As rice mountain shrinks, Thailand risks amassing one for rubber

[webfact]

As Rice Mountain Shrinks, Thailand Risks Amassing One for Rubber
by Supunnabul SuwannakijJasmine Ng

(Bloomberg) - Eight months after Thailand’s military junta started selling rice into an oversupplied global market, the officers are taking a different tack amid a rubber glut.

But this approach by Thailand, the world’s biggest exporter of both commodities, may cause as many problems in global markets as the old one, analysts say. That’s because while the rubber purchases revived domestic prices that touched a five-year low in October, they’re failing to cut a global production surplus that is entering its fifth year, according to data from the International Rubber Study Group.

Demand is slowing in China, the world’s top buyer and tire exporter, and natural rubber faces stiffer competition from synthetic material made from crude oil, which costs half what it did a year ago. Rubber prices are down more than 70 percent from their 2011 peak as trees planted in Asia over the past decade matured and flooded the market. That hurt farmers and cut costs for users of the raw material, including Goodyear Tire & Rubber Co. and Michelin & Cie.

“Thailand’s approach is just pushing the problem down the road,” Colin Hamilton, head of commodities research at Macquarie in London, said by e-mail on March 20. “The market needs supply to exit, not be encouraged.”

Full story: http://www.bloomberg.com/news/articles/2015-04-02/in-rice-for-rubber-shift-thailand-s-junta-is-a-buyer-once-again

-- Bloomberg 2015-04-02

[clifric]

It seems to me that the problem in Thailand is that when the peak price was reached, many rubber planters went out and bought 4x4s, satellite TVs and phones etc instead of saving the excess profits for a period of low prices. When the market fell they demanded the government of the time subsidise their rubber in the same way that rice farmers did under a falling rice market. Had they saved their gains they would not have needed to get into such debt as some have done

Had successive governments spent time making attempts to educate the farmers instead of introducing populist polices that yielded votes and sources of income (graft) then the farmers might have eventually moved to self-sufficiency. I say 'might' as the growing conditions are never guaranteed.

Guess a GtoG deal with China or Japan is the ideal solution!

[how241]

_{Rice or rubber...The story is the same...Only the names change.}

[ezzra]

No surprise there, in this country a farmer can grow anything he likes, as many cycles that he

likes and much as he can without really having a plan in place who's going to buy it of his

hand and at what price... why you ask? because he knows that if you gather enough clueless

and inept so called farmers with huge of unsold produce on their hands crying foul and accusing

the government with mismanagements of their affairs, block a highway or two for few days and presto,

the PM or some government department will come up with ways to erase the debt or have a moratorium

on it or throw more money at the farmers that were the cause of the problems at the first place...

and so it continue season after season, year after year and no one learn anything...

[laocowboy2]

The government actually encouraged marginal rice farmers in the NE to switch from rice to rubber about a decade ago - and it is these trees that have been coming online over the last three years or so. And rubber trees produce for a long time. No sign of this problem going away any time soon.

[soalbundy]

we have a mountain of farming experts here,very few of whom would dare to leave their air-con office if their life depended on it let alone work on the fields, of course they don't need to having had a first class education unlike the Thai farmer but that's all his fault,

[bangon04]

No surprise there, in this country a farmer can grow anything he likes, as many cycles that he

likes and much as he can without really having a plan in place who's going to buy it of his

hand and at what price... why you ask? because he knows that if you gather enough clueless

and inept so called farmers with huge of unsold produce on their hands crying foul and accusing

the government with mismanagements of their affairs, block a highway or two for few days and presto,

the PM or some government department will come up with ways to erase the debt or have a moratorium

on it or throw more money at the farmers that were the cause of the problems at the first place...

and so it continue season after season, year after year and no one learn anything...

Tried and trusted farmer strategy - Works in France......lamb anyone?

Edited April 2, 2015 by bangon04

[worgeordie]

You have to keep those warehouses filed with something.

regards Worgeordie

[robblok]

we have a mountain of farming experts here,very few of whom would dare to leave their air-con office if their life depended on it let alone work on the fields, of course they don't need to having had a first class education unlike the Thai farmer but that's all his fault,

Ah an other farmer that is not satisfied. Fact is if someone is laid off because of work problems nobody gives a damm.. But farmers think they are special. They are not.. if you cant be economical viable then don't do it. Dont expect the taxpayer to pay for your failure.

Other people suck it up.. farmers just blockade roads.. and stuff to get their wishes.

