Spalpeen]

This thread comes straight out of the Fox News school of economics. It may well be the case that the rice pledging scheme hasnt turned out well, but one gets the sense that there arent many Keynesians posting on TVF. A lot of Western governments pump money into depressed regions, as well as maintaining demand in a period of economic recession through measures such as quantitative easing, selective infrastructure investments and yes, subsidies. For many who live in the European Union that is not such a strange concept; it is the impact on the macro economy that counts rather than break-even on a particular project. Of course, many will say that PTs electoral strength is in the North and NE, but while they are thus taking care of their own constituency, this is the very constituency that had been marginalised and stigmatised until things started to change after 2000. That is when the genie got out of the bottle and these people realised their votes could be cast for a party that would improve their lives. And economic growth in the NE is presently very encouraging, something that is a major boost for the whole Thai economy. It may be that the IMF was right when it suggested recently that the emphasis should shift from the shaky rice pledging scheme to other measures to support low-income rural families, but I imagine many small government advocates on TVF would oppose this approach for the same reason. It is not as though the Democratic Party would not introduce policies favouring certain business and corporate interests. That is electoral politics. Such policies are most definitely not the same as vote buying, which as anybody outside the Bangkok bubble knows affects all sides.

A well thought out and reasoned post for a change. Saved me the trouble of saying the same thing. Far too many people get up on their hind legs on this forum only to blurt out their complete ignorance of economics.

[steveromagnino]

This thread comes straight out of the Fox News school of economics.

A well thought out and reasoned post for a change. Saved me the trouble of saying the same thing. Far too many people get up on their hind legs on this forum only to blurt out their complete ignorance of economics.

You need to understand the basics of the broken window (used to teach economics 101) to understand why the rice pledging scheme longterm is a very, very poor idea.

19th-century political economist Frederic Bastiat "That Which Is Seen and That Which Is Unseen." (This was, of course, translated from the French "Ce qu'on voit et ce qu'on ne voit pas.") Bastiat's reasoning goes as follows:

A good shopkeeper's careless son breaks a pane of glass - onlookers say "it is ok, after all what would become of the glaziers if panes of glass were never broken?"

Suppose it cost 1000b to repair the damage, so brings 1000b to the glazier's trade who performs his task, receives his 1000b, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen."

It is not seen that our shopkeeper has spent 1000b upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his 1000b in some way, which this accident has prevented.

In this parable, the thirty people telling the shopkeeper that the broken window is a good thing because it keeps the glazier employed are the equivalent of the journalists and politicians who say that natural disasters are actually an economic boon. Bastiat's point, on the other hand, is that the economic activity generated for the gl Perhaps he would have hired new staff, increased his production, or something else that genuinely results in an economic boon.

The glazier is only half of the picture, and it's therefore a mistake to look at the benefit to the glazier in isolation. Instead, a proper analysis considers both the fact that the glazier's business is helped and the fact that the money used to pay the glazier is then not available for some other business activity.

Bastiat's point, in a way, is about opportunity cost- unless resources are idle, they must be shifted away from one activity in order to be shifted toward another. Shifting, in the case of rice pledging, to get people to effectively be paid to merely stack and unstack wooden bricks 8 hours a day for no benefit to man nor beast, serves little benefit longterm to the Thai economy. Growing rice to throw away is even worse, because the liability of storage costs and financing makes it a truly expensive exercise.

Having resolved that, the only issue becomes how to help a business through the swings and arrows of outrageous fortune, helping through the bad times, rather than a permanent arrangement. Obviously the current government has no specific policy for farmers in general, just rice farmers. Certainly not garlic, palm oil, etc.

In fact the current TRT/PPP/PT government are one of several reasons why Thailand has lost so much of its diversity in other crops since they were the ones who signed the FTA with China enabling us to be overrun with low grade/pesticide ridden garlic etc, where Thailand dropped all its tariffs, only for the same to not be reciprocated at the other end, resulting in the trade deficit doubling within a year from $450m USD to around $910m in just 12 months, as the northern garlic farmers were first decimated when the FTA they were not allowed to participate in was introduced with resultant massive smuggling of garlic (some estimates are that 10% of the garlic from China is legally imported and 90% is smuggled); then again in 2008 with the China garlic oversupply, and again where (as a common ingredient in Thai cooking) there is a reduction in local farmer supply to the Thai markets but the global price has subsequently increased due to reduction in production in China - some estimate by over 500%, resulting in inflation (which is also a problem caused by rice pledging the rice price is ramping up across the entire kingdom, making rice farmers/millers/politicians rich at the expense of the majority of people who eat it).

Also, garlic farmers have been encouraged to switch to other crops (none of which are pledged either) so in effect, their broken window has remained broken, while the rice farmers are getting extra surplus windows for future breakage; that is the inherent nature of corrupt crony politics with no logical foundation in economic theory or fairness.

Edited December 20, 2013 by steveromagnino