Rice-pledge catastrophe could be final straw for Thailand

[webfact]

OVERDRIVE
Rice-pledge catastrophe could be final straw for Thailand
Thanong Khanthong

BANGKOK: -- The caretaker Yingluck government has already technically defaulted by failing to pay the Bt130 billion owed since October to farmers under the rice-pledge scheme.

More than 200 farmers have asked the Lawyers' Council to represent them in a class action against the government. The farmers, the bottom rung in the Thai social hierarchy, are the creditors, the government the debtor. The rice pledge has become the Achilles' heel of the Yingluck government.

For this reason, caretaker Finance Minister Kittiratt Na Ranong is scrambling to raise Bt130 billion to pay the angry farmers, traditionally a political base of the ruling Pheu Thai Party. Farmers from several provinces, particularly in the North and Central regions, have blocked highways to protest against the government. Many of them have gone bankrupt and are having to rely on loan sharks to stay afloat. At least three farmers under the scheme have committed suicide. The farmers have also threatened to travel to Bangkok to join the mass rallies led by Suthep Thaugsuban. Both the farmers' plight and the Occupy Bangkok Movement have pushed Yingluck to the edge of the precipice.

Initially, Kittiratt kept the budget for the rice-pledging scheme at Bt500 billion. The money is channelled through the Bank for Agriculture and Agricultural Cooperatives, which acts as a go-between with the farmers. Once the farmers pledge their paddy, they receive a pledging document. With the document they can, in theory, claim their money at the Bank for Agriculture. The paddy goes to participating millers under the oversight of the Commerce Ministry. Proceeds from the sale of rice by the Commerce Ministry are supposed to be funnelled back to the Finance Ministry so that it has the liquidity to continue the rice-pledging scheme in the following harvest season.

Taken at face value, this populist policy designed to win farmers' votes is a fairy tale. The reality is that corruption is rampant in the rice-pledging scheme, which has extended its budget from Bt500 billion to more than Bt700 billion. Out of this, losses from both inefficiency and corruption are estimated at about Bt400 billion. So there was no money recycled back from the Commerce Ministry to start the fresh round of the scheme, which started last October. Kittiratt's Finance Ministry had never been prepared to raise the original Bt500-billion budget, hoping instead that the Commerce Ministry would send the proceeds from the rice sale, government-to-government deals or whatever, to keep the scheme alive. But the money never arrived.

As a result, the farmers who have pledged their paddy have not received any payment since October. When Premier Yingluck Shinawatra dissolved Parliament on December 9, she and her Cabinet forgot to approve a fresh budget for the rice pledge, which had been expanded due to failure of the Commerce Ministry to recycle the money back. Thus, it now has no money to pay to the farmers. In its reduced "caretaker" capacity, Kittiratt's Finance Ministry is constitutionally barred from borrowing money that would create obligations for the next government. Kittiratt has resorted to every means to come up the money to pay to the farmers. But he and others involved in attempts to secure the Bt130 billion risk violating the law.

Moody's and other rating agencies are keeping a close watch on the impact of the rice-pledging scheme on the Thai government's fiscal position. Moody's has already expressed concern that the scheme could hurt Thai public finances and affect the country's overall credit rating. Thailand's rating is now two notches above junk status. If its rating were to be downgraded, it would harm the country's public and private finances, as the cost of borrowing would rise sharply. And since the government has already technically defaulted on its debt to farmers, there is a risk that Thailand's credit rating could be compromised. With the US Federal Reserve having just tapered its quantitative easing programme by another $10 billion to $65 billion a month, interest rates are likely to rise and the emerging markets will be targeted for sell-offs.

The rice-pledging fiasco has added salt to Thailand's wounds at a time when it is already facing a full-blown political crisis and global financial crisis.


-- The Nation 2014-01-31

[EricBerg]

What was that word again? Thaksonomics? Thaksinomics? I wonder if there'll be a Nobel prize for it.

Edited January 30, 2014 by EricBerg

[tom21]

cancel the rice pledge then cancel the subsidy on diesel to pay what's owing. problem solved. the rots that follow will be interesting

[millwall_fan]

Remember that this article is from the hopelessly biased 'Nation'. The problem is that the EC wont let the government borrow the money it needs to pay the farmers.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming. Once the government is returned to power taxing the rich more and collecting taxes that are due (tax evasion here is worse than Greece) should seal the hole in the coffers.