[rubl]

So how much is the current government actually paying (directly) to farmers? The bloomberg article doesn't give details

"In addition to buying at above-market prices, the government makes direct payments to growers and helps with borrowing costs. While the junta has ruled out purchasing rice, it also makes payments directly to farmers and subsidizes loans to help millers and growers with storage."

[slapout]

another advantage Thai farmers have is that histotically any product put/left in storage which has had government support, seems to have a magic quality of disappearing prior to the next harvest or confirmed sale to third partiesi they never found all the lamayai, rice, cane, etc, no money received, no sale of product, warehouses, trucks, buyers at farmgate, export permit, looks like just a few connected sure fire money makerrs. of course it may require a few connections,

[Srikcir]

So how much is the current government actually paying (directly) to farmers? The bloomberg article doesn't give details

"In addition to buying at above-market prices, the government makes direct payments to growers and helps with borrowing costs. While the junta has ruled out purchasing rice, it also makes payments directly to farmers and subsidizes loans to help millers and growers with storage."

The Nation 2014-12-10

“…the Cabinet had approved a Bt10-billion budget to shore up the price of concentrated latex....Sunthorn [Rakrong, coordinator for Rubber Farmers' Saviour Front] complained that the [Prayut] government had wasted a massive amount of money, because the measures it was spent on failed to help rubber farmers … because some farmers don't own the land and can't claim the subsidy,"

2015-03-11

“The Rubber Estate Organisation today called off a rubber auction after not a single rubber trader showed up to sell their rubber sheets at the central rubber market in Buri Ram province.”

“It was reported that traders or rubber farmers were reluctant to participate in the auction because they believed that they would not get good prices. Earlier, they were offered prices 8-10 baht per kilogramme above market prices but, this time, the prices expected to be on par with market prices.”

Government gamble failed. Who will pay back the losses to the Thai taxpayers?

[rubl]

So how much is the current government actually paying (directly) to farmers? The bloomberg article doesn't give details

"In addition to buying at above-market prices, the government makes direct payments to growers and helps with borrowing costs. While the junta has ruled out purchasing rice, it also makes payments directly to farmers and subsidizes loans to help millers and growers with storage."

The Nation 2014-12-10

“…the Cabinet had approved a Bt10-billion budget to shore up the price of concentrated latex....Sunthorn [Rakrong, coordinator for Rubber Farmers' Saviour Front] complained that the [Prayut] government had wasted a massive amount of money, because the measures it was spent on failed to help rubber farmers … because some farmers don't own the land and can't claim the subsidy,"

2015-03-11

“The Rubber Estate Organisation today called off a rubber auction after not a single rubber trader showed up to sell their rubber sheets at the central rubber market in Buri Ram province.”

“It was reported that traders or rubber farmers were reluctant to participate in the auction because they believed that they would not get good prices. Earlier, they were offered prices 8-10 baht per kilogramme above market prices but, this time, the prices expected to be on par with market prices.”

Government gamble failed. Who will pay back the losses to the Thai taxpayers?

Interesting, I found a theNation article from 2014-12-10 which has

""The government has until the end of December to find solutions for the rubber-price problem," Sunthorn Rakrong, a coordinator for Rubber Farmers' Saviour Front, said yesterday. He said farmers would start pressuring PM Prayut Chan-ocha directly if the price of rubber did not rise.

...

He added that the Cabinet had approved a Bt10-billion budget to shore up the price of concentrated latex.

Sunthorn complained that the government had wasted a massive amount of money, because the measures it was spent on failed to help rubber farmers."

http://www.nationmultimedia.com/national/Farmers-issue-ultimatum-over-rubber-price-30249500.html

So it would seem that this Sunthorn wants the price paid to farmers to rise and doesn't really care how the government does it. Seems you agree with the governments reluctance to pay more.

[englishoak]

Things will no doubt bounce right back .........

[rooinekrsa]

sorry to say but the rubber farming is a waste of time. told the wife to cut down the trees and plant a juice plant .eg papaya or mango crop. let me set up a crushing plant and export the pulp.....she is slowly coming around

[RT555]

Cambodian Jasmine rice has taken top honors the last couple years. And the Thai government doesn't care about tomorrow, they just want to fill their pockets TODAY.....LOL. Good thing i left Thailand March 19th......after 35 years off & on, this is a joke of a country,,,,,,enough is enough. I will only take a 2 hour flight to take a *edited out* on Thailand.

[swissbie]

sorry to say but the rubber farming is a waste of time. told the wife to cut down the trees and plant a juice plant .eg papaya or mango crop. let me set up a crushing plant and export the pulp.....she is slowly coming around

How many hundreds rai of farmland do you have? If you have just a few rais, then good luck with it, you will need it, foodprocessing is a highly competitive business.

