#  >  > Living And Legal Affairs In Thailand >  >  > Thailand and Asia News >  >  > Business, Finance & Economics in Thailand >  >  Thai government issues bond as it struggles to pay rice farmers

## Mid

*Thai government issues bond as it struggles to pay rice farmers*
Apornrath Phoonphongphiphat
(Editing by Tom Hogue and Michael Urquhart)
                  Tue Nov 19, 2013

*(Reuters)* - The Thai government will issue a 75 billion baht ($2.38  billion) bond to help fund a rice subsidy scheme that has not paid out  to farmers since October 1, a delay that risks alienating key supporters  of Prime Minister Yingluck Shinawatra.

 The government has in recent  weeks been facing the biggest protests since it swept to power in 2011  as its traditional foes from the urban elite step up their opposition.

But  now it faces the prospect of a traditional bastion of support - farmers  - joining the anti-government protests over the failure to pay them for  their rice.

The government has  been buying rice at 15,000 baht a tonne, well above market prices, but  it has struggled to sell enough to keep the subsidy scheme afloat.

Thousands of farmers have complained that they have not been paid, according to the Rice Farmers Association.

"They  are very angry and many of them have already joined a mass rally  against the government in Bangkok," Prasit Boonchoey, head of the rice  association, told Reuters.

The  Commerce Ministry has said it will spend 270 billion baht to buy 16.5  million tonnes of rice in the year that started in October. But since  then it has taken 2 million tonnes of rice, worth about 30 billion baht,  without paying for it, according to the state-backed agricultural bank  that funds the scheme.

Farmers have  been among the biggest backers of the government, largely because of  their support for Yingluck's brother, populist former premier Thaksin  Shinawtra, who has been in self-exile since 2008 but is now eyeing a  return.

The farmers' willingness to join the recent anti-Thaksin protests is a measure of their anger.

Some  farmers said they would block traffic in their areas in protest to  press for payment, an echo of action by rubber farmers in September.  Others said they would march to Bangkok.

"My  group will go to Bangkok to ask the Commerce Minister why we're not  paid," said Vichien Phuanlamjiak, head of a farmers' group in Ayutthaya  province, a major rice area north of Bangkok.

A government spokesman declined to comment on the late payments.
*
BOND ISSUE*

The  government will issue a three-year bond worth 75 billion baht to raise  funds for the rice-buying scheme, a senior official at the Finance  Ministry's Public Debt Management Office (PDMO) said on Tuesday.

"The  bond will be offered for the public by November so that we can raise  funds on time as farmers have started harvesting," said PDMO deputy  director Suwit Rojanawanich.

Bangkok  has spent 680 billion baht on rice since October 2011, but has only  sold enough to get 156 billion baht to pay the Bank of Agriculture and  Agricultural Cooperatives (BAAC) for the loans that fund the scheme.

"We  did not decline to pay the farmers, but we have some glitch with the  legislative process that is beyond my authority. It needs to be approved  by the cabinet," said Supat Eauchai, a BAAC vice-president.

The  government set aside 82 billion baht from the 2013/14 fiscal budget to  offset losses from its agricultural subsidy schemes, of which 50 billion  baht could be used to meet outstanding payments, a finance ministry  source said.

BAAC loans to pay for  the subsidy scheme are guaranteed by the Finance Ministry, which is  balking at backing more because the Commerce Ministry has not sold  enough rice to repay the outstanding debt, the finance ministry source  told Reuters.

"That was a limited  budget given to the BAAC to offset losses and prevent the bank from  having liquidity problems. It should not be used to prop up the scheme's  shortcomings," said the Finance Ministry official, who asked not to be  named.

Thailand has struggled to  cut its massive rice stockpiles, estimated at 15 million tonnes. Earlier  claims of rice sales to China and other countries were greeted with  scepticism by traders because there was no evidence of shipments.

The  International Monetary Fund last week called on Thailand to scrap the  rice subsidies and scale back on other fiscal stimulus measures in order  to balance the budget and contain rising public debt.

"They  just told me the government has no money. I'm concerned I won't earn a  living," said Kitti Boonraud, 38, who farms 6 hectares of paddy. He said  he had not been paid for 20 tonnes of rice sold to the government since  October.

in.reuters.com

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## Yasojack

15,000 per tonne thought it was 12,000 and the post is by a Thai.

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## Rural Surin

What a scam.

Evolved corruption that cycles around until they don't which end is up.

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## longway

The Ministry of Con-merce as so disably represenetd by Khun Kittirat and Nattawud demonstrate by their gutting and ransacking of the BAAC that robbing banks using masks and guns is so passe.

And the scam goes on.

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## Thormaturge

Gosh, I wonder where all the money is going.

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## longway

^ I hope this government stays in office long enough to explain how it gutted the BAAC and the destroyed rice industry by spending about a trillion baht.

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## S Landreth

update: UPDATE 2-Thailand issues bond as it struggles to pay rice farmers | Reuters




> The bond issue would be the biggest this year by the BAAC, and may get a frosty reception.


ya think?  :Smile: 




> He said bond auctions by the bank were cancelled last month because of low market interest, even though they offered higher yields than issues from other state enterprises.


 :Smile:

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## Butterfly

this is the making of a new 1997, bring it on !!!

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## Mid

*Thai $2.9 billion rice bond may struggle, risk of further payment delays*
Nov 25, 2013            

*BANGKOK* (Reuters) - Thailand may struggle to sell a 75 billion  baht (S$2.9 billion) bond to fund its rice intervention scheme, fund  managers said on Monday, risking further delays on payments to farmers.

 The state Bank of Agriculture and Agricultural Cooperatives (BAAC)  needs money from the bond, its biggest ever, to pay farmers for rice  bought at above market prices in a subsidy scheme that has cost the  government 680 billion baht so far.

