Pledging policy blamed for drastic fall in price of Thai rice

[webfact]

Pledging policy blamed for drastic fall in price of rice
PETCHANET PRATRUANGKRAI
THE NATION

BANGKOK: -- THE PRICE of Thai rice has plunged to the lowest level in six years, even lower than Vietnam's despite higher cost of production, due to the deposed government's pledging policy.

The Thai Rice Exporters Association reported last week that the price of 5-per-cent white rice had dived about 60 per cent to US$375-$389 per tonne from the all-time high of $1,020 in April 2008.

Compared to $395 quoted for Vietnamese rice, it is also the first time in history that Thai rice is cheaper.

Chookiat Ophaswongse, president of the association, blamed this on the ousted government's rice-pledging scheme. Exporters are not happy with the price trend, which should boost exports, as the cost of production has been on the rise and Thai rice quality is superior to Vietnam's.

"Thai rice should be more expensive than Vietnamese rice. Our price has, however, dropped gradually since late last year, because the government released stocks in haste," he said.

According to Chookiat, Thailand's paddy rice price is also priced lower than Vietnam's, at about Bt7,000-Bt7,500 a tonne against Bt8,000.

The pledging scheme, which quotes Bt15,000 or about $500 per tonne, has encouraged farmers to sell rice to the government. In the first two years of the scheme, the inventory exceeded 10 million tonnes.

Late last year, the dissolution of the lower House left the scheme struggling, as the government could not find the cash to pay farmers for their rice. Under pressure to raise money quickly, the stockpiles were dumped into the market, leading to the sharp drop in price.

Many foreign buyers have piled on orders for Thai rice because of the cheap price, he said.

That is supported by the Foreign Trade Department's figures for the first four months of this year. By volume, Thailand exported 3.21 million tonnes, which was 26.6 per cent higher than the 2.05 million tonnes in the same period last year.

However, by value, exports rose only 17.5 per cent in baht terms to Bt51.5 billion and only 8.3 per cent in dollar terms to $1.47 billion.

Chookiat hopes that the Commerce Ministry, after the military coup, would slow down the stockpile releases and this should prop up the price.

However, the United States Department of Agriculture projects that in the 2014-15 crop year, rice production would hit a new record of 480.7 million tonnes, up 4.6 million tonnes from the previous year. Assuming normal weather, record crops are projected for the major exporters including India, Thailand and Vietnam.

Global rice supply and consumption are projected to reach record levels of 592 tonnes and 482.2 million tonnes.


-- The Nation 2014-05-26

[cloudhopper]

Well that's what happens every time an attempt to corner the market fails. And they always fail, sooner or later. Unfortunately the wider consequences have yet to be realized.

[MaxLee]

Cheaper, but nasty Nasty basty lower and vermin contaminated in quality after more than 3 years stocked in the warehouses.

Anyone wanna try, wanna buy??? After effects non-guaranteed ????

Edited May 26, 2014 by MaxLee

[BSJ]

It sounded like a grand plan when I first hear of it....but that was when I assumed the government had secured forward sale contracts with international buyers, I hadn't taken into account the gross incompetence in managing the scheme and I expected the rack-off the top to be no more than usual. Silly me!

[djjamie]

This all goes back to populist policies.

The PTP might have seemed pretty popular for introducing this scheme, but what makes populism different from popularity is the exploitation of economic and social interests. Populism leads to abuse and politicians play their role as hero's fighting for a greater good, but in reality they are fighting their own personal struggle for power. Nazism had its roots in Populism, as did many other failed democracies. Heck, even the fall of the Roman Empire was attributed to populism.

The PTP are now no longer. They too can be added to this long long list of failed governments. In part due to populism.

[UbonRatch]

Chookiat Ophaswongse - PhD in stating the bleedin' obvious.

[chainarong]

We all know what caused the rice price to fall, what was the point of this scheme ,a poorly thought out vote buying scam, the industry market place import/ exporters are not going to wear this, they just up and go elsewhere, the damage is massive , now you not only have to make up for the loss you have to come back with cap in hand begging , Thailand makes the best rice in the world , why did you ruin your priceless reputation , we all know the answer to that one, Pickup the pieces and start again, that's the only course left and hope it works.

[Mitker]

"Thailand exported 3.21 million tonnes, which was 26.6 per cent higher than the 2.05 million tonnes in the same period last year"

2.05 x 1.266 = 3.21 ?

They really don't like numbers..

[iancnx]

I doubt if the PTP supporters here on TV will have anything useful to contribute to this thread..... ?