[soalbundy]

we have a mountain of farming experts here,very few of whom would dare to leave their air-con office if their life depended on it let alone work on the fields, of course they don't need to having had a first class education unlike the Thai farmer but that's all his fault,

Ah an other farmer that is not satisfied. Fact is if someone is laid off because of work problems nobody gives a damm.. But farmers think they are special. They are not.. if you cant be economical viable then don't do it. Dont expect the taxpayer to pay for your failure.

Other people suck it up.. farmers just blockade roads.. and stuff to get their wishes.

Walk a mile in their shoes first before getting up on your high horse. If farmers could charge a fair price for their produce instead of getting stitched up there would be no need for subsidies. Maybe they are special because you can't eat your fancy sedan or your designer clothes which many are prepared to pay over the top for but not for essentials like food.

[samuibeachcomber]

we have a mountain of farming experts here,very few of whom would dare to leave their air-con office if their life depended on it let alone work on the fields, of course they don't need to having had a first class education unlike the Thai farmer but that's all his fault,

you dont need a first class education to know its folly to go out and buy a new SUV while living in a shack.You do need common sense,and as far as i can see thais do not possess any common sense at all.

[soalbundy]

we have a mountain of farming experts here,very few of whom would dare to leave their air-con office if their life depended on it let alone work on the fields, of course they don't need to having had a first class education unlike the Thai farmer but that's all his fault,

you dont need a first class education to know its folly to go out and buy a new SUV while living in a shack.You do need common sense,and as far as i can see thais do not possess any common sense at all.

I have yet to see a farmer with a SUV, a 20 year old pick up if lucky yes but usually an old motorbike, i don't know what farming community you live in but in the North-East they are hard working, resourceful and poor.

[samuibeachcomber]

we have a mountain of farming experts here,very few of whom would dare to leave their air-con office if their life depended on it let alone work on the fields, of course they don't need to having had a first class education unlike the Thai farmer but that's all his fault,

you dont need a first class education to know its folly to go out and buy a new SUV while living in a shack.You do need common sense,and as far as i can see thais do not possess any common sense at all.

I have yet to see a farmer with a SUV, a 20 year old pick up if lucky yes but usually an old motorbike, i don't know what farming community you live in but in the North-East they are hard working, resourceful and poor.

then you have n't visited southern thailand where the best rubber is grown.

[robblok]

we have a mountain of farming experts here,very few of whom would dare to leave their air-con office if their life depended on it let alone work on the fields, of course they don't need to having had a first class education unlike the Thai farmer but that's all his fault,

Ah an other farmer that is not satisfied. Fact is if someone is laid off because of work problems nobody gives a damm.. But farmers think they are special. They are not.. if you cant be economical viable then don't do it. Dont expect the taxpayer to pay for your failure.

Other people suck it up.. farmers just blockade roads.. and stuff to get their wishes.

Walk a mile in their shoes first before getting up on your high horse. If farmers could charge a fair price for their produce instead of getting stitched up there would be no need for subsidies. Maybe they are special because you can't eat your fancy sedan or your designer clothes which many are prepared to pay over the top for but not for essentials like food.

God a farmer that thinks he can dictate the price.. that will happen only if there was no globalization and no overproduction. If you can't make a living find something else. I did the same when PC's were no longer high selling objects. Do you think i should have asked the government to subsidize me too ? Everyone is responsible for themselves and the constant handouts to farmers.. just crazy.

[soalbundy]

we have a mountain of farming experts here,very few of whom would dare to leave their air-con office if their life depended on it let alone work on the fields, of course they don't need to having had a first class education unlike the Thai farmer but that's all his fault,

Ah an other farmer that is not satisfied. Fact is if someone is laid off because of work problems nobody gives a damm.. But farmers think they are special. They are not.. if you cant be economical viable then don't do it. Dont expect the taxpayer to pay for your failure.

Other people suck it up.. farmers just blockade roads.. and stuff to get their wishes.

Walk a mile in their shoes first before getting up on your high horse. If farmers could charge a fair price for their produce instead of getting stitched up there would be no need for subsidies. Maybe they are special because you can't eat your fancy sedan or your designer clothes which many are prepared to pay over the top for but not for essentials like food.

God a farmer that thinks he can dictate the price.. that will happen only if there was no globalization and no overproduction. If you can't make a living find something else. I did the same when PC's were no longer high selling objects. Do you think i should have asked the government to subsidize me too ? Everyone is responsible for themselves and the constant handouts to farmers.. just crazy.