 Farmers, a key support group for the government of Prime Minister  Yingluck Shinawatra, have threatened to join growing anti-government  protests as they have not been paid for their rice since the scheme was  renewed in October.

 Underwriters began sounding out institutional investors on Friday and will set the price on Monday when book-building ends.

straitstimes.com

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## S Landreth

Rice Bond Flop Adds to Yingluck Protest Misfortune - Businessweek

The failure of a bond sale for subsidized rice purchases adds to Prime Minister Yingluck Shinawatras challenges as she rounds up support to counter protesters occupying government offices.

The finance ministry sold 37 billion baht ($1.2 billion) of three-year notes on behalf of Bank for Agriculture & Agricultural Cooperatives on Nov. 25, short of its 75 billion baht goal. The yield of 3.53 percent was 39 basis points above that on similar-maturity sovereign debt, according to the Public Debt Management Office. That compared with a 30 basis point premium at the last offer on Oct. 31, Thai Bond Market Association figures show.

Rising borrowing costs are another blow for a program that has already eroded investor confidence and drawn criticism from the International Monetary Fund, which says the expenditure could jeopardize Thailands goal of balancing its budget by 2017. The Bank of Thailand unexpectedly cut interest rates this week amid slowing growth and a month long effort to oust Yingluck and dismantle the network of her brother, former premier Thaksin Shinawatra.

This growing political tension might have made it more important for them to raise funds for the rice scheme, Kobsidthi Silpachai, Bangkok-based head of capital markets research at Kasikornbank Pcl, the countrys fourth-biggest lender, said in a Nov. 26 interview. In the event of an election, they need to make sure their supporters are satisfied.

Farmer Support

Parties linked to Thaksin have won the past five elections on support from rice-growing areas in the north and north-east of Thailand that are poorer and more populous than the rest of the country.

The government spent 689 billion baht in the two years through September buying 44 million tons of rough rice from farmers at above-market rates, official data show. The program spurred the buildup of record reserves of the grain and dethroned the country as the worlds largest exporter. The IMF said in a report this month the purchases should be dropped in favor of budget transfers to low-income households.

The rice-purchasing scheme is already putting a severe strain on Thailands public finances and augurs badly for the credibility and transparency of fiscal policy, Nicholas Spiro, London-based managing director of Spiro Sovereign Strategy and a former consultant at Medley Global Advisors LLC, said in a Nov. 26 interview. The government is treading on very thin ice right now and has lost credibility.

Protests, Growth

Protesters started rallying last month to oppose a proposed amnesty bill that they said was aimed at allowing Thaksin to return to Thailand, and demonstrators broke into a compound housing the Ministry of Finance on Nov. 25. Protest leader Suthep Thaugsuban rejected an offer by Yingluck, who survived a no-confidence vote in parliament yesterday, to hold talks. The biggest opposition party plans to step up support of the demonstrations, Democrat party leader Abhisit Vejjajiva said yesterday.

Thailands economy grew by 2.7 percent in the third quarter from a year earlier, the least since the first three months of 2012, official data show. The central bank cut its 2013 expansion forecast this week to around 3 percent from 3.7 percent. Exports fell 0.7 percent year-on-year in October following a 7.1 percent decline in September, customs data show.

Global funds pulled a net $1.3 billion from Thai bonds and $1.5 billion from local stocks this month, according to official figures. Thats contributed to a 3 percent decline in the baht in November, with only Indonesias rupiah dropping more among emerging-market Asian currencies.

Dovish Tone

The Bank of Thailand cut its benchmark interest rate by 25 basis points to 2.25 percent on Nov. 27, a decision that wasnt predicted by any of the 19 analysts surveyed by Bloomberg. The yield on the 3.125 percent government bonds due December 2015 fell 23 basis points since the rate reduction to a three-year low of 2.65 percent, data compiled by Bloomberg show.

With the dovish tone and the bias going forward, it should provide quite a bit of support for the bond markets, Santitarn Sathirathai, an economist at Credit Suisse Group AG in Singapore, said in an interview yesterday. Theres more risks and uncertainties surrounding this program and that loss could be larger for longer, he said, referring to the rice buying.

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## Butterfly

to be expected, they are truly fucked

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## Mid

*Not only protesters, the farmers too*
Veera Prateepchaikul
24/12/2013
*
The festive season is already here with the New Year just a  week away and many office workers anxiously anticipating their year-end  bonus. Even government officials are to get a bonus  thanks to the  extraordinary generosity of the government and despite the fact that it  is broke.*

But not our farmers, especially those who have already  "pledged" their crops with the millers under the governments "Thaksin  thinks, Pheu Thai acts" rice buying scheme.

 Many of them have yet to receive payments from the Bank of  Agriculture and Agricultural Cooperatives for rice "pledged" back in  October  the beginning of the 2013-14 harvest season.

 The truth is that the bank which is the main and only sponsor of the  rice pledging scheme has run out of cash to pay the farmers. In short,  it is broke.

 
_The government's coffers are empty, and farmers are waiting for their  promised payment for already pledged crops, says Veera._ 
(Bangkok Post  file pic)

Those farmers who cannot wait for the bank to replenish its  depleted cash flow have simply gone to the wealthy millers and pawned  their _bai prathuan_, the receipt issued by the bank after having received the rice from farmers, and asked for cash in advance.

 But millers are not philanthropists. They are businessmen  the  blood-sucking sort. It was reliably reported that for every tonne of  paddy, for which farmers could get up to 15,000 baht from the government  under the scheme (depending on moisture content), the millers would  advance only 8,000 baht, charging the needy farmers about 7,000 baht.

 Of the four million or so farming households in this country, only  1.7 million subscribed to the rice pledging scheme, most of them in the  Central Plains and classified as in the middle- or high-income group.

 In other words, the majority of the farmers have not benefitted at  all from the scheme because they do not  produce enough rice, just  enough to feed themselves with maybe a little left over to sell if they  are lucky.