The corruption is lamentable, but this scheme has resulted in a major redistribution of wealth. For too long the Isaan and Lanna have been the rice baskets for Bangkok and its source of cheap exploitable labour. This is changing and Sutheps patrons dont like it.

Edited January 31, 2014 by millwall_fan

[zydeco]

Remember that this article is from the hopelessly biased 'Nation'. The problem is that the EC wont let the government borrow the money it needs to pay the farmers.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming. Once the government is returned to power taxing the rich more and collecting taxes that are due (tax evasion here is worse than Greece) should seal the hole in the coffers.

The corruption is lamentable, but this scheme has resulted in a major redistribution of wealth. For too long the Isaan and Lanna have been the rice baskets for Bangkok and its source of cheap exploitable labour. This is changing and Sutheps patrons dont like it.

This sounds like the economic model hatched in the mind of Robert Mugabe.

[whybother]

Remember that this article is from the hopelessly biased 'Nation'. The problem is that the EC wont let the government borrow the money it needs to pay the farmers.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming. Once the government is returned to power taxing the rich more and collecting taxes that are due (tax evasion here is worse than Greece) should seal the hole in the coffers.

The corruption is lamentable, but this scheme has resulted in a major redistribution of wealth. For too long the Isaan and Lanna have been the rice baskets for Bangkok and its source of cheap exploitable labour. This is changing and Sutheps patrons dont like it.

The government should have budgeted for this payment BEFORE they called an election. The payments have been outstanding since October, before the EC were even involved.

Sent from my phone ...

[Siripon]

Remember that this article is from the hopelessly biased 'Nation'. The problem is that the EC wont let the government borrow the money it needs to pay the farmers.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming. Once the government is returned to power taxing the rich more and collecting taxes that are due (tax evasion here is worse than Greece) should seal the hole in the coffers.

The corruption is lamentable, but this scheme has resulted in a major redistribution of wealth. For too long the Isaan and Lanna have been the rice baskets for Bangkok and its source of cheap exploitable labour. This is changing and Sutheps patrons dont like it.

Issan booming has nothing to do with this scheme.

How many rai of rice farmland do you think the average Issan family has?

I would say not more than 15 judging from my subdistrict and village.

That's per family so we are talking about 4 or 5 people.

How much rice of those 15 rai will they sell after their own consumption?

Maybe 5.

Assuming they get the 15,000 baht,(unlikely at the mill, more likely 12,000 or 13,000 baht max) they will benefit from the scheme (assuming market price of 8,000 baht) to the tune of 35,000 baht per year per family absolute maximum, and assuming 15 rai.

Remember Issan only has one crop per year.

The people who really benefit from the rice scheme are not the poor but those farmers with 50, 100, 200 rai and especially those from the central plains who can grow rice all year round, 3 crops.

Many say the real aim of this scheme was to win those constituencies in central Thailand that Pheua Thai didn't possess, 'the helping the poor farmer' was just a convenient tag to sound caring.

[Bcgardener]

It would have been better to have let market forces do as they will with rice prices and just pay a fixed subsidy direct to the farmers. It's still vote buying but at least it would have been more controllable. Looking at the way most of my Issan staff conduct themselves, it would probably be spent on whisky, gambling and cigarettes anyway.

Sent from my GT-I9500 using Thaivisa Connect Thailand mobile app

[Tatsujin]

Remember that this article is from the hopelessly biased 'Nation'. The problem is that the EC wont let the government borrow the money it needs to pay the farmers.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming. Once the government is returned to power taxing the rich more and collecting taxes that are due (tax evasion here is worse than Greece) should seal the hole in the coffers.

The corruption is lamentable, but this scheme has resulted in a major redistribution of wealth. For too long the Isaan and Lanna have been the rice baskets for Bangkok and its source of cheap exploitable labour. This is changing and Sutheps patrons dont like it.

As always, the pro-Govt supporters blame everyone else but themselves. The problems with this Rice Scam, the lack of money, all were in place prior to anyone else getting involved, so there is no way you can lay this at the door of the EC or the protestors. If PT had planned ahead, they could have borrowed the money prior to dissolving the House. They could still talk to the EC and CC and the protestors right now to come up with an interim solution agreeable to all, but guess what, they don't talk to anyone and they don't compromise. Take your head out of the sand and lay blame where it really belongs . . . blame them, not the EC.

