Thai talk: Why is govt stuck in the mud over rice-pledging scheme?

[webfact]

THAI TALK
Why is govt stuck in the mud over rice-pledging scheme?
Suthichai Yoon
The Nation

BANGKOK: -- Someone in the newsroom posed a very simple question on a subject undermining the caretaker government to the point of near collapse: Can the Yingluck caretaker government pay farmers under the rice-pledging scheme?

Somebody immediately responded: "Yes. Payments could be made to farmers because it would be a continuation of a policy adopted by the government."

Somebody else added: "It depends on how the interim government goes about doing it. If it has to make new loans to pay, permission must first be sought from the Election Commission. Check Article 181 of the Constitution. If it falls under that clause, it can't be done."

Article 181 says that a caretaker government cannot take actions that result in approving activities or projects that could be seen as binding commitments on the new Cabinet after the election.

The government was channeling its payments to farmers under this project through the Bank of Agriculture and Agricultural Cooperatons (BAAC), a government financial institution, before the House dissolution.

It ran into a liquidity problem because the government had asked the bank to pay out in advance. Once the limit was reached, the bank halted the payments. That's when the BAAC labour union smelled something fishy - and came out in public to protest.

Someone else in the newsroom chipped in with to explain that the BAAC could have extended the advance payments for farmers on behalf of the government but an official Cabinet endorsement would be required - and the BAAC would have asked the Finance Ministry where the refund would come from.

In the past, the BAAC had gone along with government requests for such advances, but this time around the ministry wasn't clear how it would repay the bank.

For this year's paddy crop, the government had set a budget of Bt270,000 million for the scheme. The real pay-out was to be Bt400,000 million. The shortfall of Bt130,000 million was what the government's "credit crisis" was all about.

There wouldn't have been a problem if the Commerce Ministry could sell part of the mountain of paddy stock. But that became an uphill task - for the simple reason that the government had bought paddy from farmers at a price much higher than the market average. And even when the ministry tried to get friendly governments to sign "government-to-government" deals to deflate criticism, it failed miserably. There were some diplomatically polite gestures from some governments, but when they sat down to discuss the price, none of the proposed deals could be sealed.

And when it tried to manipulate things, the Commerce Ministry screwed up. The previous Commerce minister is under investigation by the Anti-Corruption Commission for accusations that he was responsible for faking a "g-to-g" deal with Guangdong Stationery & Sporting Foods Import & Export Corp (GSSG) and Hainan Grain & Oil Industrial Trading Company of China.

Then, another Chinese firm, Heilongjiang Beidahuang Rice Industry Group, was said to have signed another "g-to-g" deal. Last week, the Commerce Ministry confirmed that the firm had cancelled the contract due to Thailand's domestic changes.

Neither deal, however, could be considered a genuine "g-to-g" contract since it is well known that the Chinese government would consider any deal a government-to-government transaction only if it is done through its national state enterprise for this purpose - COFCO.

COFCO does have a five-year contract to buy 200,000 tonnes of rice yearly. Another deal was to be signed on December 15, last year, for a two-year special offer to buy one million tonnes each year after Premier Li Keqiang's visit last year. The draft agreement mentioned the Thai government's readiness to give priority consideration to China's participation in the country's high-speed train project - and Beijing's agreement to receive agricultural products as part of the payment for that service.

But the signing never took place because of the House dissolution.

Why the Yingluck government has never come clean with the Thai public about the "official government-to-government rice deals" with China remains a mystery. It is clear, however, that not even the most powerful country in the world can come to the rescue of a government determined to commit political suicide through extreme populist policies.


-- The Nation 2014-02-13

[TVGerry]

The scam ran into liquidity problems mainly because the 2 trillion baht infrastructure loan was stopped and they couldn't misuse those funds to pay the farmers.

The Shinawatras still insist on defending this scam and carrying on with it. I guess admitting it's a failure would look bad when they're in court defending themselves on corruption charges and malfeasance.

[xtof2]

Thanks for the explanations.

Well, assuming that this article from the Nation is mot full of crap !?

[millwall_fan]

If the Bank of Thailand had enacted fiscal measures to reduce the value of the Baht when finance minister Kittirat Na Ranong asked them to do so, Thai rice wouldn't be overpriced in the international market. The bank, ruling elite members to a man, refused because their mates in the Ruling Elite were strutting around the worlds financial stags with bulging wallets bloated by the strong baht, buying up stocks and companies. For all the corruption in the rice scheme, it has been a major factor in the growth of the Isaan economy, which has pissed off the ruling elite because now they have to go to Burma to find room maids and gardeners as less Isaan people want these poorly paid servile jobs. But one wouldn't expect The Nation to print reports like that.