 It is fortunate for the government that the farmers, particularly  those who have not been paid by the BAAC, are a very patient lot and do  not take to the streets readily to protest. At least not yet.

 This does not mean their patience will last forever. Once their  patience snaps the consequences will be dire for the government, given  the fact the election is a little more than a month away.

 The BAACs plight is understandable. It has to rely on fresh funds,  borrowed funds, injected by the Finance Ministry, which is reluctant to  borrow more as cost of the scheme for just two harvests, 2011-12 and  2012-13, has already exceeded the 500 billion baht ceiling by 180  billion baht.

 The other source of revenue that the bank can reasonably expect is the Commerce Ministry which is, at best, discouraging news.

 The ministry has been unable to sell rice fast enough to repay the bank. Thai rice, except the premium _hom mali_, is no longer the darling of buyers because of its high price and low quality  a result of the rice pledging scheme.

 Eminent scholar Nipon Puapongsakorn, of the Thailand Research and  Development Institute, said recently that unless the rice pledging  scheme is scrapped, the quality of Thai rice will continue to fall and,  in the end, Thailand will permanently lose its rice markets.

 The Commerce Ministry has issued assurances that all the farmers will  be paid before the end of December. That is just wishful thinking, if  not just another lie. The ministry has lied before, so many times, and  one more lie will not make even a dent in its tainted credibility.

 The cabinet meeting on Wednesday is to consider the issue  where to  get the needed cash, quickly enough to satisfy the seething farmers  before they decide to take to the streets. Like the BAAC, the government  itself is also broke.

 There are not many options open to the caretaker government either,  because its ability to make financially-related decisions is now  severely restricted by the election law, because the country is now in  election mode.

 Getting new funding to pay the farmers can be interpreted as buying votes from the farmers, which is against the election law.

 It is not only the anti-government protesters the caretaker  government has to worry about, now there are the farmers too. It appears  the noose is tightening around the Yingluck Shinawatra governments  neck  all by its own making.

bangkokpost.com

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## S Landreth

> The Commerce Ministry has issued assurances that all the farmers will  be paid before the end of December. That is just wishful thinking, if  not just another lie. The ministry has lied before, so many times, and  one more lie will not make even a dent in its tainted credibility.


Fuckin awful,.just awful to take advantage of these hard working people.

But what might even be worse,.buying votes with money that is already due to these farmers.




> Getting new funding to pay the farmers can be interpreted as buying votes from the farmers, which is against the election law.

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## ralphlsasser

> Originally Posted by Mid
> 
> 
> The Commerce Ministry has issued assurances that all the farmers will be paid before the end of December. That is just wishful thinking, if not just another lie. The ministry has lied before, so many times, and one more lie will not make even a dent in its tainted credibility.
> 
> 
> Fuckin awful,.just awful to take advantage of these hard working people.
> 
> But what might even be worse,.buying votes with money that is already due to these farmers.
> ...


We all know it happens, but there is no legal proof for your statement.

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## S Landreth

> Originally Posted by S Landreth
> 
> 
> 
> 
> 
> 
> 
>  Originally Posted by Mid
> ...


Knowing its the way of PT politics, I didnt think I would have to show you (or anyone) support for the fact that PT buys their way into office.

To summarize the article headline (underlined/circled in red): Farmers were told to vote for PT if they want payment for their rice. 


More evidence in this link. 

Thai Rice Farmers' Association president Prasith Boonchuey: 20 Million rice farmers prepared to protest the Government for the payment. This could lead to no vote/no election.


Holding any group hostage (their vote/s for food on the table) for what is rightfully theirs is unacceptable behavior, be it from any political party.

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## Albert Shagnastier

Just more evidence that confirms how corrupt and stupid the current government is.

I'm sure the next one will be..
Nah - fvck it.

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## S Landreth

BANGKOK, Jan 9 – The caretaker government will seek permission from the Election Commission (EC) to borrow Bt130 billion to buy rice from farmers under the subsidy scheme, according to the caretaker commerce minister.

Niwatthamrong Boonsongpaisarn said the EC has allowed the ministry to continue the rice pledging plan, one of the Yingluck Shinawatra government’s major policies, but it will need to seek Bt130 billion loans to buy rice from farmers in the 2013/14 harvest season.

He said the Commerce Ministry will soon conduct an auction to sell 500,000 tonnes of rice on government-to-government basis in order to earn revenue to pay farmers.

The ministry has sold rice at a total value of Bt180 billion since 2011 while the new batch of 10 million tonnes of rice, which will be pledged with the government in the 2013/14 harvest season, will cost Bt150 billion.

The ministry has paid Bt30 billion to farmers and the remaining Bt77 billion will be given to them by January 25, he said.

Tanith Sriprateth, EC deputy secretary general, said the Commerce Ministry’s requested Bt130 billion in loans is a big issue which needs thorough study.

The EC must consider the law, particularly Section 181 of the Constitution, to ensure that the caretaker government’s spending will not become a burden to the next administration, he said. (MCOT online news)


Doesn’t January 25th come before February 2nd?

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## Butterfly

> The caretaker government will seek permission from the Election Commission (EC) to borrow Bt130 billion to buy rice from farmers under the subsidy scheme, according to the caretaker commerce minister.


needs to buy those votes ASAP,

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## Butterfly

> To summarize the article headline (underlined/circled in red): Farmers were told to vote for PT if they want payment for their rice.


but but all democracies do it, so it's normal for Thailand to do it too  :Roll Eyes (Sarcastic):

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## baldrick

> Bt130 billion


4 billion USD ?  that is a fair sized hole

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## Mid

*Thailand offers rice at a loss as it struggles to pay farmers*
Apornrath Phoonphongphiphat and Naveen Thukral
(Additional  reporting by Ho Binh Minh in HANOI and  Erik dela Cruz in MANILA; Editing  by Raju Gopalakrishnan)
($1 = 32.9 baht)   

 * Thailand desperate to raise money to pay farmers
               * Offers 30 percent discount for rice against cost price
               * Rice prices slip as farmers sell on open market

*BANGKOK/SINGAPORE,*  Jan 17 (Reuters) - Thailand's embattled government offered to sell rice  at a huge loss, officials said, as it sought to shore up Prime Minister  Yingluck Shinawatra's support among farmers who are concerned that the  administration could run out of money to pay them.

