Thai Commerce Ministry to keep rice price from falling below 8,500 baht per ton

[webfact]

Commerce Ministry to keep rice price from falling below 8,500 baht per ton

BANGKOK, 18 September 2014 (NNT) – The Ministry of Commerce has agreed to meet with rice growers' representatives every two weeks to ensure stability of rice price is achieved and to address the demands of rice growers.

Commerce Minister Chatchai Sarikanlaya yesterday met with representatives from five rice growers' organizations to discuss measures to aid rice growers, the appropriate price of rice and the marketing of rice.

It was agreed at the meeting that the government would work to keep the rice price from falling below 8,500 baht per ton. Measures to ensure this price level would vary according to circumstances.

For the long run, cost of producing rice would be reduced and improvement made to the yield per rai of paddy.

The representatives of rice growers and Commerce Ministry officials will meet every two weeks to follow up on these drives, with the first meeting set to take place next week, said the Commerce Minister.

The Ministry of Commerce is also looking to implement the same model to oversee issues of other crops.

-- NNT 2014-09-18

[worgeordie]

So does that mean they will ignore the World price of rice,

and what the other major exporters,India,Vietnam,USA,

etc are selling their rice stocks for.and the price of Thai

rice will be,minimum 8500 THB per tonne,

regards Worgeordie

[givenall]

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So does that mean they will ignore the World price of rice,

and what the other major exporters,India,Vietnam,USA,

etc are selling their rice stocks for.and the price of Thai

rice will be,minimum 8500 THB per tonne,

regards Worgeordie

Thailand has their own version Economics 101. It says if demand falls rise prices to make up the difference, and of course that even reduces the demand, and so on.....

[daoyai]

Maybe they can set a guaranteed price and buy the rice from the farmer? ....oh, wait,....never mind.

[KarenBravo]

Sounds like another subsidy scheme....

[dogleg]

In no way to be confused with a certain failed populist policy.

[chainarong]

If you come in at a reserve price at auction over the world market price, Vietnam will be ever so delighted , perhaps this is what they mean ASEAN free trade.

[cloudhopper]

More evidence that these people are living in a fantasy world. Utterly clueless.

[casindonet]

I thought all this will stop under the junta....

[halloween]

They will work to..........measures will vary........

No promises, no specific measures, about as credible as a B300 note

[rreddin]

In no way to be confused with a certain failed populist policy.

Absolutely! This is a new populist policy also doomed to failure.

[rickirs]

"The Ministry of Commerce has agreed to meet with rice growers' representatives every two weeks to ensure stability of rice price is achieved ..."

Some TVers have stated this sounds like a subsidy similar to the Yingluck's rice program (except for the lack of government-paid rice holding warehouses) to keep rice prices above market prices. But what is also a concern is from a budget viewpoint. The NLA has already approved the NCPO's 2015 budget (albeit with very minor cuts).

Now the MoC has unilaterally ensured rice price stability below 8,500 Bt/tn. This action creates a potentially unlimted government financial obligation having no review process, not even the courtesy of NLA review and approval. There is no mention of the PM's approval being the head of the cabinet. If the potential cost of this price guarantee can be reasonably predicted for the near term and the resultant massive borrowing by the government to meet its payment obligatins to the farmers, one might argue CRIMINAL DERELECTION OF DUTY will have occurred similar to the NACC charge against Yingluck.

The MoC's price ensurance is in direct confllict with the Thai Rice Exporters Association's (TREA) proposal to the National Council for Peace and Order "for setting up of an independent "Rice Board", comprising representatives from all involved to set up rice management policies and development plans for promoting sustainable growth of the industry. The proposal was made following expectations that the military government would not intervene in the market mechanism any longer, as it has created huge losses for the country as well as destroyed rice exporters' competitiveness." * (my added the underlined emphasis)

TREA president Charoen Laothamatas Charoen said "that Thailand had learnt a valuable lesson from market intervention by setting a high pledging price. The government has faced huge losses from pledging and is left with enormous stockpiles, while the rice trading system has been destroyed. The government should no longer set up any subsidy project as it has destroyed both farmers and traders. He pointed out that without subsidy measures, the government could save at least Bt45 billion to Bt50 billion to help farmers with other long-term measures such as reducing the cost of production." * (my added the underlined emphasis)

It appears that Charoen's proposal fell on deaf ears.

* http://www.thairiceexporters.or.th

[rubl]

"The Ministry of Commerce has agreed to meet with rice growers' representatives every two weeks to ensure stability of rice price is achieved ..."

Some TVers have stated this sounds like a subsidy similar to the Yingluck's rice program (except for the lack of government-paid rice holding warehouses) to keep rice prices above market prices. But what is also a concern is from a budget viewpoint. The NLA has already approved the NCPO's 2015 budget (albeit with very minor cuts).

Now the MoC has unilaterally ensured rice price stability below 8,500 Bt/tn. This action creates a potentially unlimted government financial obligation having no review process, not even the courtesy of NLA review and approval. There is no mention of the PM's approval being the head of the cabinet. If the potential cost of this price guarantee can be reasonably predicted for the near term and the resultant massive borrowing by the government to meet its payment obligatins to the farmers, one might argue CRIMINAL DERELECTION OF DUTY will have occurred similar to the NACC charge against Yingluck.

