Us Report Puts Thai Rice Edge In Doubt

[Flashermac]

Thailand is set to lose its status as the world's top rice exporter to India, ending nearly 50 years in the top spot, says the US Department of Agriculture.

 

According to figures released Wednesday by the USDA, Thailand is expected to sell 6.5 million tonnes of rice this year, slipping to third place behind India and Vietnam, which will export 8 million and 7 million tonnes, respectively.

 

The country in 1965 was proclaimed by the UN Food and Agriculture Organization as the biggest rice exporter with 1.89 million tonnes of rice, replacing the long-time champion, Myanmar.

 

The USDA said Thailand's rice exports this year will drop by 39% from last year's sales.

 

Exporters have blamed the populist rice pledging programme of the government for the decline, saying artificially high prices have hurt the competitiveness of Thai rice in the global market.

 

Prime Minister Yingluck Shinawatra said Thursday that the government will continue the pledging plan and that the Commerce Ministry has a plan to sell the rice.

 

The government reportedly has spent 250 billion baht to purchase some 17 million tonnes of paddy since the intervention plan began last October.

 

The programme pays 15,000 baht a tonne for white paddy rice and 20,000 baht for Hom Mali rice.

 

Commerce Minister Boonsong Teriyapirom remains confident Thailand will export at least 8.5 million tonnes this year, as the government has negotiated with several countries to sell a combined 4-5 million tonnes of rice, with some expected to ship this year.

 

Mr Boonsong said the government has no plans for now to revise the scheme.

 

"Thai rice is recognised worldwide as having a better quality than Vietnam rice, so it's reasonable for Thai rice to be quoted higher," he said.

 

In a separate press briefing, Yanyong Phuangrach, the commerce permanent secretary, voiced confidence that full-year rice exports will reach 9.5 million tonnes.

 

"Of this, 3 million tonnes will be government-to-government (G-to-G) contracts," he said.

 

The total includes contracts with Indonesia (1.5 million tonnes), Iraq (660,000 tonnes), Ivory Coast (240,000 tonnes) and various other African countries (2-3 million tonnes) plus 1.5 million tonnes on the premium rice market.

 

So far, the ministry has yet to export any rice under the G-to-G deals.

 

With supplies running low, exporters on Wednesday urged the government to sell some of the state's stockpile at a lower cost than it paid under the pledging plan.

 

They said the private sector hopes to sell 3 million tonnes of rice in the second half of this year after shipping 3.45 million tonnes in the first six months, a 45% drop year-on-year.

 

Mr Yanyong responded that the government would release its stock on condition that the sales would not affect domestic rice prices and only serve to minimise the expense of keeping stock.

 

"The pledging programme is aimed at raising rice prices, and the government has achieved that goal," he said. "We do not mind carrying losses."

 

The export price of 5% white rice was US$585 a tonne as of Thursday, up from $527 a year ago, while the Hom Mali price was $1,084 a tonne from $1,010.

 

"The previous government's rice income guarantee put a total of 50 billion baht in loss but could not raise rice prices," said Mr Yanyong.

 

Niphon Poapongsakorn, president of the Thailand Development Research Institute, questioned the sources of locally sold and exported rice.

 

Thailand produces 30 million tonnes of paddy, but 17-18 million tonnes are in the state's stock, he said.

 

His suspicion is the pledged and exported rice may have come from Cambodia and Vietnam.

 

Dr Niphon suggested the government appoint an independent investigation team to check the quality of the rice and make sure none of it was imported to take advantage of high prices under the pledging scheme.

 

Thank you so much, Pheu Thai!

 

 

[Flashermac]

Less paddy power

 

Populist politics mess up Thailand’s biggest crop

 

IN FEW other countries is self-image as bound up with one crop as it is in Thailand with rice. The country’s fragrant Hom Mali grain, in particular, has become justifiably famous among types of jasmine rice. For 30 years or more the country has been the world’s biggest rice exporter.

 

Now, however, its pre-eminence is under threat. The country’s most respected economic think-tank, the Thailand Development Research Institute, recently reported that exports had fallen by 44% year-on-year since January, making it almost certain that the country would be knocked off its perch as the number-one exporter by either India or Vietnam. This is alarming exporters and has an unsavoury political taste to it. To many, it is the consequence of a populist new subsidy for rice farmers, who form a bedrock of support for Yingluck Shinawatra, the prime minister elected by a landslide a year ago.

 

Under the “rice-mortgage schemeâ€, introduced last September, the government buys rice direct from farmers at about twice the normal market price; 15,000 baht (about $500) a tonne for ordinary white rice and 20,000 baht for Hom Mali. This benefits mostly small-scale rice farmers in Thailand’s poor rural north-east and central plains, a constituency fiercely loyal to the ruling Pheu Thai party of Ms Yingluck and the former prime minister, her elder brother Thaksin Shinawatra.

 

According to Vichai Sriprasert, head of Riceland International, a family-run company that has been selling abroad since the 1930s, only twice, in 1974 and 2008, have rice prices on the open market reached the levels now being paid by the Thai government; the normal range is $200-300. Not surprisingly, Thai farmers are eagerly selling their rice at the newly inflated price to the government, which is stockpiling it.

 

However, what may be a bounty (at least in the short term) for farmers is proving disastrous for rice exporters, who tend to support the opposition Democrat Party and its rival policy of income support for rice farmers. The stockpiling leaves little for the private exporters such as Mr Vichai to sell abroad. What rice he can get his hands on costs over $100 more a tonne than the same rice from India or Vietnam—partly because India is also benefiting from a weakening currency. Customers are therefore turning to those countries instead. Mr Vichai says that, like other exporters, he could go out of business unless the scheme is changed.

