Thai govt searches for ways to pay rice farmers

[webfact]

RICE
Govt searches for ways to pay rice farmers
Sasithorn Ongdee
The Nation

BANGKOK: -- The Yingluck Shinawatra government may have dried the tears of a few cash-strapped farmers when she vowed to pay them off today, but her administration is still struggling to find ways to secure at least Bt130 billion legally.

Over the past week, some of the methods the caretaker government is using to seek funds to pay the farmers what they are owed under the rice-pledging scheme have surfaced.

These ways are separate from the Commerce Ministry's accelerating sales of rice from the state's stocks, expected to reach almost 20 million tonnes.

First, a group of rice millers in Nakhon Ratchasima showed up with the intention to help farmers by taking out loans from banks for them. The banks would lend to the millers so that the millers could lend to the farmers. The millers would use their credit standing to back the loans from the banks while keeping the farmers' pledging receipts as collateral.

The farmers would receive some money, though this would be part of the total value of their pledging receipts; for example, Bt50,000 out of Bt100,000 if they are extended loans at 50 per cent of the pledging receipt.

Second, millers are being offered loans to buy rice from the government. State-owned Krungthai Bank circulated a letter dated Wednesday saying it would extend credit to millers and packers interested in joining the Commerce Ministry's rice auction. The bank said this is a normal lending service.

Deputy Finance Minister Benja Louicharoen on Thursday said the ministry had come up with a conclusion on loans in an effort to pay the farmers. Part of the loans would come from the Bank for Agriculture and Agricultural Cooperatives (BAAC).

The Finance Ministry was also reportedly securing funds to pay unpaid farmers via the interbank market, in which the state-owned Government Savings Bank extends loans to the state-run BAAC. But the loan would be for Bt20 billion, much more than the usual Bt5 billion deal. The ministry then would issue a "letter of comfort" in confirmation that it would support the loan deal, a ministry source was cited as saying by Isranes Agency.

"The ministry expects to seek approval on this matter from the Cabinet meeting this week," the source said.

However, GSB president Worawit Chalimpamontri said on his Facebook page on Friday that he refused to lend to the BAAC for the rice-pledging scheme. He admitted that the bank had extended the loan to BAAC via the interbank market, but not for that purpose. The bank also hasn't received any letters of loan guarantees.

Former finance minister Thirachai Phuvanatnaranubala posted on his Facebook page on Friday that if the "comfort letter" was true, this meant the government is trying to avoid violating Article 181(3) of the Constitution. Under the law, a caretaker government is banned from creating any activities or transactions that could burden the next government unless the Election Commission (EC) gives it permission. But, the EC has declined to consider whether the government could obtain such loans as requested.

Normally, the Finance Ministry issues letters of guarantee to back loans made by state-run banks for the government's specific purposes.

"The letter of comfort is likely a letter for the government to show its intention to guarantee such a loan, which it cannot do now. When the government is out of being the caretaker, it will issue the letter of guarantee to back that loan," Thirachai cited in his page.

However, if the "comfort letter" is legally binding, the Cabinet might be accused of violating the law, Thirachai said. If it's not, claims for loan guarantee payments cannot be made. The blame might then be placed on the banks' boards of directors or those involved with the loan deals, instead of ministers.

Even though some of more than 1 million rice growers seem to enjoy a partial inflow of cash to ease their plight, that could happen in the short term. Considering the sales of rice from inventory, it would take some two years to earn as much as Bt130 billion. For those who cannot wait, they are likely to have a chance to face a "legal risk", however.


-- The Nation 2014-02-17

[notmyself]

Convoluted springs to mind.

[Robby nz]

Convoluted springs to mind.

And it get worse.

Reported elsewhere this morning that the GSB has approved 5 billion to help pay the farmers, apparently separate from the 20 billion which was to shore up the banks liquidity .

BUT, They will consider stopping the deal if people start withdrawing their money (public sentiment)

So in fact the BAAC has got, as far as I can see, 1 billion (less costs) from the last rice sale plus 5 billion (with strings) from the GSB to pay out today.

A Max of under 6 billion out of 130 billion.

BUT again, we are told the BAAC can only pay out 2 to 3 billion a week.

Happy farmers ? Not

[Thai at Heart]

Banking policy by facebook .

What a world....

[belg]

just an idea: why not the hell sell rice ? to pay for the riceberg ??????????

[jpeg]

Govt searches for ways to pay rice farmers

Does Dubai have a Western Union branch?

Edited February 17, 2014 by jpeg

[Baerboxer]

just an idea: why not the hell sell rice ? to pay for the riceberg ??????????

They'd love to - but can't find enough buyers willing to buy huge quantities.

