Promissory notes 'unlikely to raise targeted Bt20 bn for farmers'

[webfact]

Promissory notes 'unlikely to raise targeted Bt20 bn for farmers'
SUPHANNEE POOTPISUT,
PETCHANET PRATRUANGKRAI
THE NATION

BANGKOK: -- THE FINANCE MINISTRY expects that the auction of promissory notes to raise funds to pay farmers in the rice-pledging scheme might not meet the target of Bt20 billion, as the state agencies invited to join the bid might feel reluctant to take part, given opposition to the rice scheme within their organisations.

According to the Bank for Agriculture and Agricultural Cooperatives (BAAC), the state enterprises that the Public Debt Management Office invited to join the bid would propose the coupon rate today. If the rate is acceptable, the notes will be allotted as planned. However, if the rate is too high and the PDMO does not accept the offer, the note sales will fail.

A ministry source said the PDMO did not expect to see the full Bt20-billion value being sold out as state enterprises have faced opposition from within. The source added, however, that falling short of the Bt20-billion target would not be a disaster.

"It would, at least, help build up market confidence after the PDMO recently scrapped a sale of Bt20 billion worth of bonds as financial institutions offered [coupon] rates that were too high," the source said.

The money raised from the promissory notes and the Bt20 billion allotted by the Cabinet from the central budget will be used to pay farmers who have been earmarked by the government since December as being in arrears under the pledging programme.

In response to former finance minister Thirachai Phuvanatnaranubala's comment that no primary dealers were taking part in the promissory-note auction and the coupon rate would not reflect the market's actual borrowing costs, the same source said that recent auctions by the PDMO had been done through primary dealers. However, the office cut them out and made direct offers to state enterprises so it does not have to pay the dealers' 0.50-per-cent commission.

The government is said to have three sources of financing for the rice-pledging scheme: the Commerce Ministry's rice sales; borrowings; and the government's budget. Previously, the Finance Ministry could not borrow for the pledging scheme as financial institutions were concerned that the government's caretaker role would make such lending unconstitutional, and there were also objections from several other parties.

The Metropolitan Waterworks Authority (MWA) backed out of the bid for the BAAC promissory notes after its legal team warned that taking part could violate Section 181 (3) of the Constitution. It had been reported that the MWA intended to bid for Bt1 billion worth of notes. But according to an MWA memorandum yesterday, its legal team pointed out that A caretaker government is barred from doing anything that would create a debt burden for the next government.

TOT executives yesterday also denied a rumour that it had decided to take part in this promissory-note bid.

Meanwhile, the government is expected to generate a total of Bt10 billion from selling 1 million tonnes of rice through the futures market during the first six months of this year. However, that would not provide the immediate funding needed to get the farmers' payments up to date.

The Agricultural Futures Exchange of Thailand (Afet) expects the government will be able to get about Bt5 billion in the first half of the year from the futures market, said Sakda Thongpalad, acting president to the organisation.

The Afet will continue to open bidding for about 200,000 tonnes a month through June. Every 100,000 tonnes sold through the Afet is expected to generate about Bt1.5 billion.

A total of 17 traders joined the auction in the futures market yesterday for 162,157 tonnes of 5-per-cent white rice and 230,748 tonnes of jasmine rice. The bids were quite low compared with the current market price as the market acknowledges that the supply of rice is very high, while the Thai government needs to release rice from stocks to raise badly needed funds.

Bids for white rice were Bt1.70-Bt4 per kilogram lower than the market price for delivery, and Bt1.60-Bt6.40 a kilo lower for jasmine rice. Currently, the market price of white rice is quoted at Bt13.70 a kilo, while the price of jasmine rice is Bt30.75.

The next round of Afet bidding is scheduled for March 12, for about 200,000 tonnes of rice.Suchat Sinrat, deputy director-general of the Internal Trade Department, said the Commerce Ministry could continue to sell rice via the futures market.

The Commerce Ministry is planning to open a general auction for another 300,000 tonnes of rice next week.


-- The Nation 2014-02-27

[orchidlady]

So how are they going to pay the farmers this week. It's Thursday--will they be working round the clock to do it by Sunday? More empty promises I believe.

[Thait Spot]

It's getting close to the end of the week - the week of the last promise to the farmers - and it doesn't appear that they have raised more than 700 million of the 130 billion

[djjamie]

So what is this, the 4th or 5th broken promise now?

How many do they have to get to before they are found to be dishonest?