Seems to be necessary though,it's done all over the world, Europe and USA included, i think it's because people have got into the habit of eating.

[robblok]

God a farmer that thinks he can dictate the price.. that will happen only if there was no globalization and no overproduction. If you can't make a living find something else. I did the same when PC's were no longer high selling objects. Do you think i should have asked the government to subsidize me too ? Everyone is responsible for themselves and the constant handouts to farmers.. just crazy.

Seems to be necessary though,it's done all over the world, Europe and USA included, i think it's because people have got into the habit of eating.

Its a big scam all over the world.. but you think your special as a farmer.. your just as important as anyone.. and that is not important. I don't understand why other hardworking people should pay tax for farmers that just can't change their habits and become profitable.

If you can't do your job or your job is not profitable.. change.. find something else. Then there is less production and people are forced to pay the remaining farmers more.. Then it becomes interesting to farm again.. and they will overproduce and prices drop again. Pure economics.. Its not like there are no jobs in Thailand.. real low unemployment.

Its the same for anything but farmers are always DEMANDING (not asking like normal people) for compensation this and complaining. Farmers in all countries are often militant just look at France.

I am against subsidies anywhere.. unless it is to change.. not to keep something that is not viable alive. That is communist style it does not work. If my work becomes obsolete.. I will moan but nobody will help me.. (as it should) but farmers.. the world over think they are special.. maybe they are "special" like Corkey because they think the laws of economics don't apply to them.

Edited April 3, 2015 by robblok

[billd766]

we have a mountain of farming experts here,very few of whom would dare to leave their air-con office if their life depended on it let alone work on the fields, of course they don't need to having had a first class education unlike the Thai farmer but that's all his fault,

you dont need a first class education to know its folly to go out and buy a new SUV while living in a shack.You do need common sense,and as far as i can see thais do not possess any common sense at all.

I have yet to see a farmer with a SUV, a 20 year old pick up if lucky yes but usually an old motorbike, i don't know what farming community you live in but in the North-East they are hard working, resourceful and poor.

It is the same situation over this side of the country in the central regions of Khampaeng Phet, Tak, Phitsanulok, Petchabun and Nakhon Sawan provinces. A few new pickups and motorbikes but mostly older stuff and they work damn hard to stay on top.

I think that Thailand may be a rice importing country in the next 10 to 20 years as the current older generation of farmers die off or simply give up due to old age and the younger generations don't WANT to be farmers or live out in the sticks.

[robblok]

we have a mountain of farming experts here,very few of whom would dare to leave their air-con office if their life depended on it let alone work on the fields, of course they don't need to having had a first class education unlike the Thai farmer but that's all his fault,

you dont need a first class education to know its folly to go out and buy a new SUV while living in a shack.You do need common sense,and as far as i can see thais do not possess any common sense at all.

I have yet to see a farmer with a SUV, a 20 year old pick up if lucky yes but usually an old motorbike, i don't know what farming community you live in but in the North-East they are hard working, resourceful and poor.

It is the same situation over this side of the country in the central regions of Khampaeng Phet, Tak, Phitsanulok, Petchabun and Nakhon Sawan provinces. A few new pickups and motorbikes but mostly older stuff and they work damn hard to stay on top.

I think that Thailand may be a rice importing country in the next 10 to 20 years as the current older generation of farmers die off or simply give up due to old age and the younger generations don't WANT to be farmers or live out in the sticks.

If that happens.. price of rice will go up and people will start farming again.. right now its just not viable because of the small plots and outdated methods. Let the market decide.

[halloween]

Do as I say, not as I do.

The rubber scheme is just a mechanism to pay off Suthep's hired PDRC thugs

The only interesting thing about this article is that it exposes the hypocrisy of the TVF Junta lovers.

Rice scheme bad, rubber scheme good.

The elite appointed NACC jokers will never have the balls to haul the Generals in for their "populist policies".

B700+ billion LOST (bad) compared to B10 billion PAID (?) if total spent, some at least recoverable (Good/better)

B700+ billion lost off-budget , it will make a profit,(bad) compared to B10 billion budgeted (much better).

You might also note the B10 billion is/was not offered as an electoral bribe, nor were the recipients encouraged to believe the payout was endless or to increase production.

[soalbundy]

God a farmer that thinks he can dictate the price.. that will happen only if there was no globalization and no overproduction. If you can't make a living find something else. I did the same when PC's were no longer high selling objects. Do you think i should have asked the government to subsidize me too ? Everyone is responsible for themselves and the constant handouts to farmers.. just crazy.