               The  government, battling a campaign to oust Yingluck that has pitted the  royalist, Bangkok establishment against her mainly rural supporters,  offered rice at around 30 percent below cost on the export market to  continue funding a rice intervention scheme, a Thai and a Philippine  official said.

               The offers continued until Yingluck dissolved parliament last month to counter the campaign against her government.

               Her  caretaker government lacks the authority to take major decisions,  including the export of state rice stocks, and has to rely on domestic  sales to pay the mounting bills it owes rice farmers in Yingluck's  provincial strongholds.

               The government  does not disclose at what prices it offloads rice in the domestic  market, but traders estimate they will be substantially below anything  offered on the international market.

               "We  need to adjust ourselves in order to sell rice at appropriate prices to  get liquidity to run the rice-buying scheme," said Surasak Riangkrul,  director-general of the Foreign Trade Department, which oversees sales  of the government's rice stocks.

               He  declined to disclose the exact price Thailand is offering but another  official in the commodity trade department said Bangkok quoted $475 a  tonne in a government-to-government deal with Manila last month to  supply 500,000 tonnes.

               This is almost a  third below the estimated cost of 22,000 baht ($669) per tonne the  government incurred on buying paddy from farmers, milling and storage.  At the time, rice prices in the world market were around $400-$420 a  tonne.

               A spokesman of the National Food  Authority (NFA) in the Philippines said Thailand reduced the offer price  further to $462 per tonne as it tried to outbid Vietnam, which quoted  $462.25, highlighting Bangkok's desperation.

               "But it was too late because we had already decided to award the deal to Vietnam," said Rex Estoperez, NFA's spokesman.

               The  subsidy, which has cost the government billions of dollars, has fuelled  the political crisis that is being played out on the streets of  Bangkok.

               Protesters are seeking to topple  the government, which swept to power in 2011 with support from rural  voters, many of them rice farmers who had welcomed the generous  intervention scheme. City dwellers are angered that their taxes are  paying for the subsidy.

               However, hundreds  of farmers, some unpaid since October, have also joined the  demonstrations against Yingluck, disillusioned by the government's  inability to reliably fund the controversial programme.

               Farmers  who have not been paid by the state for rice bought under the scheme  threatened to block roads in 26 provinces last month.

               Thailand is sitting on a massive rice stockpile, estimated between 15 and 17 million tonnes.

*REPRIEVE*

               But  in a reprieve for the government, Thailand's state-backed farm bank,  which runs the rice scheme, raised 32.58 billion baht ($991.33 million)  in a domestic debt issue that was far better subscribed than expected,  officials said on Thursday. It had aimed to raise 20 billion baht.

               Earlier  this week, Thai rice prices slipped as fears of payment disruptions  under the rice-buying scheme forced farmers to unload the grain in the  market, despite higher prices offered by the government, traders said.

               The money raised in the bond issue looks set to be used to pay farmers since rice sales are limited by the ban on exports.

               "The  caretaker government has no authority to seal any state binding  agreements, including rice deals, so government-to-government rice sales  will halt automatically," Surasak said.

               Thailand  sold 1 million tonnes of rice to China in November to be supplied over a  period of one year but the shipments have been held up as the Election  Commision says the caretaker government cannot enact long-term contracts  that would commit any new government, an official of the commission  said.

               The rice-buying programme made Thai  rice more expensive in the global market, and in 2012 the country lost  its crown as the world's top exporter, with India taking over.

               Anti-Yingluck  protesters say the rice scheme is corrupt and has helped wealthy  farmers and regional politicians more than the poor.

               Protesters  brought parts of Bangkok to a near-standstill this week but the  government is sticking to a plan for a Feb 2 election as it believes  support for the leader of the agitation is waning.

               The protesters have rejected the proposal to hold elections and want an unelected "people's council" to take power.

               Nevertheless, rival exporters Vietnam and India fear losing market share when Thailand resumes exports with reduced prices.

               "Definitely  there's a big chance that we will buy more from Thailand if they offer a  better price," said Estoperez of the Philippines' NFA, one of the  world's biggest buyers of rice.   "Whether it is a  government-to-government deal or a private transaction, the price and  quality are always important for us." 

trust.org

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## Mid

*Thai govt seeks go-ahead to raise $4B to pay rice farmers*
January 24, 2014

*BANGKOK * The Thai government has sought a ruling from an  administrative court on whether it can raise 130 billion baht ($4  billion) to pay rice farmers who have been waiting for months for money  after selling their grain into a state intervention scheme.

  Farmers are blocking provincial roads in protest and some have  threatened to travel to Bangkok to join demonstrators who are trying to  topple the government.

 Prime Minister Yingluck  Shinawatra has dissolved parliament and called a snap election for Feb.  2. She now heads a caretaker administration that is not supposed to make  decisions that bind the next government.

 "On  the rice funding, the Finance Ministry just submitted the plan to the  Council of State today, which is expected to take time to consider it,"  Suwit Rojanawanich, an adviser to the ministry's Public Debt Management  Office, told Reuters.

 "We will have to wait for what the council says before proceeding on anything," he added.

  The intervention scheme has run into funding problems because the  government has been unable to sell the rice it bought from farmers. It  promised them a price well above the market rate, which made the export  price uncompetitive.

 The government has said it would spend 270 billion baht on the intervention scheme in the crop year from October 2013.

