Thai rice-pledging scheme: Farmers await Council of State

[webfact]

RICE PLEDGING
Rice farmers await Council of State
The Nation

BANGKOK: -- More than 1 million farmers are expecting money owed for their pledged rice in 30 days at the earliest, when the Council of State is expected to advice whether the caretaker government can legally acquire funds for the rice-pledging scheme.

The Bank for Agriculture and Agricultural Cooperatives (BAAC), meanwhile, is ready to aid the suffering farmers by extending their credit limit.

The Public Debt Management Office yesterday said in a report that after the Cabinet approved seeking an additional loan of Bt130 billion to pay for the pledged rice for the 2013-14 harvest, the Office had submitted a letter to the Council of State seeking their advice on the matter.

"The Office sent the letter to the Council of State for deliberation because of the huge amount of money involved. We expect to hear from the council in 30 days," the Office report said.

After receiving the advice, the Office would begin borrowing from financial institutions Bt10 billion a week in the form of loans and bonds, according to the report.

BAAC executive vice president Songserm Saksit said yesterday that the bank's board had agreed to launch measures to mitigate the suffering of farmers numbering some 1.4 million people who have not been paid their dues.

Initially, the BAAC board eased the requirement for lending to farmers through extension of the credit limit to 80 per cent from 20 per cent of the value of the farmers' pledge invoices; decrease in interest rate to 3-5 per cent from 7 per cent annually. However, the loan limit will take into account the market price, not the pledged price [bt15,000 per tonne]. In addition, the bank would reschedule the loan repayments due in March, by extending the due date by another six to 12 months without charging the penalty rate of 3 per cent per annum. Hundreds of thousands of farmers have to make loan repayments.

Meanwhile, the caretaker government would rush to provide the council additional information after receiving a written recommendation from the Election Commission, said Agriculture and Cooperatives deputy minister Varathep Ratanakorn.

Section 181 of the Constitution bans a caretaker government from making any decisions that could impose a financial burden on the next government. The government is required to ask for permission from the EC. However, the EC on Tuesday rejected a government request to acquire an additional Bt130-billion loan to fund the rice-pledging scheme.

Under the scheme, the government needs at least Bt130 billion more to pay for the pledged rice in the 2013-14 harvest season, of which about 10.41 million tonnes (worth Bt167 billion) of paddy rice are expected to gradually enter the project. The government has so far paid Bt50 billion to farmers and needed more money for farmers who had not yet been paid. BAAC projected that the value of the pledged rice may reach Bt190 billion.


-- The Nation 2014-01-24

[notmyself]

More than 1 million farmers are expecting money owed for their pledged rice in 30 days at the earliest

At the earliest?

[JRSoul]

IF approval is given, b10 billion will be borrowed per week to pay b130 billion debt, so some farmers will have to wait another 13 weeks. That will make them happy.

Meanwhile BAAC refuses to recognise inflated value of farmer's rice and will only extend credit on MARKET value. Farmers, welcome to the world of the economically sane.

[EricBerg]

According to the constitution the caretaker government must ask the EC permission to raise the billions to pay the farmers. The EC says no. Case closed.

[tomross46]

The Bank for Agriculture and Agricultural Cooperatives (BAAC), meanwhile, is ready to aid the suffering farmers by extending their credit limit.

This is interesting, BAAC is a government owned bank, the government owes money to the farmers and is month behind in paying the outstanding debt. So, is the government insolvent? The bank, received the money from the government and pays the farmers. Government no money, bank no money, farmers no money, so the BAAC will extend the credit limit of the farmers, thereby putting the farmers deeper in debt, The farmers have no money to pay the money they owe, since they put their land up as collateral for the loan, does the farmer lose his land.

[pedro01]

Wasn't it 60,000 farmers a short while ago?

[worgeordie]

Even if the EC approves the loans, wheres the money

going to come from ?, who going to loan money to a

failed project, think their last chance, contact Wonga !

regards Worgeordie

[Ulic]

Funny how they have no money to pay the farmers but they have plenty to lend the farmers.

It must be in another account. Give with one hand and takeaway with the other.

[JRSoul]

There is another solution - PTP gets elected on Feb 2 and shells out to cover its debts. Apparently nobody sees that as likely.