Seems to be necessary though,it's done all over the world, Europe and USA included, i think it's because people have got into the habit of eating.

Its a big scam all over the world.. but you think your special as a farmer.. your just as important as anyone.. and that is not important. I don't understand why other hardworking people should pay tax for farmers that just can't change their habits and become profitable.

If you can't do your job or your job is not profitable.. change.. find something else. Then there is less production and people are forced to pay the remaining farmers more.. Then it becomes interesting to farm again.. and they will overproduce and prices drop again. Pure economics.. Its not like there are no jobs in Thailand.. real low unemployment.

Its the same for anything but farmers are always DEMANDING (not asking like normal people) for compensation this and complaining. Farmers in all countries are often militant just look at France.

I am against subsidies anywhere.. unless it is to change.. not to keep something that is not viable alive. That is communist style it does not work. If my work becomes obsolete.. I will moan but nobody will help me.. (as it should) but farmers.. the world over think they are special.. maybe they are "special" like Corkey because they think the laws of economics don't apply to them.

I am not a farmer per se, i am retired, i used to work in the British and German industry and could see first hand that a lot of subsidization went on there as well, whether it was the aircraft industry,weapons industry or automobile industry, it made sense as long as it wasn't overdone, you need to retain the skills acquired over many years of practice when a troublesome time is met,you can't let an industry go under and then start over quickly again when things are better,you lose the know how. Britain is an example, the manufacturing industry was swept away in the Thatcher era and the UK produces very little now, all the parts for Rolls Royce for instance are made in Germany,they are merely put together in the UK. Farming,from what i have observed, my wife owns 220 Rai of rice fields, is a skilled occupation,you don't just throw the seed down and let it grow,there is water management fertilizer and pest control, drying,etc. Lose the farmers and you lose the land as well as the experience,very dangerous to have housing estates and factories on once arable land and have to rely on foreign countries for basic food stuff ( like the UK now ) I am not an evangelist for subsidies but i can appreciate the farmers point of view, i think that the Russians now regret ignoring their food manufacturing.

[halloween]

Do as I say, not as I do.

The rubber scheme is just a mechanism to pay off Suthep's hired PDRC thugs

The only interesting thing about this article is that it exposes the hypocrisy of the TVF Junta lovers.

Rice scheme bad, rubber scheme good.

The elite appointed NACC jokers will never have the balls to haul the Generals in for their "populist policies".

B700+ billion LOST (bad) compared to B10 billion PAID (?) if total spent, some at least recoverable (Good/better)

B700+ billion lost off-budget , it will make a profit,(bad) compared to B10 billion budgeted (much better).

You might also note the B10 billion is/was not offered as an electoral bribe, nor were the recipients encouraged to believe the payout was endless or to increase production.

Blah, blah, blah.....

If there are no elections, it's hard to have electoral bribes.

The fact is the Junta has done an awful lot to try and placate the citizens, from bribery (free world cup matches and largesse handouts) to ruthless force (martial law, section 44 and re-education camps).

You're backing a loser mate, best jump off the wagon while you still can.

You forgot to mention .........while stopping the political violence. Between that and the "bribes", they seem to have made themselves quite popular.

You stay on your wagon, it's gone off a cliff, and the sudden stop is coming very soon.

[mikemac]

Walk a mile in their shoes first before getting up on your high horse. If farmers could charge a fair price for their produce instead of getting stitched up there would be no need for subsidies. Maybe they are special because you can't eat your fancy sedan or your designer clothes which many are prepared to pay over the top for but not for essentials like food.

God a farmer that thinks he can dictate the price.. that will happen only if there was no globalization and no overproduction. If you can't make a living find something else. I did the same when PC's were no longer high selling objects. Do you think i should have asked the government to subsidize me too ? Everyone is responsible for themselves and the constant handouts to farmers.. just crazy.

@ robblok -

I have never really been involved in farming myself but have been married to a lady from a rice farming background, in Surin, for five years.

I feel sorry for farmers as most of them are born into it and really don't have much choice as to what they are going to do in their life. Not too many educated rich kids from Bangkok go up-country and buy a few rai to become "hobby farmers".

Not too many Issan farmers have kids who attend universities and attain degrees in agricultural subjects, mainly because they just can't afford it.

And could you imagine if every farmer in Thailand took the oft offered advice and just give it away. Turn up at Wororot Market only to find there are no fruit and veges for sale. It's a good thing there are people out there who know nothing else but farming because I could not grow a piece of fruit or a vegetable to save my life.