  The state farm bank that is managing the scheme, the Bank of  Agriculture and Agricultural Cooperatives, has just raised 32.58 billion  baht in a bond issue this month. Suwit said the money had been  transferred to the BAAC on Thursday.

 In  November, the bank only managed to raise half of the 75 billion baht  bond it offered, so it reopened the bond this month to help get funds to  meet late payments to rice farmers.

 The rice  scheme, which has cost the government billions of dollars, has fueled  the political crisis that is being played out on the streets of Bangkok,  with critics saying it is riddled with corruption and a drain on the  state budget.

 The cost of the scheme has led to a  warning from rating agency Moody's and a rebuke from the International  Monetary Fund about the fiscal impact. 

gmanetwork.com

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## Seekingasylum

I rather think the Thai taxpayer will be paying for Thaksin's last election for a few more years yet, never mind the premium to be paid on the next.

All good stuff for we expats subsisting on our incomes sourced in real currencies.

Of course, when I move into my des res in Pattaya and contemplate my retirement years to be spent in increasing financial security, I shall raise my glass of champagne in a toast to the true hero of the hour - the monumental, cretinous stupidity of the chickenhead Isaan farmer who in voting for Thaksin made it all possible. His ignorance is our gain.

God love him.

As Butterfly says, bring it on.

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## baldrick

> The intervention scheme has run into funding problems  because the government has been unable to sell the rice it bought from  farmers. It promised them a price well above the market rate, which made  the export price uncompetitive.


takky the economic guru promised that his scheme would raise the riceprice worldwide - which it has in the poorest countries in the world

now his grand scheme has shagged the thai economy - another dunning-kruger example




> As Butterfly says, bring it on.


I am sure the ladyboys will satisfy you as well

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## Mid

* Thailand Government to Seek Bridge Financing from Local Banks to Pay Farmers     * 
Jan 28, 2014                  

            Thailand's  Finance Ministry will seek bridge loans from local banks to pay the  farmers who pledged their rice under the rice mortgage program,  according to a local daily.

 The Finance Ministry's Public Debt Management Office (PDMO) plans to  make payments to the farmers within a month.  The PDMO also plans to  issue the Bank for Agriculture and Agricultural Cooperatives' (BAAC)  bonds, which are guaranteed by the Finance Ministry, as payment for  financing. 

 Local sources say that the government wants to complete the borrowing  process within one week. Recently, the State Council allowed the  caretaker government to borrow 130 billion baht (around $4 billion), and  the PDMO is reportedly waiting for an official letter from the Council.  Banks are also waiting for a letter from the State Council before  joining bidding for bridge loans as most banks are concerned about the  risks involved.  

 The caretaker government, which is struggling to raise funds for the  rice mortgage program, is planning to auction around 500,000 tons to 1  million tons of rice from government stockpile early next month.

 The rice mortgage program 2013-14 began in October 2013 and so far  farmers have pledged about 10 million tons of paddy rice with the  government. However, the government has paid about 50 billion baht  (around $1.5 billion) only for 3.5 million tons of paddy rice. The  government has spent about 780 billion baht (around $23.6 billion) on  the program in the last two years according to the caretaker Deputy  Commerce Minister.

oryza.com

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## Albert Shagnastier

> Thailand's Finance Ministry will seek bridge loans from local banks to pay the farmers who pledged their rice under the rice mortgage program


How much was collected?

How much was sold?

Where's the fvcking money from the sales?

Why are PT trying to borrow (from what I can tell) the entire amount?

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## Mid

*Thai govt seeks $5 billion in loans to fund rice-buying scheme*
Jan 29, 2014            

 
_Workers at the Udon Permsin rice mill piling up sacks full of rice  to for storage in the north-east province of Udon Thani, Thailand  January 21, 2014._
FILE PHOTO: REUTERS        

*BANGKOK* (Reuters) - The Thai government, struggling to fund a  controversial rice-buying scheme, will seek bridging loans of 130  billion baht (S$5 billion) to pay farmers who have been waiting months  for their money, a state farm bank official said on Wednesday.

 Farmers have been blocking roads in protest at the late payment in  some provinces and some have threatened to join anti-government protests  in Bangkok.

 The government, acting through the state Bank of Agriculture and  Agricultural Cooperatives (BAAC), is paying farmers well above the  market rate for their rice. This has priced Thai grain out of export  markets and the government has been unable to sell enough to replenish  the buying fund.

 "The Finance Ministry will guarantee another 130 billon baht loan for  the BAAC to borrow. We have sent invitations to domestic financial  institutions and a first auction is due to start on Jan. 30," Mr Wanchai  Siriwatanatrakul, a director in charge of government policies at BAAC,  told Reuters.

straitstimes.com

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## Butterfly

I think the evil plan by Thaksin was to bankrupt all those rice farmers so it could slow down production for the next few years which would push up the price of rice on world markets

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## Norton

> Thailand's embattled government offered to sell rice at a huge loss,


Should have been long ago. Take the hit and move on.

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## Rural Surin

> Originally Posted by Mid
> 
> Thailand's embattled government offered to sell rice at a huge loss,
> 
> 
> Should have been long ago. Take the hit and move on.


Yep.

Hope there are lessons learned by both Farmers and Mafias.

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## Butterfly

> Originally Posted by Mid
> 
> Thailand's embattled government offered to sell rice at a huge loss,
> 
> 
> Should have been long ago. Take the hit and move on.


that's a big hit, and I don't think they have the cash for it

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## S Landreth

Ex-finance minister warns bank to be cautious in joining bridge loan auction

Commercial banks interested to join the governments auction of a bridge loan to raise fund for the Bank of Agriculture and Agricultural Cooperatives (BAAC) so it can pay rice farmers should ask for a close look of the letter of the Council of State endorsing the governments loan plan.

The above warning was made by former finance minister Thirachai Phuvanartnaranuban as the Finance Ministry had extended invitation to financial institutions to join the auction of a bridge loan amounting to between 20-30 billion baht so the Finance Ministry could secure a loan for BAAC to pay rice farmers who had pledged their crops with the government since last October.