[carbine1125]

If the Bank of Thailand had enacted fiscal measures to reduce the value of the Baht when finance minister Kittirat Na Ranong asked them to do so, Thai rice wouldn't be overpriced in the international market. The bank, ruling elite members to a man, refused because their mates in the Ruling Elite were strutting around the worlds financial stags with bulging wallets bloated by the strong baht, buying up stocks and companies. For all the corruption in the rice scheme, it has been a major factor in the growth of the Isaan economy, which has pissed off the ruling elite because now they have to go to Burma to find room maids and gardeners as less Isaan people want these poorly paid servile jobs. But one wouldn't expect The Nation to print reports like that.

Oh how Millwall must be missing you and your silver tongue!

[trogers]

If the Bank of Thailand had enacted fiscal measures to reduce the value of the Baht when finance minister Kittirat Na Ranong asked them to do so, Thai rice wouldn't be overpriced in the international market.

Devaluing a country's currency just to sell rice? With rice at 40% above market price, the Baht has to be at least 46 to US$1 to bring prices on par.

And what will become of the cost of living for everybody, farmers included?

Which sane country in the world devalues its currency for political reasons?

[howzat]

The Government basic house keeping is crap because of the corruption and government ministers skimming the money for their own selfish means.

Simply they have the cash to pay or they don't. Basically Yingluck and her band of motley fools are a boiler room scam and only the foolish would invest in it.

Can anyone explain why they want to borrow trillions of baht to improve infrastructure when they don't have the money to even pay the farmers.

I think the answer is obvious. Some of these fools have never had a proper job other then being a "politician" so where doers all their wealth come from.

Any one can tell me?

[onlycw]

They could be selling the 14 m or 18 m (Telegraph, a UK newspaper) tons pdq, pretty darn quickly. It's a declining asset.

And the whole stinking mess was predictable, including the rampant smuggling of rice from neighboring countries.

"The government" handling anything doesn't bode well. Be that schools or getting quality government housing.

At my school, they installed amplifiers in every classroom for 6,500 B. Alas, the power outlets are total crap, so the plugs fall out or don't connect properly. Or the necessary cinch cables aren't there - a 100 B items renders the whole apparatus worthless.

At one school, they had more than a dozen (!) servers and 5 technicians. Possibly one or two engineers. and ToT had an office at the school as well.

But reliable wifi? Forget it! Internet at the English Department? (A <700 Baht ADSL contract with 3BB would have powered the few PCs in our office). No way. But the cost for this absurd theater was a 7-digit amount per annum! (And I would love to see the electricity bill for the servers in a rack up to the ceiling).

A private business would have taken corrective measures, including an immediate STOP to buying up rice they cannot pay for.

Surely, someone noticed that they would run out of cash soon - that was many months ago!

Maybe they can cancel the scheme now, so that all the farmers can prepare to sell their rice on the market.

[Ricardo]

If the Bank of Thailand had enacted fiscal measures to reduce the value of the Baht when finance minister Kittirat Na Ranong asked them to do so, Thai rice wouldn't be overpriced in the international market.

Aren't you assuming that Thai rice-exports are priced in Baht, rather than US$ ?

I would suggest that, if world-prices (and Thai-government export-prices) are in dollars like most other competing countries, then an over-strong Baht would just reduce the Baht-prices upon conversion, increasing the government's Baht-losses within the scheme but not impacting the export-price achieved.

Of course they wouldn't wish to see such massive-losses locked-in, for fear that someday they might be held accountable, so might understandably try to hold out for a higher dollar-price, thus losing the customer to other sources-of-supply.

The Great Thinker not having thought to assemble a supplier-cartel/consensus, to push up world rice-prices, at that point. He hoped it would happen, he gambled that it would happen, but he did nothing to actually ensure that it would happen.

But hey, it's only (largely-borrowed) public-money, so who cares, until the agreed borrowing-limits & budgeted-loss-limits are reached, as they now appear to have done.

Time to pay the piper farmer ! Now, who can we try to lay-off the blame onto, for the default ? Oh, hello Suthep !