[chadintheusa]

Nobody wants to authorize a 130 billion baht loan a week before an election so that the one party running for election can hand out large amounts of cash to their voting base. To any one outside Thailand that may have the appearance of being improper. I know I wouldn't want my reputation to be associated with making that sort of decision, one could be charged with all sorts of things afterwards.

[chadintheusa]

There is another solution - PTP gets elected on Feb 2 and shells out to cover its debts. Apparently nobody sees that as likely.

The farmers are waiting for payments that should have been made in the fall before the house was dissolved. Why weren't they paid then when there was no obstacle to making the payments? Was it incompetence, arrogance, or a sign that the government was in financial trouble?

[DLock]

Farmers demanded that they be paid by tomorrow - the 25th.

Will they back down and wait at least 30 days or as long as 13 weeks after that?

Or will they bite the hand that promised to feed them?

I hope they join the protests and try to overthrow the criminal clan.

Interesting times.

[ggold]

There is another solution - PTP gets elected on Feb 2 and shells out to cover its debts. Apparently nobody sees that as likely.

The farmers are waiting for payments that should have been made in the fall before the house was dissolved. Why weren't they paid then when there was no obstacle to making the payments? Was it incompetence, arrogance, or a sign that the government was in financial trouble?

It is a sign that the money went somewhere other than the rice farmers.

[allan michaud]

IF approval is given, b10 billion will be borrowed per week to pay b130 billion debt, so some farmers will have to wait another 13 weeks. That will make them happy.

Meanwhile BAAC refuses to recognise inflated value of farmer's rice and will only extend credit on MARKET value. Farmers, welcome to the world of the economically sane.

So around 17 weeks for some to get paid. Like you say that will go down well. While the farmers voted for this bunch of thieves they do not deserve to get screwed over like this, I am certain many are getting into serious trouble with loan sharks and they are not to blame for the late payment so they should be compensated for the additional bank interest fees they are incurring. Total clusterf$%#, but oh so predictable. Good to see the bank is not being stupid.

Shame the govt doesn't seem able to sell the rice mountain for love nor money. These muppets have wrecked the countries main export business in just 3 years. Way to go Thaksin.

[Crushdepth]

Farmers demanded that they be paid by tomorrow - the 25th.

Will they back down and wait at least 30 days or as long as 13 weeks after that?

Or will they bite the hand that promised to feed them?

I hope they join the protests and try to overthrow the criminal clan.

Interesting times.

If they want the money they'd better sort it out before February 2. The government won't give a toss after that.

[Scamper]

The Yingluck administration is backed into a corner. Without the permission of the EC, and the banks closing their doors to further loans, it's really finished. The courts will render their rulings on this scandal.

[Muhendis]

"Initially, the BAAC board eased the requirement for lending to farmers through extension of the credit limit to 80 per cent from 20 per cent of the value of the farmers' pledge invoices; decrease in interest rate to 3-5 per cent from 7 per cent annually. However, the loan limit will take into account the market price, not the pledged price [bt15,000 per tonne]. In addition, the bank would reschedule the loan repayments due in March, by extending the due date by another six to 12 months without charging the penalty rate of 3 per cent per annum. Hundreds of thousands of farmers have to make loan repayments".

Well isn't that cute. The bank owes the farmers money and the farmers owe the bank money but only the bank talks about interest payments....

[ozzydom]

Farmers demanded that they be paid by tomorrow - the 25th.

Will they back down and wait at least 30 days or as long as 13 weeks after that?

Or will they bite the hand that promised to feed them?

I hope they join the protests and try to overthrow the criminal clan.

Interesting times.

And not to forget , another harvest is due March /April.

[steveromagnino]

There is another solution - PTP gets elected on Feb 2 and shells out to cover its debts. Apparently nobody sees that as likely.

The farmers are waiting for payments that should have been made in the fall before the house was dissolved. Why weren't they paid then when there was no obstacle to making the payments? Was it incompetence, arrogance, or a sign that the government was in financial trouble?

As I understand it, the reason is that the government claimed pre snap election (when they were not a caretaker govt) that the sales of rice G2G (namely to the Chinese) would allow the scheme to self fund within the limits of the total budget. Once they became a caretaker govt, they lost the ability to commit the country to new budgetary amounts unless an emergency or out of necessity, in which case the EC can make a decision on these. They are also not allowed to make new budget payments for the purposes of influencing an election.