[bangkokheat]

disgusting filthy behavior from all the corrupt siphoning money leading to farmers bankruptcy and suicide, so many families must be destitute, is there any morals or heart for your own people, best way to deal with these leaches is to freeze there accounts to bring them to a level that they helped create for the farmers, i spit on you

[dcutman]

Remember that this article is from the hopelessly biased 'Nation'. The problem is that the EC wont let the government borrow the money it needs to pay the farmers.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming. Once the government is returned to power taxing the rich more and collecting taxes that are due (tax evasion here is worse than Greece) should seal the hole in the coffers.

The corruption is lamentable, but this scheme has resulted in a major redistribution of wealth. For too long the Isaan and Lanna have been the rice baskets for Bangkok and its source of cheap exploitable labour. This is changing and Sutheps patrons dont like it.

I guess you missed the other thread, about no banks including all the state banks, are not willing to lend this govt any money. So I guess it really their fault the farmers are not going get paid.

If this scheme is a major distribution in wealth to the poor, why are the farmers still living season to season with no money saved for any unforeseen hard times?

Edited January 31, 2014 by dcutman

[Scamper]

The rice scheme is indeed a catastrophe which exposes every aspect of the Yingluck administration's attitude towards governance. And the attempts to secure the money now - in the midst of not having the power of parliament - are profoundly criminal.

[jaidam]

That this government can't even pay the farmers for their rice makes the government's leader over in Dubai's claim that his govt sent money overseas to him to the tune of 30,000,000,000 in october last year even more sickening. Although if the farmers really do love him as much as his fans on this forum have us believe, maybe they are happy for him that his wealth has skyrocketed by 450% in the last year thanks to him trousering their rice money. No doubt a huge consolation to them. A less kind person could consider it as fools getting exactly what they deserve

[millwall_fan]

Remember that this article is from the hopelessly biased 'Nation'. The problem is that the EC wont let the government borrow the money it needs to pay the farmers.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming. Once the government is returned to power taxing the rich more and collecting taxes that are due (tax evasion here is worse than Greece) should seal the hole in the coffers.

The corruption is lamentable, but this scheme has resulted in a major redistribution of wealth. For too long the Isaan and Lanna have been the rice baskets for Bangkok and its source of cheap exploitable labour. This is changing and Sutheps patrons dont like it.

Issan booming has nothing to do with this scheme.

How many rai of rice farmland do you think the average Issan family has?

I would say not more than 15 judging from my subdistrict and village.

That's per family so we are talking about 4 or 5 people.

How much rice of those 15 rai will they sell after their own consumption?

Maybe 5.

Assuming they get the 15,000 baht,(unlikely at the mill, more likely 12,000 or 13,000 baht max) they will benefit from the scheme (assuming market price of 8,000 baht) to the tune of 35,000 baht per year per family absolute maximum, and assuming 15 rai.

Remember Issan only has one crop per year.

The people who really benefit from the rice scheme are not the poor but those farmers with 50, 100, 200 rai and especially those from the central plains who can grow rice all year round, 3 crops.

Many say the real aim of this scheme was to win those constituencies in central Thailand that Pheua Thai didn't possess, 'the helping the poor farmer' was just a convenient tag to sound caring.

I have agreed that the corruption is lamentable and I'm quite sure that winning seats in the central plains figured in PT's thinking - the same as it would anywhere in the world - government spending in 'marginal constituencies' is often higher than elsewhere.

However, even using your own homespun economics, if each farmer earned the extra 35,000 you suggest, how many of those small farmers are there in the Isaan? 1m, 2m? that in itself means another 35 - 70 bn baht going into the Isaan economy that wasn't there before. Now maybe you can begin to see how important this scheme is in redistributing wealth.

[Crushdepth]

Remember that this article is from the hopelessly biased 'Nation'. The problem is that the EC wont let the government borrow the money it needs to pay the farmers.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming. Once the government is returned to power taxing the rich more and collecting taxes that are due (tax evasion here is worse than Greece) should seal the hole in the coffers.

The corruption is lamentable, but this scheme has resulted in a major redistribution of wealth. For too long the Isaan and Lanna have been the rice baskets for Bangkok and its source of cheap exploitable labour. This is changing and Sutheps patrons dont like it.