The prices being offered reflect the likely poor quality and the fact the buyers know the government are desperate to sell. There's plenty of other source rice about so it really is a buyers market. The government would have to sell at a massive loss and face possible rejection issues when rice delivered.

The much touted "G2G" deals appear to have been somewhat exaggerated and are being probed by the NACC.

The plan was to get the 2.2 trillion loan and use some of that to pay the farmers.

All gone tits up now.

[Thaddeus]

Who will buy this wonderful morning.

Trying to sell daylight at noon.

Edited February 17, 2014 by Thaddeus

[Baerboxer]

Shouldn't they have been searching last August/September before and as payments they couldn't meet came up? Or were they pinning all their hopes on getting the 2.2 trillion loan as a cover all?

Dissolving the house has made a bad problem worse. Regardless of the questions of corruption being probed by the NACC, this really is inept and reckless management and almost certainly would be considered negligent in most countries. Any normal government would have resigned shame faced - but of course this is PTP.

[thaimat]

"The banks would lend to the millers so that the millers could lend to the farmers." This regime,in both present and previous incarnations, always does seem to find a way to get their supporters the farmers deeper in debt. Am sure it's coincidental.

[SOTIRIOS]

....this is money owed....way before the election.....the money was allocated...and....disappeared???

...why should 'the next government' be burdened....

...why should farmers be made to borrow....

[worgeordie]

Get on the phone to the big boss ,whose idea this rice scam was,and

may have been a beneficiary from it,if he loves Thailand and the poor

farmers so much he should have no problem giving something back

to the country and its people.

With all the money he has ,he is not know for his philanthropy,will use

other peoples money but not his own,he just looks to acquire more and

more through any means.

regards Worgeordie

[lostinsurin]

So this is where you are all hiding.

[kerrysum]

The logic behind this be-fuudles me.......

Hmmmmm give me your crops,

And I will make you rich?

IN my neck of the woods, here in the U.S.

Not much Thai rice in the local Thai stores........

the farmers had a choice of the rice millers,

and the government......

From what I have heard the rice-millers paid it,

So what is the problem with the Thai government????

Just a thought

[Old Man River]

....this is money owed....way before the election.....the money was allocated...and....disappeared???

...why should 'the next government' be burdened....

...why should farmers be made to borrow....

Good questions.

I will add to that:

Why does the government have to search for ways to pay the farmers when paying the farmers was a government program?

Sent from my iPad using Thaivisa Connect Thailand

Edited February 17, 2014 by Old Man River

[Robby nz]

Went past our local branch of the BAAC about an hour ago and the car park was full with some vehicles parked outside.

The people I saw coming out all had their papers with them but I didn't see and bundles of money.

One lady (farmer) who came out on a motorbike stopped and I asked her if she got any money, she laughed and shook her head, seems she didn't really expect any.

[Scamper]

What the Yingluck administration is doing is illegal and unconstitutional - no matter how you look at it - or how strenuously you try to channel Pheu Thai " thought ". The fiction that the government is plugging is that the unions of the BAAC are on board. That's a lie. They strenuously protest this. The fact is that this administration has no legislative power to delegate funds that are intended to go through a parliamentary-backed budgetary process. Period. Everything Pheu Thai are trying to do is to skirt around that. They are trying " letters of comfort " which are in violation of Article 181 ( 3 ). Pheu Thai's idea is by issuing a letter of comfort you are not assuming responsibility for issuing a direct, or official, or parliamentary appeal - which would be illegal. It apparently suggests " unofficially " that a loan be issued. But by guaranteeing the loan in the letter, the administration commits an unconstitutional act, as only a sitting parliamentary government can guarantee payment. Kittirat says that the guarantee is not " official ". But if it isn't, on whose behalf is the guarantee being pledged ? Who can guarantee a multi-billion baht loan ? Kittirat ? There is absolutely no way around it. No rounds of gin with Chalerm are going to haze over the pure illegality of the act. In this situation both the administration and the banks face legal consequences - because the banks too are sucked into Pheu Thai's illegal gambit.

" However, GSB president Worawit Chalimpamontri said on his Facebook page on Friday that he refused to lend to the BAAC for the rice-pledging scheme. He admitted that the bank had extended the loan to BAAC via the interbank market, but not for that purpose. The bank also hasn't received any letters of loan guarantees. "

This is what the Yingluck administration is doing. They are pitting one national institution against another by feeding them contrasting lines. It is both manipulative and illegal. And as the government just happens to be one of the parties involved, it is also unconstitutional. The diversion and channelling of funds through a collusion of deceit from one banking institution to the next is crooked. For anyone. And certainly for any government. There is no other way of describing it. It proposes not only to flaunt the constitution, but to do it in the clear light of day, in the full sight of all.

