Flashermac Posted August 11, 2012 Report Share Posted August 11, 2012 Thailand could face tens of billions of baht in losses as the government moves to sell off some of its rice stocks to India and China with warehouses and silos across the country overloaded with rice purchased under the state pledging scheme. Commerce Minister Boonsong Teriyapirom said the government estimates it will sell 4-5 million tonnes of rice in government-to-government deals this year, up from an earlier estimate of 3 million tonnes. The ministry recently completed sales of 2 million tonnes of rice to China and 1 million tonnes to Indonesia, at prices "on par with market prices", Mr Boonsong said. Authorities are negotiating with countries such as Bangladesh, the Philippines and nations in Africa and the Middle East to sell additional rice from state stocks, he added. Cash received from the government sales would in turn be used to repay debt owed by the government to the Bank for Agriculture and Agricultural Co-operatives, the state bank responsible for managing the rice pledging scheme. According to the Thai Rice Exporters Association, rice in the global market was quoted at US$564 per tonne for 5% white rice, and $580 per tonne for 100% grade B rice. But analysts estimate the government must sell rice for at least $800 per tonne simply to recoup the costs paid to farmers under the pledging programme. The programme, a cornerstone of the Yingluck Shinawatra government's rural development policy, offers farmers prices of up to 15,000 baht per tonne for white rice paddy and 20,000 baht per tonne for jasmine Hom Mali rice. The pledging prices, set as much as 40% to 50% over previous market rates, has made the government essentially the sole buyer of rice in the country, with inventories at local mills and silos all but overloaded with rice pledged to the scheme and awaiting sale. Economists have estimated that taxpayers' losses could reach 100 billion baht this year alone out of the 260 billion baht in funds committed to the pledging programme. Critics argue that the scheme offers little benefit to poor farmers, but instead rewards rice mills and large-scale farmers while also raising costs for consumers and taxpayers. Allegations of corruption have also dogged the project, including claims that rice is being smuggled from neighbouring countries to be sold into the government programme. Members of a House standing committee on economic development, chaired by Democrat MP for Bangkok Chanin Rungsaeng, yesterday visited mills in Ayutthaya and discovered a number of irregularities in the programme, including the transfer of rights from farmers to middlemen to benefit from the high pledging prices. Mr Chanin said the committee would ask rice mill operators, farmers and other participants in the rice pledging programme to give testimony before the committee about the irregularities. "The government can't just say that these are operational problems. Policy and operations go hand in hand," Mr Chanin said. "If the policies are not well-designed from the start, it's no different than leaving the door open for thieves to enter your house." Monitoring systems and CCTV cameras all failed to track lorries shipping rice pledged to the programme or else lacked past records to allow for audits. A total of 26 mills in Ayutthaya have accepted pledges of 627,678 tonnes of rice, or nearly all of the 662,421 tonnes produced within the province over the past year to Aug 6. Warong Dejkitvikrom, a Democrat MP for Phitsanulok, said regulations call for rice mills participating in the pledging programme to have CCTV cameras installed to help record rice shipments to the mills. Documents must also track the time and licence plates of lorries delivering rice to ensure shipments are made. "Following the inspection of all three mills, no review could be made, with each alleging 'technical problems' in their recording systems," Mr Warong said. He said farmers have also reported that the mills paid farmers 500 baht to 1,000 baht each to transfer their pledging rights to the mills, showing that the government's pledging policy was rife with loopholes and possible corruption. But Somsak Ekpinijpitaya, executive chairman of the Srithepmongkol Mill, one of the three mills visited by the MPs, insisted state regulations do not require 24-hour video monitoring. He said it was unfair to say the entire system was corrupt, and suggested the House panel visit local farmers to judge the effectiveness of the programme. Finance Minister Kittiratt Na-Ranong acknowledged that areas for improvement remained. "I have never said that the rice pledging programme was free from corruption," he said. "If we didn't think there were problems, then the government wouldn't have needed to set up a panel to review any complaints." Deputy Prime Minister Chalerm Yubamrung is currently overseeing an investigation by the Department of Special Investigation into corruption allegations in the pledging programme. Pheu Thai is great! Link to comment Share on other sites More sharing options...