Had they not lied about having government to government contracts, and been honest, they could have pushed through the necessary legislation pre snap election. I don't think anyone knows exactly why this wasn't a higher priority, perhaps it was because they didn't really know how sick the program was, and were trying to look good while they focused on the amnesty bill for Thaksin. I doubt it was deliberate, I think it was a genuine oversight, and since no one was really looking after the rice program (despite the fact that it costs 700 billion baht the PM who heads the committee has attended 1 meeting only relating to it) so no one knew until now that it really was insolvent; well no one within the government anyhow. In addition, the government have repeatedly said the scheme is fine, so to say otherwise would be to admit they were lying or negligent in managing it.

As a caretaker govt, they then then hoped to create a smoke and mirrors argument blaming the EC for not releasing payment, but most people (well maybe except just a few) see that this is not an EC matter, and that's what the EC said also; you can make your decision as the government to use bonds or whatever, but its on you, not us, because it is neither an emergency nor a necessity (e.g. flood relief or a tsunami would be the kind of extraordinary budget expense that the EC would rule on) rather it is simply a government policy. It would put Kittirat and other government officials on the hook if it is later found that they acted beyond their authority as a caretaker government.

The same as if a politician claims taxes will drop to 0% if he/she is elected and play doctored videos of his/her rivals to influence voting.....eventually that politician must take responsibility for their actions - likewise the real reason why the government won't/can't move forward is they know their position is not as stable as 2003/4 so no one is willing to put their neck on the chopping block when the scheme is obviously completely corrupt on so many levels and no one knows quite where it ends (there are many, many hands in the pie).

AFAIK The BAAC is a government bank, and sponsors the purchase of the rice; they would have the freedom also to operate as they see fit which is how PT try to keep the real costs etc somewhat hidden (and refuse to disclose details of G2G deals for 'national security' but now it's clear it's to misrepresent, BAAC cannot run themselves into insolvency and so that's why they need the cash injection from the government's other budgets to keep themselves going.

With no ability to sell the rice, and the increasingly clear picture that a lot of the rice doesn't exist and is 'virtual rice' bought and sold multiple times or is already rotten or pilfered, the problem is even if you could sell all the rice, the scheme would still be broke. No one knows (like Enron or toxic sludge subprime loans) how much it will actually take to get out of this hole. had the govt been honest pre election, none of this would be a problem, but they weren't.

It is very unfortunate for the farmers, no doubt, as they in some cases all they have now is an IOU and many don't have the rice to sell to someone else. It was, however, quite obvious that it would end up like this eventually, it just is surprising that the government felt the amnesty bill and the budget for the trains or flood management scheme they wanted was more important than telling the truth, and ensuring they could fund this white elephant for their voting base for even another crop cycle. The blind refusal to accept reality and to lie about it has been part and parcel of this scheme since day 1.

The easiest and simplest solution for PT is to have Thaksin buy the entire rice stock in storage (calculated as (all rice pledged - all deals done correctly) X 15,000b - 2% wastage, and all new rice pledged in the new crop at the agreed 15,000b price, since he's the one who came up with the idea. Since he is so smart, he can sell it on the open market at a profit, and then the entire scheme can be run farmer : private sector rather than using OUR money (instead of his own) as his own personal bank to get people to vote for him.

Edited January 24, 2014 by steveromagnino

[northernjohn]

There is another solution - PTP gets elected on Feb 2 and shells out to cover its debts. Apparently nobody sees that as likely.

Makes no difference if they win the election they still won't have a viable government until they fill 8 more seats.

They have paid out money all ready. Does any one know if it went to the small farmers or just the big ones with connections?

[Muhendis]

There is another solution - PTP gets elected on Feb 2 and shells out to cover its debts. Apparently nobody sees that as likely.

The farmers are waiting for payments that should have been made in the fall before the house was dissolved. Why weren't they paid then when there was no obstacle to making the payments? Was it incompetence, arrogance, or a sign that the government was in financial trouble?