Edited May 26, 2014 by iancnx

[antimedia]

It sounded like a grand plan when I first hear of it....but that was when I assumed the government had secured forward sale contracts with international buyers, I hadn't taken into account the gross incompetence in managing the scheme and I expected the rack-off the top to be no more than usual. Silly me!

Gross incompetence or premeditated fraud?

[chooka]

We bought two 5 kg bags yesterday and my wife was saying how expensive it is getting. I guess the price isn't falling in the supermarkets.

[KunMatt]

Torch the stockpile that you can never sell and just start again. It's the only way the farmers will get their livelihoods back.

And send the bill to Taksin!

[whybother]

Nobody could have expected that to happen!

/sarc

[smedly]

The big question that I would have is - how do they shift the massive stock pile of old rice before the end of the next growing period - why should a customer be buy from old stock - simple, it has to be cheaper

Not that I know very much about rice farming but it seems to me that the government should be addressing the high material cost to actually grow the rice and leave the market alone - investigate the costs involved in fertilizers etc and investigate those that are price fixing and introducing price controls and possible subsidies at the front end reducing the cost to actually grow it

Edited May 26, 2014 by smedly

[issanaus]

Remember the very poor small rice farmers. The poorest of the poor. The ones who were to small to get the pledge price but had to wear the inflated costs that the scheme brought about. Now they pay yet again with the collapse of the rice price. Thanks PTP

[Valentine]

We bought two 5 kg bags yesterday and my wife was saying how expensive it is getting. I guess the price isn't falling in the supermarkets.

I reckon the price of rice in supermarkets is up about 100% over the past few years.

[Valentine]

We bought two 5 kg bags yesterday and my wife was saying how expensive it is getting. I guess the price isn't falling in the supermarkets.

I reckon the price of rice in supermarkets is up about 100% over the past few years.

[Valentine]

Remember the very poor small rice farmers. The poorest of the poor. The ones who were to small to get the pledge price but had to wear the inflated costs that the scheme brought about. Now they pay yet again with the collapse of the rice price. Thanks PTP

This is the true tragedy of the scheme.

[worgeordie]

Who will be held responsible for this massive mess and huge loses

for Thailand, NO BODY.

regards Worgeordie

[Valentine]

Well that's what happens every time an attempt to corner the market fails. And they always fail, sooner or later. Unfortunately the wider consequences have yet to be realized.

Remember the Hunt brothers & their foray into the silver market where they did actually corner the market but then went bankrupt.

[otherstuff1957]

According to the OP:

Global rice supply and consumption are projected to reach record levels of 592 tonnes and 482.2 million tonnes.

If they mean 592 MILLION tonnes, then the supply will exceed the demand by 110 million tonnes.... which means that prices will plummet over the next year.

So, how did we get into this situation?

Well, where is Thaksin living? Dubai is one of the members of OPEC, which was one of the most successful cartels in history. In the 1970s, the OPEC countries agreed to limit oil production. I don't have the exact figures, but let's say that they restricted oil production by 20% which caused prices to double. You don't need a PhD from Sam Houston U to do the math! As a result of OPEC's activities, GDP in the Oil producing states skyrocketed.

Thaksin obviously tried to imitate OPEC's success using Thailand's rice production. After all, the Rice Scheme was not a subsidy, it is a government monopoly. However, it just didn't work. Either the other rice producing countries didn't play along or Thaksin overestimated the influence of Thailand on the world rice markets. Either way, we now are faced with the consequences of a failed monopoly.

This is when Thaksin's true business genius shines forth. He gambled with the taxpayers money... if he lost, he wouldn't be out of pocket himself, but if he won, he would be in a position where he could make his constituents happy with the inflated market price while siphoning off billions for himself and his cronies.

[hanuman2543]

Welcome to the real world where competition, supply and demand regulates the price.

Sorry, you don't understand, you are not farang.

[boomerangutang]

The already-rich Chinese-Thai rice millers aren't complaining. They were probably front of the queue when gov't money was being handed out.

Let's think outside-the-box for a moment. There's a crop which is superior to rice for the following reasons... can you guess which crop?

>>> grows like a weed in poor soils

>>> doesn't need copious amounts of water, like rice does

>>> doesn't need pesticides or herbicides like rice does

>>> doesn't destroy watersheds like rice paddies do

>>> has higher $ value than rice

>>> its seed and oil are much more nutritious. What is rice, other than starch?