[Chupup]

Promises Promises Promises lies lies lies you get what you Vote for.....................

[sustento]

What a surprise ! The 'small folks' get screwed over again...

[jonclark]

Poor bastard farmers - utter shafted by PTP

[WilliamCave]

Not to sound disrespectful to farmers but they keep believing this govt when they say they will get paid by a certain date .

If I had some one tell me that this many times and I still believed them I would say I am not that bright or I can use other words but would be removed post

[TallGuyJohninBKK]

It's interesting to note...these kinds of articles always say how much rice they EXPECT to sell or offer for bid. But rarely do they say actually how much they sold or raised.

The OP above says the bids this week were low and quotes per kilo offers, but doesn't say how much of the 200,000 tonnes on offer was bid on, if the bids were accepted or how much proceeds resulted.

Kind of looks like more smoke and mirrors...

[khwaibah]

Still trying to cover their arse and with an arse that big it can't be done.

Edited February 27, 2014 by metisdead
Bold font removed.

[worgeordie]

The Government has taken on the mantra of a failing company,

desperately trying to raise funds,up to the eyes in debit,while

it keeps telling its creditors "every things OK", the cheque is

in the post

regards Worgeordie

[djjamie]

It's interesting to note...these kinds of articles always say how much rice they EXPECT to sell or offer for bid. But rarely do they say actually how much they sold or raised.

The OP above says the bids this week were low and quotes per kilo offers, but doesn't say how much of the 200,000 tonnes on offer was bid on, if the bids were accepted or how much proceeds resulted.

Kind of looks like more smoke and mirrors...

Would you expect anything less from this government who are currently being investigated for corruption.

The government have a monopoly on Thai rice. Transparency is non existent as can be shown here. The government thought they didn't have to be accountable to anyone.

Put all of those in a petris dish and you know what flourishes? Yep, Corruption.

[Ricardo]

Would you expect anything less from this government who are currently being investigated for corruption.

The government have a monopoly on Thai rice. Transparency is non existent as can be shown here. The government thought they didn't have to be accountable to anyone.

Put all of those in a petris dish and you know what flourishes? Yep, Corruption.

"The government have a monopoly on Thai rice."

Surely that would only be true, if all rice grown must be sold into the scheme, but don't farmers have a choice of whether-or-not to sell into the scheme ? Those who don't, but get ready-cash & a lower price from their local miller or rice-trader, accept that they don't get the purchase-pledge rate but a more-certain immediate-one ?

I believe a lot of that rice then goes to supply the domestic market, it's not all supplied via the government's releases to the domestic-market, and some of the non-government rice can be purchased by traders who then can export it, formally or informally across-the-borders ?

Weren't the Indonesians complaining about lower-than-market-price Thai rice being dumped onto their market, where did that Thai rice (if it was Thai !) come from, if not the government than it has to be from Thai rice-traders trying to maintain sales to their established-customers ?

Anyway, back to the OP, the government PDMO may choose not to pay the interest-rates demanded, as Thais often say "up to you" ! But I'd have thought they were expecting, and willing to pay, some sort of premium over their normal interest-rates, given how desperately the government now needs the cash !

[Robby nz]

Would you expect anything less from this government who are currently being investigated for corruption.

The government have a monopoly on Thai rice. Transparency is non existent as can be shown here. The government thought they didn't have to be accountable to anyone.

Put all of those in a petris dish and you know what flourishes? Yep, Corruption.

"The government have a monopoly on Thai rice."

Surely that would only be true, if all rice grown must be sold into the scheme, but don't farmers have a choice of whether-or-not to sell into the scheme ? Those who don't, but get ready-cash & a lower price from their local miller or rice-trader, accept that they don't get the purchase-pledge rate but a more-certain immediate-one ?

I believe a lot of that rice then goes to supply the domestic market, it's not all supplied via the government's releases to the domestic-market, and some of the non-government rice can be purchased by traders who then can export it, formally or informally across-the-borders ?

Weren't the Indonesians complaining about lower-than-market-price Thai rice being dumped onto their market, where did that Thai rice (if it was Thai !) come from, if not the government than it has to be from Thai rice-traders trying to maintain sales to their established-customers ?

Anyway, back to the OP, the government PDMO may choose not to pay the interest-rates demanded, as Thais often say "up to you" ! But I'd have thought they were expecting, and willing to pay, some sort of premium over their normal interest-rates, given how desperately the government now needs the cash !