As I understand it, the reason is that the government claimed pre snap election (when they were not a caretaker govt) that the sales of rice G2G (namely to the Chinese) would allow the scheme to self fund within the limits of the total budget. Once they became a caretaker govt, they lost the ability to commit the country to new budgetary amounts unless an emergency or out of necessity, in which case the EC can make a decision on these. They are also not allowed to make new budget payments for the purposes of influencing an election.

Had they not lied about having government to government contracts, and been honest, they could have pushed through the necessary legislation pre snap election. I don't think anyone knows exactly why this wasn't a higher priority, perhaps it was because they didn't really know how sick the program was, and were trying to look good while they focused on the amnesty bill for Thaksin. I doubt it was deliberate, I think it was a genuine oversight, and since no one was really looking after the rice program (despite the fact that it costs 700 billion baht the PM who heads the committee has attended 1 meeting only relating to it) so no one knew until now that it really was insolvent; well no one within the government anyhow. In addition, the government have repeatedly said the scheme is fine, so to say otherwise would be to admit they were lying or negligent in managing it.

As a caretaker govt, they then then hoped to create a smoke and mirrors argument blaming the EC for not releasing payment, but most people (well maybe except just a few) see that this is not an EC matter, and that's what the EC said also; you can make your decision as the government to use bonds or whatever, but its on you, not us, because it is neither an emergency nor a necessity (e.g. flood relief or a tsunami would be the kind of extraordinary budget expense that the EC would rule on) rather it is simply a government policy. It would put Kittirat and other government officials on the hook if it is later found that they acted beyond their authority as a caretaker government.

The same as if a politician claims taxes will drop to 0% if he/she is elected and play doctored videos of his/her rivals to influence voting.....eventually that politician must take responsibility for their actions - likewise the real reason why the government won't/can't move forward is they know their position is not as stable as 2003/4 so no one is willing to put their neck on the chopping block when the scheme is obviously completely corrupt on so many levels and no one knows quite where it ends (there are many, many hands in the pie).

AFAIK The BAAC is a government bank, and sponsors the purchase of the rice; they would have the freedom also to operate as they see fit which is how PT try to keep the real costs etc somewhat hidden (and refuse to disclose details of G2G deals for 'national security' but now it's clear it's to misrepresent, BAAC cannot run themselves into insolvency and so that's why they need the cash injection from the government's other budgets to keep themselves going.

With no ability to sell the rice, and the increasingly clear picture that a lot of the rice doesn't exist and is 'virtual rice' bought and sold multiple times or is already rotten or pilfered, the problem is even if you could sell all the rice, the scheme would still be broke. No one knows (like Enron or toxic sludge subprime loans) how much it will actually take to get out of this hole. had the govt been honest pre election, none of this would be a problem, but they weren't.

It is very unfortunate for the farmers, no doubt, as they in some cases all they have now is an IOU and many don't have the rice to sell to someone else. It was, however, quite obvious that it would end up like this eventually, it just is surprising that the government felt the amnesty bill and the budget for the trains or flood management scheme they wanted was more important than telling the truth, and ensuring they could fund this white elephant for their voting base for even another crop cycle. The blind refusal to accept reality and to lie about it has been part and parcel of this scheme since day 1.

The easiest and simplest solution for PT is to have Thaksin buy the entire rice stock in storage (calculated as (all rice pledged - all deals done correctly) X 15,000b - 2% wastage, and all new rice pledged in the new crop at the agreed 15,000b price, since he's the one who came up with the idea. Since he is so smart, he can sell it on the open market at a profit, and then the entire scheme can be run farmer : private sector rather than using OUR money (instead of his own) as his own personal bank to get people to vote for him.

Oooo crickey. what a lot of writing.....I think, in a word, you are saying the government is.......... incompetent..........

[kikoman]

We have a different angle on the payments,

Yes Yingluck government should have paid the farmers when the rice was sold, she and her government are responsible for that.

Understanding the PTP was responsible for the initial payment, since the house was desolved and PTP placed into the capacity of a caretaker government, then by law they could not make any decisions about borrowing money with out the approval of the EC, Which rejected approving the loan, so it was not the Caretaker Government that refuse to release the money owed to the Farmers,

It was the EC, that rejected the money that the government owed the farmers, and since the EC has publicly, refused to set up an election . They chose to deprive the farmers payment of money rightfully owed to them, before the election, in hopes of getting the farmers protest vote against PTP, as the Rich elite old power base ordered the EC to do?