The MoC's price ensurance is in direct confllict with the Thai Rice Exporters Association's (TREA) proposal to the National Council for Peace and Order "for setting up of an independent "Rice Board", comprising representatives from all involved to set up rice management policies and development plans for promoting sustainable growth of the industry. The proposal was made following expectations that the military government would not intervene in the market mechanism any longer, as it has created huge losses for the country as well as destroyed rice exporters' competitiveness." * (my added the underlined emphasis)

TREA president Charoen Laothamatas Charoen said "that Thailand had learnt a valuable lesson from market intervention by setting a high pledging price. The government has faced huge losses from pledging and is left with enormous stockpiles, while the rice trading system has been destroyed. The government should no longer set up any subsidy project as it has destroyed both farmers and traders. He pointed out that without subsidy measures, the government could save at least Bt45 billion to Bt50 billion to help farmers with other long-term measures such as reducing the cost of production." * (my added the underlined emphasis)

It appears that Charoen's proposal fell on deaf ears.

* http://www.thairiceexporters.or.th

The support for a minimum price level sounds much more like the old scheme of the Democrats. With the government paying the difference of the price gotten by farmers and the minimum price set by the government, and pay directly to farmers.

Of course, compared with 15,000 Baht white rice paddy, 20,000 Baht hom mali paddy, the current minimum price level of 8,500 Baht for white rice is way too high. Especially with lots of farmers complaining that even 8,500 barely covers their costs.

It would seem some really would like to go back to the marvelous RPPS of the Yingluck government. The one which needs seven more years to pay of in 110 billion Baht installments, or just the price of the two double track 160km/h high speed links the government is now planning.

[Nuddy]

Forgive me if I am wrong but I have seen written in the news that rice sells for 26000 baht per tonne to the export market? But even at the local prices shown in the charts by Rickers (post #12) above there is a fat margin for those who are not actually doing the work of growing the rice.

For sure I don't know if this export price includes shipping like "free on board" or milling, or the numerous other factors that include, storage, transport and so on.

If my first line is correct then it seems there is scope to at least get the farmer the price of 8500 baht, unmilled, and delivered to the storage facility.

Like most things in Thailand it appears to me that the middlemen are reaping ( or is that raping) more of the proceeds than the farmer who grows it.

Bearing in mind that the players who handle the rice to the exporting of it are very rich merchants whilst the growers are in the much lower levels of income.

Competition by way of a Farmers Cooperative seems a way to minimise the middlemen's costs and increase the farmers gate price.

Regards

[BSJ]

I don't see any problem helping maintain a reasonable price for rice over the next few years until they can work out how to do a free market/no govt subsidies deal.

[maoro2013]

There is more than one type of rice. Which one are they talking about?

[maoro2013]

There is more than one type of rice. Which one are they talking about?

[Thai at Heart]

"The Ministry of Commerce has agreed to meet with rice growers' representatives every two weeks to ensure stability of rice price is achieved ..."

Some TVers have stated this sounds like a subsidy similar to the Yingluck's rice program (except for the lack of government-paid rice holding warehouses) to keep rice prices above market prices. But what is also a concern is from a budget viewpoint. The NLA has already approved the NCPO's 2015 budget (albeit with very minor cuts).

Now the MoC has unilaterally ensured rice price stability below 8,500 Bt/tn. This action creates a potentially unlimted government financial obligation having no review process, not even the courtesy of NLA review and approval. There is no mention of the PM's approval being the head of the cabinet. If the potential cost of this price guarantee can be reasonably predicted for the near term and the resultant massive borrowing by the government to meet its payment obligatins to the farmers, one might argue CRIMINAL DERELECTION OF DUTY will have occurred similar to the NACC charge against Yingluck.

The MoC's price ensurance is in direct confllict with the Thai Rice Exporters Association's (TREA) proposal to the National Council for Peace and Order "for setting up of an independent "Rice Board", comprising representatives from all involved to set up rice management policies and development plans for promoting sustainable growth of the industry. The proposal was made following expectations that the military government would not intervene in the market mechanism any longer, as it has created huge losses for the country as well as destroyed rice exporters' competitiveness." * (my added the underlined emphasis)

TREA president Charoen Laothamatas Charoen said "that Thailand had learnt a valuable lesson from market intervention by setting a high pledging price. The government has faced huge losses from pledging and is left with enormous stockpiles, while the rice trading system has been destroyed. The government should no longer set up any subsidy project as it has destroyed both farmers and traders. He pointed out that without subsidy measures, the government could save at least Bt45 billion to Bt50 billion to help farmers with other long-term measures such as reducing the cost of production." * (my added the underlined emphasis)

It appears that Charoen's proposal fell on deaf ears.

* http://www.thairiceexporters.or.th

Becoming the effective bottom to the market at 8000 baht is a world away from 15000 .

It prevents complete collusion and exploitation from buyers.

[surangw]

whats the price for stale rice set at lately, seems the supply of stale rice will increase with less demand

[billd766]

So does that mean they will ignore the World price of rice,

and what the other major exporters,India,Vietnam,USA,

etc are selling their rice stocks for.and the price of Thai

rice will be,minimum 8500 THB per tonne,

regards Worgeordie

It depends on which end of the rice chain the 8,500 baht is applied to.

If the farmers gets the 8,500 then extra costs will be incurred at the middleman, transport, storage and sales people and they will all want their costs plus a profit.

If the 8,500 baht is ther sale price to the market then once again the farmers will be screwed.

[billd766]

More evidence that these people are living in a fantasy world. Utterly clueless.

So what would be YOUR suggestions then?

[Bluespunk]

"It was agreed at the meeting that the government would work to keep the rice price from falling below 8,500 baht per ton. Measures to ensure this price level would vary according to circumstances."

Globally can't be done.

Locally yes, but only for so long and then it will end in tears.

Or bankruptcy.

And then tears.