Are you crazy? This scheme has done NOTHING to improve the financial stability of farmers it is PUTTING THEM OUT OF BUSINESS.

The 'redistribution of wealth' you mention has been from poor rural farmers into the pockets of the corrupt politicians and their minions overseeing the scheme.

This scheme was broadly condemned as economically retarded before it had even launched.

[kingalfred]

Remember that this article is from the hopelessly biased 'Nation'. The problem is that the EC wont let the government borrow the money it needs to pay the farmers.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming. Once the government is returned to power taxing the rich more and collecting taxes that are due (tax evasion here is worse than Greece) should seal the hole in the coffers.

The corruption is lamentable, but this scheme has resulted in a major redistribution of wealth. For too long the Isaan and Lanna have been the rice baskets for Bangkok and its source of cheap exploitable labour. This is changing and Sutheps patrons dont like it.

you are something else."It's a failed policy"SFA to do with "redistribution".Back to the Den with that other MW comedian Danny Baker

Sent from my iPhone using Thaivisa Connect Thailand mobile app

[LuckyLew]

Why should they be allowed to borrow more money? they have no means to repay it

I cannot go to the bank and borrow a million if I have no means to pay it back

I fell sorry for the farmers but the trusted a false prophet ... so mai pen rai to them

If anything DSI should freeze all the assets of Gov't officials and chuck the lot in jail

Anyone with half a brain knows the Gov't is culpable of mass gaft ... give their ill gotten gains to the farmers

[Suriya4]

That this government can't even pay the farmers for their rice makes the government's leader over in Dubai's claim that his govt sent money overseas to him to the tune of 30,000,000,000 in october last year even more sickening. Although if the farmers really do love him as much as his fans on this forum have us believe, maybe they are happy for him that his wealth has skyrocketed by 450% in the last year thanks to him trousering their rice money. No doubt a huge consolation to them. A less kind person could consider it as fools getting exactly what they deserve

There is no reason why rich Thai's tax money should be re-distributed to the poor rice farmer at all.

In fact, to be fair to all tax payer, a new tax is needed to tax 15% of all agriculture produce, especially rice.

They should learn what supply & demand is, and plan their crop accordingly.

[notmyself]

Remember that this article is from the hopelessly biased 'Nation'. The problem is that the EC wont let the government borrow the money it needs to pay the farmers.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming. Once the government is returned to power taxing the rich more and collecting taxes that are due (tax evasion here is worse than Greece) should seal the hole in the coffers.

The corruption is lamentable, but this scheme has resulted in a major redistribution of wealth. For too long the Isaan and Lanna have been the rice baskets for Bangkok and its source of cheap exploitable labour. This is changing and Sutheps patrons dont like it.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming.

You do understand this is via debt right?

[Bluespunk]

Remember that this article is from the hopelessly biased 'Nation'. The problem is that the EC wont let the government borrow the money it needs to pay the farmers.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming. Once the government is returned to power taxing the rich more and collecting taxes that are due (tax evasion here is worse than Greece) should seal the hole in the coffers.

The corruption is lamentable, but this scheme has resulted in a major redistribution of wealth. For too long the Isaan and Lanna have been the rice baskets for Bangkok and its source of cheap exploitable labour. This is changing and Sutheps patrons dont like it.

BANGKOK: -- The caretaker Yingluck government has already technically defaulted by failing to pay the Bt130 billion owed since October to farmers under the rice-pledge scheme.

Since October being the key words.

Also the EC did not block payment or raising a loan. They said its illegal and if govt wanted to do it they could, but PT were responsible for any legal action that could follow.

[noikrit]

Tragically 3 Thai Farmers have taken their lives SO FAR because of this SHIN RICE SCAM !!! Not to mention the hardship on so many other Families that may not have even voted for this Criminal On the Run in Dubai ........ How about sending over some compensation Cheques MISTER ELITE IN DUBAI !!! ....... Pathetic ! .........

[focus27]

Remember that this article is from the hopelessly biased 'Nation'. The problem is that the EC wont let the government borrow the money it needs to pay the farmers.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming. Once the government is returned to power taxing the rich more and collecting taxes that are due (tax evasion here is worse than Greece) should seal the hole in the coffers.

The corruption is lamentable, but this scheme has resulted in a major redistribution of wealth. For too long the Isaan and Lanna have been the rice baskets for Bangkok and its source of cheap exploitable labour. This is changing and Sutheps patrons dont like it.