kamui Posted August 11, 2012 Report Share Posted August 11, 2012 The Yingluck government is destroying a major export industry in just a few months. And the government hasn't even been invoiced yet. I guess the hammer will fall, when the government need to sell hundreds of thousands of tonnes of low quality rice. Populist Thai rice policy backfires By Apornrath Phoonphongphiphat 0 comments DISASTROUS MOVE: A scheme to help farmers is inflating prices and lowering quality, writes Apornrath Phoonphongphiphat The Thai government has agreed to pay farmers RM1,480 for a tonne of rice, inflating prices and making Thai rice less competitive. AP pic MILLIONS of tonnes of rice that no one wants; huge losses for the state budget; farmers more interested in quantity than quality; exporters throwing in the towel. Thailand's world-beating rice industry is in a sorry state. The government won the election a year ago by promising to pay farmers double the market level at the time for their rice -- a policy to help the poor, ostensibly, but one that has backfired by making grain so expensive that hardly anyone is buying it. As a result Thailand exported just 3.45 million tonnes in the first half of this year, down 45 per cent from the same period last year. The Thai Rice Exporters' Association is expecting exports of no more than 6.5 million tonnes for the whole of this year against eight to 10 million normally, and that means Thailand will probably lose its crown as the world's top rice shipper to India or Vietnam. Exporters are struggling: the bigger ones are looking for opportunities in other countries or diversifying into other sectors to stay afloat, while the smaller ones are getting out. The exporters association had 192 members last year and officials reckon only 30 to 40 can be certain of surviving, because they have the financial means to get into other businesses such as real estate and food processing. "But small companies will have to get out of the business," said association president Korbsook Iamsuri, referring to exporters that ship just 500 to 1,000 tonnes a year. Twenty companies have already resigned. Among the bigger names, Number 2 exporter Asia Golden Rice Co Ltd is investing in milling and exporting in neighbouring Cambodia as costs rise at home. Uthai Produce Co Ltd has scaled down its exporting business in Thailand and is getting grain from Cambodia, Vietnam, Pakistan and elsewhere for clients in the United States, Canada and Asia. "We still have our expertise. We are still keen on the rice exporting business. "It's just that we're using our expertise to boost exports for other countries," said Charoen Laothammatas, president of Uthai Produce. "I could quit the rice business here in Thailand one day, too, if the government carries on with this policy." Commerce Minister Boonsong Teriyapirom is unapologetic about the cost of the scheme. "Our policy is to support farmers. And to do so, we need to accept some losses." Despite the enormous cost to the state budget, the government has extended the scheme beyond its initial end date of June and will renew it for the main crop in October. The government has spent 260 billion baht (RM25.74 billion) on the scheme so far. For the period from October, it plans to set aside another 300 billion baht, which is equivalent to the total planned budget deficit for fiscal 2012/13. Not all that money will be lost but the International Monetary Fund estimated in June that the programme could cost about 1 per cent of gross domestic product annually, even before storage and management costs. That is about US$3.8 billion (RM11.84 billion) a year. Even that assumes the government can find buyers for the record 10 million tonnes of milled rice it has stockpiled. It sold 240,000 tonnes to Ivory Coast last month but in general buyers have gone elsewhere, Thailand's reputation for logistical efficiency and reliability not counting for much in the face of big cost savings brought by Indian and Vietnamese rice. The Thai government rice costs around US$700 per tonne by the time it is ready for export, while market prices offered by India and Vietnam stand more than 40 per cent less, around US$430 a tonne. Thailand usually influences world prices but not this year, mainly because India returned to the market last September after a gap of four years following a food supply panic in 2007/2008. At best, Thai rice has reached US$640 per tonne this year and is now offered at around US$580 by exporters who managed to buy at perhaps 9,000 baht a tonne to fill orders, taking advantage of some farmers' need for quick cash. Many farmers are throwing quality concerns to the wind since they know the government is offering 15,000 baht a tonne and has said it would buy every grain of rice if necessary. "Who cares about quality? Farmers know they'll get 15,000 baht so they just grow more and more, and that's it," said Prasit Boonchuey, head of the Thai Farmers Association. Many farmers had switched to lower-quality, short-grain rice strains that took less time to grow, he said. A senior Agriculture Ministry official said that was particularly so in the well-irrigated centre of the country, which contributes half of annual production of about 30 million tonnes. The implications for the Thai rice industry are serious if it loses the high-end market at the same time as it loses market share on common rice grades to India and Vietnam. "It would take years to build up rice quality again, as now we have plenty of low-quality seeds but a lack of high-quality ones," said Vichai Sriprasert, a director at the Thai Rice Exporters Association. The IMF report called the intervention scheme cumbersome and said small farmers often found it simpler to sell to middlemen, even at lower prices. "Hence, the programme could end up mainly benefiting large-scale producers and middlemen," it said. NewStraitTimes Link to comment Share on other sites More sharing options...