Thirachai pointed out that there is a high risk involved for the banks if the letter of the Council of State endorsing the governments loan plan was just the personal opinion of its secretary-general because  if that is the case, it would not be binding to the cabinet.

He said that the best way to pay back the farmers is for the Commerce Ministry to speed up selling rice in the stockpiles so there will be earnings for repayments to the farmers.

The ex-finance minister said he suspected the whole loan plan might be just a deception to lure farmers and their families to vote for the Pheu Thai party in Sunday election to return them into the government again.

----------


## nidhogg

Ok.  What I heard. Government promised 15K (budget), gave 12K (guess where the difference went).  Much of the rice is graded as "spoiled", sold to "buyers" at minimal price, sold on market at (slight discount) full price (guess where the difference went).  Independent sellers can't sell (market glutted by all this "spoiled" rice sold at slight discount).

How many bites of the cherry?

----------


## S Landreth

Not good news, but given the uncertain risk why would anyone invest?

Pheu Thai may pay the price at the ballot box for failure to pay farmers

The caretaker government suffered a major setback yesterday when it failed to secure massive loans to pay farmers ahead of Sunday's election. The government seeks loans to pay for crops farmers sold months ago under its flagship rice-pledging programme.

This bad news is likely to hit the ruling Pheu Thai Party hard at the ballot box, after many rice farmers threatened to boycott the election or vote against the party if they were not paid before the election.

Leaders of farmers' groups from all over the country agreed yesterday to start protesting on the streets tomorrow if the government fails to settle what it owes to farmers by today, said Songpol Poonsawat, who represents farmers in Ang Thong.

"This is our response to the government's failure to pay attention to our suffering. We farmers have been waiting for too long," he said.

The government yesterday opened bidding for the first batch of Bt130 billion to be raised through short-term loans. Many of the 34 financial institutions invited by the Finance Ministry avoided the bidding, as there is no clarity on whether the lending would be legitimate. 

A Finance Ministry source said it would open the next round of bidding for Bt40 billion in loans.

The next weekly bidding session is scheduled for Tuesday.

* "Though some banks joined the bidding, high interest rates were offered, which included risks. This made the Public Debt Management Office [PDMO] cancel the bidding this time," the source said.

Had the auction succeeded, farmers who mortgaged their paddy with the government under the scheme would have been paid by today (?), as the government claimed - two days ahead of the general election on Sunday.

As scheduled, the first batch of loans from financial institutions under the auction arranged by the PDMO for the Bank for Agriculture and Agricultural Cooperatives (BAAC) totalled Bt20 billion with a 15-year tenor. The open bidding will be made every Tuesday with offers to be submitted before 10am.

The bidding is part of the Bt130-billion funding that the caretaker government is seeking to pay off farmers. The PDMO designed a schedule to gradually borrow from financial institutions up to Bt30 billion a week via bidding until the total amount would reach Bt130 billion as needed.

The PDMO's loan bidding arrangement came after the Council of State gave the opinion that the Finance Ministry could proceed with the Bt130- billion borrowing plan. The ministry had asked for legal advice on whether it was eligible to get that amount of loans as carrying loans. 

Piti Tantakasem, chief wholesale banking officer of TMB Bank, insisted that the bank has not participated in the loan auctions for the BAAC because some legal issues needed further study, and the approval of the bank's credit committee was needed. 

Teeranun Srihong, co-president of Kasikornbank, cited the same reason, saying the bank did not join the bidding, as it could be not verified legally.

A source from the banking industry said banks had discussed among themselves by phone and agreed that the auction was not a suitable way of lending and that it could affect depositors' trust. 

However, the Finance Ministry reportedly threatened the banks with revoking their right to be the ministry's primary dealer if they didn't join the auction.

Despite the disappointment from the government's aborted bridge-financing bidding, the Commerce Ministry has high hopes that foreign banks would be interested. 

Caretaker Deputy Commerce Minister Yanyong Phuangrach said the state-owned banks' employees were worrying too much about the lending. They should concern themselves more about the farmers who have been not yet been paid, and allow the banks to lend money. 

"The government should be able to earn money and pay farmers as soon as possible, while it may consider not allowing state-run banks to join the rice-pledging project in the future," he said.

Caretaker Commerce Minister Niwatthumrong Boonsongpaisan said seeking funds to support the rice-pledging scheme is the responsibility of the Finance Ministry, while the Commerce Ministry would accelerate selling rice from the state's stockpiles to earn money to pay off the unpaid farmers for paddy pledged.

However, Niwatthumrong could not disclose how long it would take or how much money the ministry could make from rice releases to pay the farmers. 

Wichian Phuanglamchiak, president of the Thai Agriculturist Association, has called on employees of government banks to be more sympathetic towards farmers, as millions of them have suffered from the delay in payment under the pledging scheme since October.

"Farmers are suffering tremendously from the late payment under the pledging scheme. We owe the BAAC, fertiliser and pesticide traders, the rice seed company and transportation companies for delivering rice to millers," he said.

If the government banks do not care about farmers, the group of farmers will withdraw their money from those banks and will embargo government banks' services, he said.

----------


## Butterfly

they did Y a favor, accepting the loans would have brought legal grounds to dismiss her if she wins

----------


## robuzo

Pretty soon if they are paying the farmers they could be doing so in devalued baht.

----------


## Albert Shagnastier

> A source from the banking industry said banks had discussed among themselves by phone and agreed that the auction was not a suitable way of lending and that it could affect depositors' trust.





> However, the Finance Ministry reportedly threatened the banks with revoking their right to be the ministry's primary dealer if they didn't join the auction.


That's a big no then.






> the Commerce Ministry has high hopes that foreign banks would be interested.


 :rofl:

----------


## Butterfly

it's a financial time bomb, why should the Thai banks pay for it ? 