PTP needs to go to work and inform the farmers who was responsible by law to approve the rice payments!.

Cheers

[MilesofSmiles]

I haven't been here very long... maybe this is par for the course.

12 months is enough time to pay the bill.

$3.94 BILLION US DOLLARS is a lot of money. <deleted> that big aren't accidental.

Whoever stole this money isn't going to be influenced by blocking the roads and having a whinge.

The farmers can't take the government to court, as you would with 12 month overdue debt from an individual or business ?

B 2,166,666 / 60,000 people.

B 130,000 / 1000,000 people.

I heard a story about a p*ssed-off owner of an earth-moving company dropping a few tons of landfill on a delinquent account before. Surely these guys have enough machinery to make themselves heard a bit.

[Suriya4]

The Yingluck administration is backed into a corner. Without the permission of the EC, and the banks closing their doors to further loans, it's really finished. The courts will render their rulings on this scandal.

EC is now more powerful than government.

[Crushdepth]

We have a different angle on the payments,

Yes Yingluck government should have paid the farmers when the rice was sold, she and her government are responsible for that.

Understanding the PTP was responsible for the initial payment, since the house was desolved and PTP placed into the capacity of a caretaker government, then by law they could not make any decisions about borrowing money with out the approval of the EC, Which rejected approving the loan, so it was not the Caretaker Government that refuse to release the money owed to the Farmers,

It was the EC, that rejected the money that the government owed the farmers, and since the EC has publicly, refused to set up an election . They chose to deprive the farmers payment of money rightfully owed to them, before the election, in hopes of getting the farmers protest vote against PTP, as the Rich elite old power base ordered the EC to do?

PTP needs to go to work and inform the farmers who was responsible by law to approve the rice payments!.

Cheers

Not true. The EC said it was up to the government to decide if it was appropriate to take the loans required to pay the farmers while in caretaker mode - and to take responsibility for their decision.

'EC blocking the payments' is PTP spin. Since they have not proceeded we must assume they think it's illegal (probably is) or that nobody wants to lend them the money.

[pantareiyingluck]

Pay the farmers with shares in the upcoming High Speed Railnetwork. By doing so YL makes a smart move and the farmers have great perspectives for them and their next generations.

[Dogmatix]

There is another solution - PTP gets elected on Feb 2 and shells out to cover its debts. Apparently nobody sees that as likely.

No.

[slapout]

Just my take on post 22, There is no monies to give the farmers from the 'rice program' (budgeted nor receipts from rice sale). Additional money must be borrowed to pay farmers for rice they have pledged and delivered (some dating back 6 months). .The Ag bank has only been repaid 180 billion vs 700 billion outlay. As per PTP (commerce Minister) the stored rice of record has decreased by 18 million tons during this same time frame. This would indicate a income of 10,000 baht/ton vs claim of 19,000/ton, OR possibly there was/is a huge amount of theft going on.

Now some may say the Ag bank and the EC are being made out the scapegoats by the caretaker government and their supporters. Others may say the officials involved were/are not aware of the status of the program. In my opinion those pointted to as scapegoats are probaly more astute than has been given credit to them.

[ratcatcher]

Pay the farmers with shares in the upcoming High Speed Railnetwork. By doing so YL makes a smart move and the farmers have great perspectives for them and their next generations.

Paying farmers from a non existent fund when there is no government seems a bit like asking for more trouble. As if PTP need that. Has Yingluck ever made a 'smart' move, except in her fashion accessories?

[Thai at Heart]

There is another solution - PTP gets elected on Feb 2 and shells out to cover its debts. Apparently nobody sees that as likely.

The farmers are waiting for payments that should have been made in the fall before the house was dissolved. Why weren't they paid then when there was no obstacle to making the payments? Was it incompetence, arrogance, or a sign that the government was in financial trouble?

Because it is not part of the main budgetary planning of the government. The money runs through the bank.

The story was always that it was to be self funding after the initial capital. Becuase of their fibs, the capital is sitting rotting in the warehouse so it needs fresh capital.for which there was no provision because the story has been a lie from the beginning.

It is not self funding and there are enormous losses. So need more cash. Whooooops