And someone sometime in the future will have to pay the principal and the higher interest rates back, probably with more borrowing at even higher interest rates, all this has implications far more reaching than the farmers.

Don't know anything about this futures market business (gambling?) but does it not mean that some time in the future the rice traded will come on the market which will make it in competition with future farmers ?

[thaivapor]

These figures are pure speculation and in most circumstances baseless because of rules and constraints on a caretaker government.

The next harvest is approaching fast, and the farmers will not see a single baht of profit, in fact if I were a rice farmer, I would not even bother planting for a few years and grow chilies or something alternative.

The government are tied to a certain speed they can release rice, and even futures is limited. They will hit the global price dramatically while they have made this situation themselves by their inability to sell rice.

They are a government, not a rice trader. They have no experience and they have of course fluffed in dramatic fashion.

They need to come out now and admit it has been a total blunder for which they are very sorry, instead of clinging to the lies that it is good.

I guarantee that 12 months from now, if they remained in power the rice farmers would be starving to death.

The fact that most of the southern (non PTP voting) rice farmers that were denied entry into the scheme, ironically has come as a blessing in disguise. They have all been paid long ago when they harvested and sold to the rice mills independent of the rice scam.

I bet they are now laughing their <deleted> off at the Thaksin hugging stupid northern farmers.

BTW.... The farmers last week on their way to sauvanabhumi airport were all paid this week according to another article where the government used something like 700 million to pay out over 3,900 farmers from the districts these particular lot came from.

So if the other 1.4 million farmers want fast payment, they should start heading off down there now. Despite the red shirts setting up camps along the road to try to intercept and stop them with war weapons.... Strength in numbers.

[Baerboxer]

So how are they going to pay the farmers this week. It's Thursday--will they be working round the clock to do it by Sunday? More empty promises I believe.

It's only Thursday lunchtime - give them a chance, still got Friday and Saturday to go!

Empty promises - caretaker PM/DM vowed they would be paid this week. She never lies so the BAAC will be busy boys and girls tomorrow. Wonder what the new excuse will be? Wonder what all those stage managed farmers whose leader was so confident after his personal assurance on payments from Yingluck he took them back home will think?

No doubt more of the usual drivel - it's Suthep, the protesters, the banks, the state enterprises, we want to pay you honest. Give us another 6 months, the scheme is successful, no corruption in my administration, I come from election thank you three times.

In reality it seems they don't give a toss about paying the farmers or anything else other than being in charge and pretending it's all rosy. Still nice to be in Chiang Ria and Chiang Mai where no one dares to ask inconvenient questions.

[billd766]

"The Afet will continue to open bidding for about 200,000 tonnes a month through June. Every 100,000 tonnes sold through the Afet is expected to generate about Bt1.5 billion."

That works out at 15,000 baht per ton, around 6,000 baht HIGHER than the price on the world market and that price would be for good quality rice from Vietnam or India whose rice trading can be trusted.

The market rate for "good" Thai rice IF they can sell it would be only 900,000,000 baht and NOT 1.5 Bn and nowhere near 130 Bn baht.

Edited February 27, 2014 by billd766

[siampolee]

http://www.actionfraud.police.uk/

Short firm fraud

This is similar to long firm fraud but it takes place over a much shorter timescale. Usually, the business doesn’t try to establish any form of credit history or credibility, apart from perhaps filing false accounts at Companies House if it’s a limited company.

The fraudulent business has no day-to-day trading activity. Instead, the fraudsters use credit to obtain goods that are delivered to third-party addresses, often on multi-occupancy trading estates. Again, the goods are sold on for cash and the criminals then disappear.

These kind of long and short firm fraudsters are happy to deal in any goods or services with a market value. They obviously prefer goods that aren’t traceable, turn over quickly and are easily disposable. For example: electrical goods, computers, toys, toiletries, wines, spirits, fancy goods and confectionery.

The most immediate impact of these frauds is serious financial loss. As a victim, your organisation may also suffer from low staff morale, adverse publicity, disruption caused by a major investigation, or even further fraud under a different guise.

I would place this current P.T.P. ongoing Rice pledging scam scheme on a level with this particular criminal activity.

[Robby nz]

Reported today :

Posted 31 minutes ago

Govt waiting for EC approval to disburse 2 billion baht from central budget to pay the pending rice money

BANGKOK, 27 Feb 2014 (NNT) - According to Commerce Minister Niwatthamrong Boonsongpisan, the Secretary General of the Cabinet has submitted the petition asking the Election Commission (EC) to approve the disbursement of 2 billion baht from the 2014 Central Fund to pay the delayed 2013/2014 rice support program money to the awaiting farmers.