>>> has hundreds of practical applications. Just one: Volvo uses one part of the plant to cushion its car and truck seats.

answer: HEMP

[djjamie]

Remember the very poor small rice farmers. The poorest of the poor. The ones who were to small to get the pledge price but had to wear the inflated costs that the scheme brought about. Now they pay yet again with the collapse of the rice price. Thanks PTP

Thailand Development Research Institute (TDRI) stated the richest 20 per cent of rice farmers produce 42 per cent of the total rice supply in the market. Meanwhile, the 2.59 million poorest rice-growing households do not produce enough grain to join the programme.

The rice price subsidy which does not take into account farmers’ income levels therefor only benefits those who are already well off, including rice millers and exporters, while those who were actually in need of a subsidy get nothing.

http://tdri.or.th/en/tdri-insight/pledging-scheme-aids-rich/

[WitawatWatawit]

Why are these people coming out and complaining now? Like everyone else they knew a long time ago that this sick policy was going to cripple the rice industry. So, why didn't they say something back then? But they held their tongues because they were benefitting from the scheme at the expense of the farmers. They might bitch about rice prices now, but it's crocodile tears - they have already made billions from the scheme. Chookiat makes me want to puke.

[iancnx]

The already-rich Chinese-Thai rice millers aren't complaining. They were probably front of the queue when gov't money was being handed out.

Let's think outside-the-box for a moment. There's a crop which is superior to rice for the following reasons... can you guess which crop?

>>> grows like a weed in poor soils

>>> doesn't need copious amounts of water, like rice does

>>> doesn't need pesticides or herbicides like rice does

>>> doesn't destroy watersheds like rice paddies do

>>> has higher $ value than rice

>>> its seed and oil are much more nutritious. What is rice, other than starch?

>>> has hundreds of practical applications. Just one: Volvo uses one part of the plant to cushion its car and truck seats.

answer: HEMP

Interesting. I did not know that. But don't forget in the poorest regions the farmers grow their rice for their own consumption. Only small excess might go to market. But commercially hemp seems a great option.

[mania]

Come now be honest

It is not rocket science. They had a scheme/subsidy

It paid a crazy high price for rice that the market could not handle period.

They tried holding thinking it would force up the price.

Instead others filled the void. Others who now are set up to continue supply

Farmer were happy to take the crazy price....why not...I would if offered.

But it was not sustainable. Who did not know that? Look at the result.

Yet the farmers got use to the higher price & thought it would last forever.

Now what? Continue the fantasy? For how long? Who ultimately loses?

They should not bother quoting the one time spike to $1000+

it was an aberration like many things in markets

First time in history Thai rice is cheaper than Vietnamese rice?

Who wouldn't pay $6 more per ton for fresh growth rice compared to years old

stored who knows how rice?

Edited May 26, 2014 by mania

[Gunna]

I doubt if the PTP supporters here on TV will have anything useful to contribute to this thread..... ?

PTP " It was done to help the farmers, therefore a good scheme scam that's why we had closed books "

Truth " You introduced the Rice Scam to buy the farmers votes with Public money, and then skimmed money and rice from it "

[IMA_FARANG]

Trust Thais to buy high and sell low, I wish there were some Thai Jews in the government

and you would have seen how to handle buying and selling....

-------------------------------

Actually there are some Thai Jews (as you seem to want to call them). Mostly they are wealthy hi-so Capitalist elite in Thailand..

But they don't buy and sell commodities.

They are smart enough to buy and sell Thai politicians, then let those Thai politicians form meaningless Thai political parties, and then fight it out among themselves within those meaningless Thai political parties.

No matter which political party wins, the "Thai Jews" will win anyhow, because their money has already bought all the politicians and the organized "political party mafia.

Whoever, "wins" in Politics is of no concern to these people. they effectively own all the politicians anyhow.

In Thailand that patronage system is called "Democracy, Thai style".

[IMA_FARANG]

Trust Thais to buy high and sell low, I wish there were some Thai Jews in the government

and you would have seen how to handle buying and selling....

-------------------------------

Actually there are some Thai Jews (as you seem to want to call them). Mostly they are wealthy hi-so Capitalist elite in Thailand..

But they don't buy and sell commodities.

They are smart enough to buy and sell Thai politicians, then let those Thai politicians form meaningless Thai political parties, and then fight it out among themselves within those meaningless Thai political parties.

No matter which political party wins, the "Thai Jews" will win anyhow, because their money has already bought all the politicians and the organized "political party mafia.

Whoever, "wins" in Politics is of no concern to these people. they effectively own all the politicians anyhow.

In Thailand that patronage system is called "Democracy, Thai style".