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Rice merchants see doom in pro-farmer policy

(dpa) Rice exports are heading for "tragedy" in 2009 if the government pursues its policy of offering above-market prices to farmers to stockpile the grain, industry sources said Thursday.

Commerce Minister Chaiya Sasomsap has hinted the government would pay rice farmers up to 15,000 baht ($446) per tonne for ordinary rice and 19,000 baht per tonne for khao hom mali (jasmine rice) in the coming months to boost farmers' incomes and stockpile the grain for exports.

But exporters said they fear the above-market prices would undermine Thailand's competitiveness next year.

"It's going to be a tragedy," said Chookiat Opaswong, president of the Thai Rice Exporters Association.

"Next year, when rice-exporting countries such as Vietnam and India are back on the market, you will see that we can't compete with those countries in price," Chookiat predicted.

Thailand has benefited this year from an artificial shortage of rice on the world market caused by India's decision to ban rice exports and a similar, though temporary, export ban on Vietnamese rice.

After Thailand, Vietnam and India are ranked among the world's top rice exporters.

Thailand, which has been the world's leading rice exporter since the mid-1960s, benefited this year from a lack of competition and soaring rice prices, which peaked in May at 1,100 dollars a ton.

The kingdom was expected to export 10 million tonnes of rice this year.

"A couple of days into August, we already exceeded 7 million tonnes, so we should be able to reach 10 million by the end of the year," Chookiat said.

But with India likely to lift its ban of rice exports next year, and Vietnamese rice selling at 100 dollars per ton cheaper than Thai rice on the world market, prospects for 2009 are a lot less bright, he warned.

The Thai government has been buying rice from farmers at above-market prices since 2003 as part of its populist policies to support the poor.

The policy has resulted in huge stockpiles that the government then tries to sell abroad. The current stockpile is estimated at 3.6 million tons, including some rice that is two to three years old.

bangkokpost.com

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nidhogg

I heard of this a few weeks ago. Of course the story I heard was somewhat different from the one above - in that it will be a cartel of buisnessmen, closely allied with some one mentioned in the article who will reap the profits - i.e. they get the fixed price, while, as usual the farmer gets whatever is given to him - (and he better be bloody greatful). There is apparently a genuine worry that this scheme will take down at least one bank (Thai Farmers) and maybe the economy along with it....

As I said previoulsy, the problem with taxin being out is a new set of snouts in the trough - and they are out to make him look like a piker...

panama hat

Some of the richest families in Thailand are part of the cartel . . . and I don't see them suffering because of this . . . plus:


and
That would be a differential of $650 per tonne for the middlemen, transport etc . . .