He explained once the EC acknowledges the petition, it would then look into the legality of the request, adding however that he could not affirm whether the EC would approve the matter or when it would process the document. The EC usually hold 2 meetings weekly, Mr. Niwatthamrong said, saying the commissioners have already held a meeting on Tuesday.

The Commerce Minister also stated his ministry has yet to receive the EC’s answer regarding another Cabinet request to disburse 712 million baht to pay nearly 4,000 rice farmers in 5 provinces who also have not been paid for their pledged paddy in the 2012/2013 cropping season.

He said it would only take a couple of days to withdraw the money once the EC approves the request. Both amounts are the last pending payments in the 2013-2014 production seasons of the rice mortgage scheme.


-- NNT 2014-02-27

So it would seem from that report that they haven't got the EC go ahead to use the 712 million.

Approve the disbursement of 2 billion ??

Posted 20 minutes ago

EC commissioner Somchai advises government to clarify how Bt20 billion from central fund wlll pay farmers /MCOT

So what is it 2 billion or 20 billion ? perhaps a typo, but which one ?

Whatever they haven't actually got the money to pay the farmers.................This week.

Both amounts are the last pending payments in the 2013-2014 production seasons of the rice mortgage scheme.

If that is true than the other hundred odd billion must be for previous season rice that has not been paid for.

[Old Man River]

It's interesting to note...these kinds of articles always say how much rice they EXPECT to sell or offer for bid. But rarely do they say actually how much they sold or raised.

The OP above says the bids this week were low and quotes per kilo offers, but doesn't say how much of the 200,000 tonnes on offer was bid on, if the bids were accepted or how much proceeds resulted.

Kind of looks like more smoke and mirrors.

[/quote

The link below always has the daily rice prices and interesting articles.

http://oryza.com/global-rice-market/asia-pacific

Sent from my iPad using Thaivisa Connect Thailand

[JesseFrank]

HE FINANCE MINISTRY expects that the auction of promissory notes to raise funds to pay farmers in the rice-pledging scheme might not meet the target of Bt20 billion, as the state agencies invited to join the bid might feel reluctant to take part, given opposition to the rice scheme within their organisations.

In the distance I hear some Kubotas starting already.

[Old Man River]

Reported today :

Posted 31 minutes ago

Govt waiting for EC approval to disburse 2 billion baht from central budget to pay the pending rice money

BANGKOK, 27 Feb 2014 (NNT) - According to Commerce Minister Niwatthamrong Boonsongpisan, the Secretary General of the Cabinet has submitted the petition asking the Election Commission (EC) to approve the disbursement of 2 billion baht from the 2014 Central Fund to pay the delayed 2013/2014 rice support program money to the awaiting farmers.

He explained once the EC acknowledges the petition, it would then look into the legality of the request, adding however that he could not affirm whether the EC would approve the matter or when it would process the document. The EC usually hold 2 meetings weekly, Mr. Niwatthamrong said, saying the commissioners have already held a meeting on Tuesday.

The Commerce Minister also stated his ministry has yet to receive the EC’s answer regarding another Cabinet request to disburse 712 million baht to pay nearly 4,000 rice farmers in 5 provinces who also have not been paid for their pledged paddy in the 2012/2013 cropping season.

He said it would only take a couple of days to withdraw the money once the EC approves the request. Both amounts are the last pending payments in the 2013-2014 production seasons of the rice mortgage scheme.

-- NNT 2014-02-27

So it would seem from that report that they haven't got the EC go ahead to use the 712 million.

Approve the disbursement of 2 billion ??

Posted 20 minutes ago

EC commissioner Somchai advises government to clarify how Bt20 billion from central fund wlll pay farmers /MCOT

So what is it 2 billion or 20 billion ? perhaps a typo, but which one ?

Whatever they haven't actually got the money to pay the farmers.................This week.

Both amounts are the last pending payments in the 2013-2014 production seasons of the rice mortgage scheme.

If that is true than the other hundred odd billion must be for previous season rice that has not been paid for.

What I find most interesting is that the PTP, apparently, didn't budget to pay the farmers. They have to take from the Central approved budget from before YL dissolved parliament to pay them. If she intended to pay the farmers, she would have already had an approved budget to pay the farmers. It looks like they were not a priority. The Suthep protests have provided the PTP with a convenient reason to blame non payment on.