Edited February 13, 2014 by Ricardo

[Yunla]

The Family do have enormous funds, and imho sources of plenty more funds internationally should they need it. They could certainly repay the farmers using The Family's own wealth, but this would require honesty, compassion, humility etc. But they are tighter than an astronaut's helmet. Its all pull and push, without any give. That is what makes this whole scam an act of Oppression (with a capital O) because the money is stolen from the poorest by the very richest. Roast goat isn't that expensive, I'm sure a certain somebody could open his purse now and still retain his Dune-Cred.

Edited February 13, 2014 by Yunla

[spirit47]

The strong Bath is a little part of the whole mismanagement, and the bank of Thailand was too late acting in the market. The main problem in the rice-pledging scheme was the fact, that Taksin thought he can control the market, and this in a time, where it was well known, that India have some over production too. Than the difference to the world market price was much to high, and it was childish, to stockpile more and more rice. Taksin is not the brilliant business man how it look, he grow up, when he can corrupt politicans in the past, so hes a real product of the Thai Elite.

[worgeordie]

Its a good job we don't run our households or business like

the Government runs this country,common sense never came

into it at all, lets buy up a product at 50% more than the market

value,we can store it (never mind the cost or shrinkage),and

corner the World market,a huge gamble and complete stupidity,

but no problem its tax payers money.

regards Worgeordie

[mightyatom]

If the Bank of Thailand had enacted fiscal measures to reduce the value of the Baht when finance minister Kittirat Na Ranong asked them to do so, Thai rice wouldn't be overpriced in the international market. The bank, ruling elite members to a man, refused because their mates in the Ruling Elite were strutting around the worlds financial stags with bulging wallets bloated by the strong baht, buying up stocks and companies. For all the corruption in the rice scheme, it has been a major factor in the growth of the Isaan economy, which has pissed off the ruling elite because now they have to go to Burma to find room maids and gardeners as less Isaan people want these poorly paid servile jobs. But one wouldn't expect The Nation to print reports like that.

Just goes to prove you know absolutely nothing.

You talk like a text book, yet you don't know your arse from your elbow.

Personally I live in Isaan and if I need a maid, I have about 30 lining up for the job.

You know nothing about Isaan. I own land here, I can tell you now, right throughout this scam, there is mass shortage of economical wealth here.

You need to get away from your PC and take a look for yourself/

Sheesh.

[mic6ard]

If the Bank of Thailand had enacted fiscal measures to reduce the value of the Baht when finance minister Kittirat Na Ranong asked them to do so, Thai rice wouldn't be overpriced in the international market.

Devaluing a country's currency just to sell rice? With rice at 40% above market price, the Baht has to be at least 46 to US$1 to bring prices on par.

And what will become of the cost of living for everybody, farmers included?

Which sane country in the world devalues its currency for political reasons?

It was crazy enough that the gov't tried to bring up the price by holding out on rice sales, unfortunately that opened the door for India, Vietnam, etc to sell more rice.

And M_f think that devalue the currency is a good idea? Helping growth of Issan farmers? LMFAO

devaluation on the currency won't do a thing to help them. It'll actually make them poorer, 100baht = 75baht (in buying power). and the economy would tumble back to 1997 when the currency value hit rock bottom.

[mikebell]

'You know nothing about Isaan. I own land here, I can tell you now, right throughout this scam, there is mass shortage of economical wealth here.'

Are you Thai?

[Bakseeda]

If the Bank of Thailand had enacted fiscal measures to reduce the value of the Baht when finance minister Kittirat Na Ranong asked them to do so, Thai rice wouldn't be overpriced in the international market. The bank, ruling elite members to a man, refused because their mates in the Ruling Elite were strutting around the worlds financial stags with bulging wallets bloated by the strong baht, buying up stocks and companies. For all the corruption in the rice scheme, it has been a major factor in the growth of the Isaan economy, which has pissed off the ruling elite because now they have to go to Burma to find room maids and gardeners as less Isaan people want these poorly paid servile jobs. But one wouldn't expect The Nation to print reports like that.

Words are cheap..... Isaan has no economy... all subsidised by the good tax-payers of Bangkok..

[rogerdee123]

If the Bank of Thailand had enacted fiscal measures to reduce the value of the Baht when finance minister Kittirat Na Ranong asked them to do so, Thai rice wouldn't be overpriced in the international market. The bank, ruling elite members to a man, refused because their mates in the Ruling Elite were strutting around the worlds financial stags with bulging wallets bloated by the strong baht, buying up stocks and companies. For all the corruption in the rice scheme, it has been a major factor in the growth of the Isaan economy, which has pissed off the ruling elite because now they have to go to Burma to find room maids and gardeners as less Isaan people want these poorly paid servile jobs. But one wouldn't expect The Nation to print reports like that.

absolute crock of sh_t .. .....