Thailand own subprime ?

yeah, I am sure foreign investors are waiting in lines to buy those rotten rice bonds  :Razz:

----------


## Necron99

I'm pretty sure they will end up sticking this debt on to the central bank like they did last time.

----------


## S Landreth

Banks say why they reject rice loan auction

Commercial and state banks yesterday attributed legal issue as main reason to not enter the first 20-billion baht bridging loan auction.

Bangkok Bank president Kosit Punpiumrat says that the bank would not be joining the loan auction to raise fund for the governments rice-pledging scheme.

He said the reasons behind the banks decision are that the loan  issue is the heart of public interests at the moment and that it is still not very clear in the aspect of legality so the bank must consider the participation carefully.

At the same time Thai Military Bank also said that it has not joined the auction because of legal complications and retain the rights to consider the best possible solution for all parties.

Meanwhile, Minister of the Prime Ministers Office Varathep Ratanakorn affirmed the government understands and sympathizes with the farmers for the delay of payments.

The minister informed that relevant agencies are currently trying their best to gather the amount of money needed and have been selling rice in stock and looking for loans, though every action has proven to be difficult due to the limitations current state of the government.

He further ensured the rice mortgage scheme was implemented for the benefit of the farmers and asked that corruption and delay in payments be looked at differently, as they are two different things.

Minister of Commerce Niwatthamrong Boonsongpaisarn said the government has released into the market over 1 million tonnes of rice in stock in the past month, and was stopped short when parliament was dissolved, since the caretaker government could no longer carry out any projects that would commit the new government.

TDRIs Research Director Viroj Na Ranong pointed out that although the government should sell as much rice in stock as they can, but it could not carry on with the method indefinitely, as the problem would become more complicated.

He suggested that the caretaker government solve the problem for rice farmers through short term solutions during the period where the prices of produce are lower than expected. He also said both the Pheu Thai Partys rice pledging scheme and Democrat Partys price guarantee  scheme should be scrapped because they were proved to be failed policies.

----------


## Seekingasylum

Remember Thaksin's fuck up with the longan harvests. They just gave the stuff away in the end.

The guy is a disaster for Thailand. Pity the majority are so retarded they can't see it.

----------


## Butterfly

yeah, but the best part is that he is the only guy in town with a clue, the others are far worse or more incompetent than he is  :rofl:

----------


## Sailing into trouble

Name a country.

Go on any country!

Then google to see how much and for how long agricultural subsidies have been paid!

Should we start with france :Smile:  http://www.french-property.com/news/...bsidies/France receives around €11 billion each year from the EU in agricultural support, but very little of it actually goes to those who do the farming.

There are a little over 500,000 recipients of EU farming subsidies in France, but over 80% of the funds actually goes to large industrial food processing businesses and charitable organisations.

In the list of beneficiaries for 2008, recently released by the French government, no independent farmer is listed amongst the top 20 recipients.

The largest recipient is the chicken production conglomerate Doux, who received a whopping €62.8 million in aid between October 2007 and October 2008. In the year 2008 the group had a turnover of nearly €2 billion.

According to the radical small famers group, the Confédération paysanne et exploitant agricole, this turnover has been achieved mainly through the acquisition of smaller competitors, all who would have been in receipt of the subsidies, which are now paid to the holding group.

Most of the subsidies were paid to the group to maintain their competitive position in the export market, by compensating the company for the lower prices they are obliged to sell into this market.

France is under strong competitive pressure from countries outside of Europe in the export of chickens, and this subsidy is considered to be important for the strategic development of agriculture in France and Europe.

The same principle applies to the subsidies received by a number of large cereal and sugar producers and wholesale traders on the list.

France is the leading producer of cereal crops and sugar in Europe and is *also the largest recipient of agricultural support.*

----------


## Sailing into trouble

OK

So how about Ireland (the republic bit)

Ireland

http://capreform.eu/irish-farmers-to...-their-income/
The dependence of Irish farm incomes on the Single Farm Payment and other direct payments was starkly revealed by the publication of the 2006 results of the annual National Farm Survey (NFS) this week. Fully 98% of Family Farm Income (FFI) on Irish farms in 2006 was derived from the Single Farm Payment and other direct payments; only 2% represented the return from the market, the lowest recorded since the Survey commenced. Market FFI per farm in 2006 was only €334. In 2004, 86% of Family Farm Income came from direct payments and subsidies, and 14% from the market place.

The USA 

Anyone? Go for it you will be amazed, or not!

From WIki
The United States currently pays around $20 billion per year to farmers in direct subsidies as "farm income stabilization

----------


## Albert Shagnastier

> I'm pretty sure they will end up sticking this debt on to the central bank like they did last time.


Buying votes with the people you're buying votes from money.
Cunning long term plan  :Smile:

----------


## robuzo

^^Food supplies are also a strategic resource, which is a rationalization for subsidies in some countries.

My take on the rice cockup is the Thais tangled with India and lost. That India is a net exporter of rice, not to mention dominates that market, is a wonder of the modern world.  :Roll Eyes (Sarcastic):

----------


## Sailing into trouble

> ^^Food supplies are also a strategic resource, which is a rationalization for subsidies in some countries.


At one time maybe. The Starvation threat to GB at the start of WW2 has often been the rational for that. However most subsidies are a political move, buying votes. Japan subsidies its rice farmers to NOT GROW RICE. Many rice farmers do nothing and "reap the rewards".

The point I am trying to make is that it is not anew strategy. It is world wide. The only major difference is that in Thailand the money is going to the poorer section of the community. Obviously any increase in the status of the peons is going to upset the elite of the nation

----------


## Necron99

> Name a country.
> 
> Go on any country!
> 
> Then google to see how much and for how long agricultural subsidies have been paid!
> 
> Should we start with france French Farmers and EU Agricultural Subsidies receives around 11 billion each year from the EU in agricultural support, but very little of it actually goes to those who do the farming.
> 
> There are a little over 500,000 recipients of EU farming subsidies in France, but over 80% of the funds actually goes to large industrial food processing businesses and charitable organisations.
> ...