BelgianBoy Posted August 11, 2012 Report Share Posted August 11, 2012 just now when all specialists claim there will be a big foodcrisis looming this year as crops are failing in the US and China, predictions of 15 to 20 % pricehikes for later this year, and Thailand is selling rice now below market prices....? WTF ? Link to comment Share on other sites More sharing options...
radioman Posted August 11, 2012 Report Share Posted August 11, 2012 This seems to be quite an issue, as was predicted when it was proposed I recall. Now I'm just a simple tech guy with no real head for all this high fallutin economic mumbo jumbo but reading these various reports rather suggests it is possibly such a huge hurdle that it could almost bankrupt the country. What I don't understand is that with these sort of policies and decisions how is it that the rest of the world is not running scared of Thailand, why is it's economy not in the toilet and why has its currency not dropped through the floor? Were this sort of fiscal imprudence demonstrated elsewhere I suspect things would be much worse. Or is it that Thailand is such an inconsequential world player that its domestic economics has no global impact? Link to comment Share on other sites More sharing options...
Hugh_Hoy Posted August 11, 2012 Report Share Posted August 11, 2012 Anybody have an opinion as to what extent all of this will affect the supply of farmer's daughters and it's impact on the price of "sanuk"? HH Link to comment Share on other sites More sharing options...
BelgianBoy Posted August 11, 2012 Report Share Posted August 11, 2012 Anybody have an opinion as to what extent all of this will affect the supply of farmer's daughters and it's impact on the price of "sanuk"? HH no impact, more daughters = more supply = same same you handsom man ! BB Link to comment Share on other sites More sharing options...
Flashermac Posted August 11, 2012 Author Report Share Posted August 11, 2012 Allegedly Thaksin himself came up with the idea. Maybe he thinks bankrupting the country will somehow work to his advantage. Link to comment Share on other sites More sharing options...
gobbledonk Posted August 11, 2012 Report Share Posted August 11, 2012 just now when all specialists claim there will be a big foodcrisis looming this year as crops are failing in the US and China, predictions of 15 to 20 % pricehikes for later this year, and Thailand is selling rice now below market prices....? WTF ? Bingo. Killer drought in the US bread basket this year - I had no idea how heavily they depended on corn production to feed animals. Combine that with investors looking for an alternative to the share market and, bingo, commodities become the focus for people who want to see prices go through the roof. Great if your only concern is house prices on Cape Cod - not so great if your concerns centre around feeding a family. Link to comment Share on other sites More sharing options...
Coss Posted August 12, 2012 Report Share Posted August 12, 2012 This seems to be quite an issue, as was predicted when it was proposed I recall. Now I'm just a simple tech guy with no real head for all this high fallutin economic mumbo jumbo but reading these various reports rather suggests it is possibly such a huge hurdle that it could almost bankrupt the country. What I don't understand is that with these sort of policies and decisions how is it that the rest of the world is not running scared of Thailand, why is it's economy not in the toilet and why has its currency not dropped through the floor? Were this sort of fiscal imprudence demonstrated elsewhere I suspect things would be much worse. Or is it that Thailand is such an inconsequential world player that its domestic economics has no global impact? I thought this when they were closing airports and burning department stores, the only answers I got that made sense were that big business itself was not unduly affected Allegedly Thaksin himself came up with the idea. Maybe he thinks bankrupting the country will somehow work to his advantage. His remaining shekels will buy a lot more when he sweeps in for the bargain sales... Link to comment Share on other sites More sharing options...
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