[Soutpeel]

'You know nothing about Isaan. I own land here, I can tell you now, right throughout this scam, there is mass shortage of economical wealth here.'

Are you Thai?

The exact thought occured to me as well....if not Thai then how is the poster owning land ? unless illegally by proxy of course

[Scamper]

Essentially, the Yingluck administration has been undone by two key things - both demonstrably incompatible with each other - corruption and incompetence.

[Baerboxer]

If the Bank of Thailand had enacted fiscal measures to reduce the value of the Baht when finance minister Kittirat Na Ranong asked them to do so, Thai rice wouldn't be overpriced in the international market. The bank, ruling elite members to a man, refused because their mates in the Ruling Elite were strutting around the worlds financial stags with bulging wallets bloated by the strong baht, buying up stocks and companies. For all the corruption in the rice scheme, it has been a major factor in the growth of the Isaan economy, which has pissed off the ruling elite because now they have to go to Burma to find room maids and gardeners as less Isaan people want these poorly paid servile jobs. But one wouldn't expect The Nation to print reports like that.

absolute crock of sh_t .. .....

Indeed. Wonder where he got his free lessons in Thaksinomics? Probably from the same lot who told him its the BoT's fault, Suthep's fault, protester's fault, farang's fault, anybody's fault but can't possible be the PTP or the inherent corruption and mismanagement to blame. No sir, this is a good scheme. World Bank, IMF, Bloomberg, Moody's know nothing. This scheme would work great without all those saboteurs

[tingtongteesood]

The scam ran into liquidity problems mainly because the 2 trillion baht infrastructure loan was stopped and they couldn't misuse those funds to pay the farmers.

The Shinawatras still insist on defending this scam and carrying on with it. I guess admitting it's a failure would look bad when they're in court defending themselves on corruption charges and malfeasance.

+1

[tingtongteesood]

Thanks for the explanations.

Well, assuming that this article from the Nation is mot full of crap !?

No, the Nation is a good newspaper, just the red sheeple don't like it because it tell too much truth. You on the other hand, you may well be full of.... Welcome to the forum anyhow.

[tingtongteesood]

If the Bank of Thailand had enacted fiscal measures to reduce the value of the Baht when finance minister Kittirat Na Ranong asked them to do so, Thai rice wouldn't be overpriced in the international market. The bank, ruling elite members to a man, refused because their mates in the Ruling Elite were strutting around the worlds financial stags with bulging wallets bloated by the strong baht, buying up stocks and companies. For all the corruption in the rice scheme, it has been a major factor in the growth of the Isaan economy, which has pissed off the ruling elite because now they have to go to Burma to find room maids and gardeners as less Isaan people want these poorly paid servile jobs. But one wouldn't expect The Nation to print reports like that.

And this guy is absolutely full of.....

[LeamchabangLarry]

The convenient dissappearence of Pipkins and ShannonT from this thread is dually noted. It also speaks volumes on their nonsense troll rhetoric.

[bigbamboo]

Not so much stuck in the mud as entangled in their own web of deceit.

[millwall_fan]

If the Bank of Thailand had enacted fiscal measures to reduce the value of the Baht when finance minister Kittirat Na Ranong asked them to do so, Thai rice wouldn't be overpriced in the international market. The bank, ruling elite members to a man, refused because their mates in the Ruling Elite were strutting around the worlds financial stags with bulging wallets bloated by the strong baht, buying up stocks and companies. For all the corruption in the rice scheme, it has been a major factor in the growth of the Isaan economy, which has pissed off the ruling elite because now they have to go to Burma to find room maids and gardeners as less Isaan people want these poorly paid servile jobs. But one wouldn't expect The Nation to print reports like that.

Just goes to prove you know absolutely nothing.

You talk like a text book, yet you don't know your arse from your elbow.

Personally I live in Isaan and if I need a maid, I have about 30 lining up for the job.

You know nothing about Isaan. I own land here, I can tell you now, right throughout this scam, there is mass shortage of economical wealth here.

You need to get away from your PC and take a look for yourself/

Sheesh.

You own land in the Isaan? Are you sure it isn't your wife that owns the land? Or a quasi-legal nominee company? That being the case, it isnt me that knows 'absolutely nothing'