The government should have budgeted for this payment BEFORE they called an election. The payments have been outstanding since October, before the EC were even involved.

Sent from my phone ...

Agreed. Forget all the other sh!t for one moment - I know it's not easy - but this is absolutely of the government's own doing and astronomically incompetent.

BTW not all farmers are poor; some do very nicely indeed - or would have done - and some wealthy landowners are definitely not in the redshirt camp. Having said that, those irresponsible for this mess deserve the full weight of law to descend upon them from a great height.

[casualbiker]

cancel the rice pledge then cancel the subsidy on diesel to pay what's owing. problem solved. the rots that follow will be interesting

According to reports the scheme HAS been canceled for the new crop year!

Sent from my XT1032 using Thaivisa Connect Thailand mobile app

[Mosha]

Remember that this article is from the hopelessly biased 'Nation'. The problem is that the EC wont let the government borrow the money it needs to pay the farmers.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming. Once the government is returned to power taxing the rich more and collecting taxes that are due (tax evasion here is worse than Greece) should seal the hole in the coffers.

The corruption is lamentable, but this scheme has resulted in a major redistribution of wealth. For too long the Isaan and Lanna have been the rice baskets for Bangkok and its source of cheap exploitable labour. This is changing and Sutheps patrons dont like it.

Why didn't they pay in October?

[asdecas]

Congratulations to The Nation for an article in English that can actually be read and understood, a rarity from the august rag these days.

[lovetotravel]

Remember that this article is from the hopelessly biased 'Nation'. The problem is that the EC wont let the government borrow the money it needs to pay the farmers.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming. Once the government is returned to power taxing the rich more and collecting taxes that are due (tax evasion here is worse than Greece) should seal the hole in the coffers.

The corruption is lamentable, but this scheme has resulted in a major redistribution of wealth. For too long the Isaan and Lanna have been the rice baskets for Bangkok and its source of cheap exploitable labour. This is changing and Sutheps patrons dont like it.

Why didn't they pay in October?

Too busy working on the amnesty bill.

[worgeordie]

The rice pledging scams, credit cards for farmers, Etc Etc, is

all vote buying with the tax payers money.

Populist policies can never be good for the country,thats why

you never really see it practiced in civilized countries,promise

people the Earth and you will always get the most votes,but

what happens afterwards cannot be sustained,its short sighted

and no good for the country.

regards Worgeordie

[dude123]

That this government can't even pay the farmers for their rice makes the government's leader over in Dubai's claim that his govt sent money overseas to him to the tune of 30,000,000,000 in october last year even more sickening. Although if the farmers really do love him as much as his fans on this forum have us believe, maybe they are happy for him that his wealth has skyrocketed by 450% in the last year thanks to him trousering their rice money. No doubt a huge consolation to them. A less kind person could consider it as fools getting exactly what they deserve

Is there any foundation to your claims about Thaksin recieving 30 Billion Baht last year? Just wondering where you read that.

[LarryBird]

It would have been better to have let market forces do as they will with rice prices and just pay a fixed subsidy direct to the farmers. It's still vote buying but at least it would have been more controllable. Looking at the way most of my Issan staff conduct themselves, it would probably be spent on whisky, gambling and cigarettes anyway.

Sent from my GT-I9500 using Thaivisa Connect Thailand mobile app

Exactly. I don't see why they haven't punted on the whole thing and just sold the rice by now.

[trogers]

Remember that this article is from the hopelessly biased 'Nation'. The problem is that the EC wont let the government borrow the money it needs to pay the farmers.

However much has been syphoned off in corrupt payments, the scheme has let to financial stability for farmers (until now) and the Isaan economy is booming. Once the government is returned to power taxing the rich more and collecting taxes that are due (tax evasion here is worse than Greece) should seal the hole in the coffers.

The corruption is lamentable, but this scheme has resulted in a major redistribution of wealth. For too long the Isaan and Lanna have been the rice baskets for Bangkok and its source of cheap exploitable labour. This is changing and Sutheps patrons dont like it.

Why didn't they pay in October?

Too busy working on the amnesty bill.

More likely PT thought that they could hide the large cash shortfall of the rice scam using monies from the water management (Bt350b) and the mega-infrastructure (Bt2.2t).

These were pushed and passed around this time period, but both had to be put on hold due to legal challenges.