[ggold]

No wonder they (the government) couldn't get a bank loan! Their idea of how to pay back the loans is with other peoples money, basically an admission that they cant get the money so have to ask the millers to take out loans instead! so much for budget responsibility?

[Suriya4]

Went past our local branch of the BAAC about an hour ago and the car park was full with some vehicles parked outside.

The people I saw coming out all had their papers with them but I didn't see and bundles of money.

One lady (farmer) who came out on a motorbike stopped and I asked her if she got any money, she laughed and shook her head, seems she didn't really expect any.

Why take cash when there is money transfer service.

[Mosha]

Went past our local branch of the BAAC about an hour ago and the car park was full with some vehicles parked outside.

The people I saw coming out all had their papers with them but I didn't see and bundles of money.

One lady (farmer) who came out on a motorbike stopped and I asked her if she got any money, she laughed and shook her head, seems she didn't really expect any.

Why take cash when there is money transfer service.

Lack of trust maybe?

[siampolee]

Of course the bank could resort to the methods used to pay depositors their full amount as per withdrawal request as one bank if not more were reputed to have done in the U.S.A at the time of the Wall Street Crash.

Said banks paid every customer in full by using 1 cent pieces hence the time taken to count the cash on both sides of the counter was indeed somewhat lengthy and only a small portion of requested monies was withdrawn at the close of business each day.

The process continued for a few more days then the panic ceased. Bank remained solvent as did its clients who still maintained their accounts.

Well that's the way the tale is told . Urban myth or not ? You tell me.

Edited February 17, 2014 by siampolee

[Old Man River]

What the Yingluck administration is doing is illegal and unconstitutional - no matter how you look at it - or how strenuously you try to channel Pheu Thai " thought ". The fiction that the government is plugging is that the unions of the BAAC are on board. That's a lie. They strenuously protest this. The fact is that this administration has no legislative power to delegate funds that are intended to go through a parliamentary-backed budgetary process. Period. Everything Pheu Thai are trying to do is to skirt around that. They are trying " letters of comfort " which are in violation of Article 181 ( 3 ). Pheu Thai's idea is by issuing a letter of comfort you are not assuming responsibility for issuing a direct, or official, or parliamentary appeal - which would be illegal. It apparently suggests " unofficially " that a loan be issued. But by guaranteeing the loan in the letter, the administration commits an unconstitutional act, as only a sitting parliamentary government can guarantee payment. Kittirat says that the guarantee is not " official ". But if it isn't, on whose behalf is the guarantee being pledged ? Who can guarantee a multi-billion baht loan ? Kittirat ? There is absolutely no way around it. No rounds of gin with Chalerm are going to haze over the pure illegality of the act. In this situation both the administration and the banks face legal consequences - because the banks too are sucked into Pheu Thai's illegal gambit.

" However, GSB president Worawit Chalimpamontri said on his Facebook page on Friday that he refused to lend to the BAAC for the rice-pledging scheme. He admitted that the bank had extended the loan to BAAC via the interbank market, but not for that purpose. The bank also hasn't received any letters of loan guarantees. "

This is what the Yingluck administration is doing. They are pitting one national institution against another by feeding them contrasting lines. It is both manipulative and illegal. And as the government just happens to be one of the parties involved, it is also unconstitutional. The diversion and channelling of funds through a collusion of deceit from one banking institution to the next is crooked. For anyone. And certainly for any government. There is no other way of describing it. It proposes not only to flaunt the constitution, but to do it in the clear light of day, in the full sight of all.

Politically, we agree and I want to agree with you here, but a Letter of Comfort normally doesn't hold up in court as a guarantee. Actually, as far as I am aware, governments don't normally give Letters of Comfort. Either they are good for it or they aren't. Large global companies will give them when they want to give a lender something for their files, but don't want it reflected as a legal commitment. At the end of the day, it is only as good as the people managing the entity that is issuing it.

Sent from my iPad using Thaivisa Connect Thailand

Edited February 17, 2014 by Old Man River

[BuaBS]

Thailand has about 100 tons of GOLD. At today prices around 133 B Baht....Problem solved.

Either pay the farmers in gold or sell it.

If they agree to have the 800.000 Baht for retirement extention in gold , I'll buy it.

China doesn't want the old bad rice ?? I'm sure they buy the gold , or our other neighbour : India....

Or devalue the Baht by 50 %, then the 15.000 B/ton will be cheaper than world price.

More tourists because of the low Baht. The wage increase from thai workers will be compensated for foreign companies.

Lower imports, good for the trade balance.

Or do like the rest of the world , print it and raise taxes .