 

The lack of transparency in the government’s rice-buying binge risks further distorting the market. It is unclear how much the government is stockpiling at its warehouses (guesses suggest it could be 10m tonnes), nor is it known when or at what price rice will be released onto the market. So far, critics say, the government appears to have made the mistaken assumption that hoarding rice will push up the price of rice on international markets. Eventually, they note, it may simply run out of warehouse space, rendering the whole scheme unsustainable. As for the supposed benefits to farmers, there are suspicions that much of the money is lining the pockets of brokers, millers and other middlemen.

 

For the moment the government is sticking to its guns. Mr Thaksin, who still wields considerable power from outside Thailand, has suggested that the stockpile could be sold abroad without the help of private exporters. But if the new scheme proves unworkable, the Democrat Party might have an opportunity to sow seeds of discontent in Mr Thaksin’s backyard.

 

The Economist

[Coss]

Dumb and Dumber...

[kamui]

Dumb and Dumber...

 

Yep, this might become a perfect deterrent example how to destroy a leading export position worldwide within less than 24 months.

 

In the end the whole scheme will crash.

And as learnt from previous such schemes the Thai will finally find out that most of the stored rice has vanished or has been substituted by low quality rice.

[Flashermac]

Thaksin himself is supposed to have come up with this lame brain idea. It was to keep his rural base happy, even if it did destroy the Thai economy. Maybe he thought he'd be back before it happened and come blame it on someone else.

 

 

 

 

 

[cavanami]

It has been said...the Thais can f'up corn flakes!

[kamui]

Thaksin himself is supposed to have come up with this lame brain idea. It was to keep his rural base happy, even if it did destroy the Thai economy. Maybe he thought he'd be back before it happened and come blame it on someone else.

 

 

Or the other way around. If the scheme crashes while he is abroad he will arrive as the saviour.

Even better, when the rice export companies, who support the Dems as the article says, will go bankrupt Mr. T.'s cronies can take over their businesses for a dime.

 

 

Probably a win-win situation for Mr. T.. If it goes wrong he has nothing to do with it and can save the country, if it goes well it's him and his sister who did it.

[Flashermac]

Rice numbers do not add up

 

 

A think tank has asked the government to clarify the origins of 3.3 million tonnes of rice sold in the market now on suspicions they were imported.

Nipon Poapongsakorn, president of the Thailand Research and Development Institute (TDRI), said there were inconsistencies in the quantities of rice in the country and urged Prime Minister Yingluck Shinawatra to set up an independent committee to look into them.

 

Based on his study, as of July 13 this year, milled rice from the pledging programme which started on Oct 7 last year totalled 10.2 million tonnes. Exports and local consumption during the same period were 5.1 million tonnes and 7.4 million tonnes respectively.

 

"The question is where the difference of 3.3 million tonnes came from," said Dr Nipon.

 

He suspected that about 1 million tonnes of the discrepancy might have been smuggled from neighbouring countries by local traders to take advantage of the high prices offered by the pledging programme.

 

Another 2.2 million tonnes could have been leaked from the warehouses of millers and traders.

 

Rumours have it that some brokers have tried to sell rice in the government's new-rice stockpile to exporters while some old rice from similar price-support programmes of previous governments was packed under the Blue Flag brand for domestic consumption and supplied to the Commerce Ministry's low-priced Took Jai shops.

 

As a result, TDRI wants to verify that 400,000 tonnes of rice has really been packed and sold under the Blue Flag brand as approved by the government.

 

According to the US Department of Agriculture data for January to mid-July this year, Indonesia imported 1.15 million tonnes of rice, the Philippines 1.5 million tonnes and China 1 million tonnes.

 

Altogether, the three countries imported 3.65 million tonnes against the combined import projection of 4.25 million tonnes - Indonesia 1.25 million and China and the Philippines 1.5 million each.

 

Based on the projection, the countries would need another 600,000 tonnes this year.

 

The amount is far short of the Thai Commerce Ministry's plan to sell 3 million tonnes under government-to-government deals -- 1.5 million to Indonesia and the rest to the Philippines and China.

 

Moreover, Dr Nipon pointed out that the Philippines is unlikely to buy rice at the moment because it is harvesting its own paddy while Indonesia is trying to keep the lid on its debt burden.

 

"If Thailand wants to sell rice we must compete with India and Vietnam, and chances are, buying countries would choose cheaper rice [from India and Vietnam]," he said.

 

My link

[kamui]

 

 

He suspected that about 1 million tonnes of the discrepancy might have been smuggled from neighbouring countries by local traders to take advantage of the high prices offered by the pledging programme.

 

Another 2.2 million tonnes could have been leaked from the warehouses of millers and traders.

 

Rumours have it that some brokers have tried to sell rice in the government's new-rice stockpile to exporters while some old rice from similar price-support programmes of previous governments was packed under the Blue Flag brand for domestic consumption and supplied to the Commerce Ministry's low-priced Took Jai shops.

 

As a result, TDRI wants to verify that 400,000 tonnes of rice has really been packed and sold under the Blue Flag brand as approved by the government.

 

 

 

The volume of the assumed illegal rice selling/ importing fraud is astonishing. Due to the volume and range of the fraud several very high ranking Thai officials must be involved.