Anyone who doubts their is a division between the PTP politicians and the upcountry Red Shirts can now start putting one and one together. Chada, who came into Bangkok with the tractors, is a politician. He wanted to meet with YL and he got the meeting. The farmers he represents have not yet been paid.

Edited February 27, 2014 by Old Man River

[DrTuner]

Tank 'em tractors up, farmers.

[Thait Spot]

HE FINANCE MINISTRY expects that the auction of promissory notes to raise funds to pay farmers in the rice-pledging scheme might not meet the target of Bt20 billion, as the state agencies invited to join the bid might feel reluctant to take part, given opposition to the rice scheme within their organisations.

In the distance I hear some Kubotas starting already.

I'm a bit concerned that they haven't got back from last time

[Robby nz]

Thought I would check on futures trading so :

Why Futures Trading?
The above example outlined a classic use of futures in commodities trading, also known as commodities futures trading. Indeed, Futures are derivatives instruments that derive their value from their underlying assets and their main function is to help buyers and sellers of the underlying asset go into purchase agreements that protect against price fluctuations. To date, this remains the most important function of futures trading.

However, apart from being a great hedging tool like it is meant to be, futures trading also opened the door to leveraged speculation of price fluctuations and have created many a lucky stock market millionaire. In fact, with the creation of Single Stock Futures (SSF) in 2002 in the US market by the CBOE, futures trading now extends to stocks of listed companies as the underlying asset, providing participants in the capital market with another avenue of leveraged trading.

Yes, leverage is another reason that makes futures trading so powerful and dangerous.

Futures trading has leverage due to the fact that only a small deposit, known as the initial margin,is needed to control a large amount of underlying asset. Using our corn farmer example above, the buyer of the futures contract on his corns only need pay the farmer a small deposit of maybe only $150 to guarantee the purchase of 5000 bushels of corn at $0.30 per bushel worth $1500 (the "Futures Price") in all. So, instead of paying $1500 to control the price on 5000 bushels of corn at $0.30, the futures buyer paid only $150 to do the same thing. Thats a 10 times leverage on his money.

If the price of corn in this example should suddenly surge to $1 per bushel due to a poor harvest, the buyer of the futures contract would still be able to buy the corn from the farmer for only $0.30 per bushel, and sell those corn in the market for $1.00 per bushel, making a total of $3500 out of a $150 capital commitment. Yes, a 2300% profit! That's the leverage power of futures trading.

http://futurestradingpedia.com/

So now I have a question

Does the Govt get the full price quoted or the initial margin, ?

If the latter then they still don't have money to pay the farmers.

If the former then I would suspect the quotes would be very low to mitigate the risk.

[Scamper]

The administration again finds itself running into the constitution. It is inevitable. At every turn they encounter it. Even the agencies they are approaching seem to be more mindful of it than they are. In one very good editorial published today, the writer talked about the five stages of grief. It was used as a measure of Yingluck's changing stances, but it could also be applied to the administration as a whole. What the commerce ministry is going through now is clearly denial. At some point, they will simply acknowledge that they no longer have the power to do what they want to do.

[rubl]

So how are they going to pay the farmers this week. It's Thursday--will they be working round the clock to do it by Sunday? More empty promises I believe.

Now, now, my dear flower lady, don't be impatient.

This month still has at least one more day

[rubl]

BTW when the government finally has sold all rice to cover debt to farmers that would mean the rice scam has cost the taxpayer around 800 billion Baht.

Imagine, 800 billion! For that amount of money we could have had the oh so much needed high-speed trains running between Bangkok and Phitsanulok, maybe even to Lamphang

[tim armstrong]

The rice mess has suddenly become porridge. Not only can the government not sell the stockpile at a reasonable price, because it can't compete with the other international players, the mountain will soon get larger after the first of the current season's harvest. There still is no decision on whether or not the new harvest will be under a new pledging scheme or sold to private buyers. At present the government has not one baht to buy it. All the borrowing ideas miss the point that the government has lost the money allocated to pay the farmers

My prediction is that some of the farmers will get back some of their rice soon to sell at a low prices to the millers, and large amounts of now old second grade rice will be dumped or burnt. By that time this government will be long gone

[bigbamboo]

Couldn't they sell some of those expensive clocks and tables and water coolers they bought. Then there's the contents of Chalerm's drinks cabinet.... that must be worth a bit.