Yes, but I'm pretty sure France doesn't have millions of tons of unsold overpriced chicken sitting in warehouses....or a million chicken farmers waiting 4 months to be paid.

----------


## longway

> Originally Posted by robuzo
> 
> ^^Food supplies are also a strategic resource, which is a rationalization for subsidies in some countries.
> 
> 
> At one time maybe. The Starvation threat to GB at the start of WW2 has often been the rational for that. However most subsidies are a political move, buying votes. Japan subsidies its rice farmers to NOT GROW RICE. Many rice farmers do nothing and "reap the rewards".
> 
> The point I am trying to make is that it is not anew strategy. It is world wide. The only major difference is that in Thailand the money is going to the poorer section of the community. Obviously any increase in the status of the peons is going to upset the elite of the nation


This is a red herring, its not an argument about subsidies, the dems had a rice subsidy, the PT subsidise a variety of agricultural products, the focus is the PT rice scam as it is so blatantly corrupt and inefficient.

They had about 23 million tonnes of milled rice from the paddy thry bought over 2 years. They claim to have 10 million tonnes in stock, so what happened to the rest and where's the money from those sales?

Given prevailing world prices they should have about 5 billion dollars or 150 billion baht. Why are they trying to borrow another 130 billion? They have already spent 680 billion, not one baht iof that had been properly accounted for by the PT. Any accounting done shows staggering losses which are denied.

You are insulting your own intelligence by trying to defend this scam. :tieme:

----------


## hazz

> Ok.  What I heard. Government promised 15K (budget), gave 12K (guess where the difference went).  Much of the rice is graded as "spoiled", sold to "buyers" at minimal price, sold on market at (slight discount) full price (guess where the difference went).  Independent sellers can't sell (market glutted by all this "spoiled" rice sold at slight discount).
> 
> How many bites of the cherry?


I think your being a bit unkind there. rice is a technical product that has to comply with a limited number os specifications to be sold as a commodity. if you give rice that is below spec then the miller will have to either process the rice to meet spec or sell the rice to a less stringent specification that the rice does meet or exceed. 

As for where that 3k difference went, in the case miss calibrated sensors, fraudulently into the pocket of the miller, but in the case where the miller is a honest chap  :mid: 
 when they buy one tonne of rice with 20% water, which they then reduce to 10% to get it to spec, they will put 100kg of water into the air, leaving with with 900kg of rice to attract  90% the price of 1 tonne... in the is case the 3k price difference essentially evaporated.... it was illusional.

Its the rest thats the nail on the head. Spoilage is where the corruption lies. dr bob is right in that white rice can keep for 30 years.... when its kept permanently in a deoxygenated, humidity controlled environment at about 4C.... a set of conditions laughably far from whats available in Thailand, which says a lot about bob's interest in accuracy.

The reality is that rice in thai storage will spoil within months at worst and a couple years at best.  The heart of the scheme, the storage creates opportunities to give patronage to little MP's... control over who gets local storage, processing, transport contracts. 
The uncertainty of the temporal effects on the quality of the rice creates opportunities to credibly and fraudulently classify rice as soiled when its sold out of government storage, which is where those who control who gets to buy the rice and just how carefully its quality is verified.... the big money for the big boys. And the G2G deals would it come asa  surprise that these bypass almost all of what thailand has in the way of eruption prevention processes and laws?

This does suggest just integrated PT is with the middle men in the rice farming areas, the current scheme has been very good for them... lots of bites at the cherry, whilst the dems scheme cut them out of the loop. Personally I would like to see a political map of thailand overland with who won the 2011 election and what the predominant crop was for each district. I suspect there would be a strong correlation.


As for the farmers themselves, I suspect that those owed money will not see anything until parliament is quorate with 85% of the its MP'd elected. This is unlikely to happen for 3 months; those who are paying loan shark interest rates are going to loose everything... including their land. And in rural thailand the loan sharks who do they tend to be? (not a retorial question)

----------


## robuzo

> Originally Posted by robuzo
> 
> ^^Food supplies are also a strategic resource, which is a rationalization for subsidies in some countries.
> 
> 
> At one time maybe. The Starvation threat to GB at the start of WW2 has often been the rational for that. However most subsidies are a political move, buying votes. Japan subsidies its rice farmers to NOT GROW RICE. Many rice farmers do nothing and "reap the rewards".
> 
> The point I am trying to make is that it is not anew strategy. It is world wide. The only major difference is that in Thailand the money is going to the poorer section of the community. Obviously any increase in the status of the peons is going to upset the elite of the nation


I think my point reinforces the one you were trying to make about subsidies for farming, so your response is a bit weird. Japan's rice reserves are a key part of its aim for food self-sufficiency. Paying farmers not to grow under subsidy schemes is certainly not specific to Japan. Leaving something as important as the food supply up to the "free market" would be ridiculous.

----------


## S Landreth

A rotten harvest Mounting debts from the heavily criticised rice pledging scheme threaten to derail the country's development.

In the two years since the launch of the government's rice pledging policy, where do we stand now? Silos across the country are filled to the brim with millions of tonnes of grain, as the government has become the sole buyer of rice in the country but been slow to sell. Farmers nationwide are protesting about delayed payments as the cost of the scheme soars. And taxpayers are facing hundreds of billions of baht in losses, with the bill rising with each passing day due to the fact that the programme is a bald-faced subsidy paying farmers up to 40% above the market price. 


The latest move by the Finance Ministry was to call for a bridging loan auction of commercial and state-owned banks last week in an attempt to get a loan to repay 1 million angry rice farmers. 

However the auction for the first 20 billion-baht bridging loan was called off, as only a few banks joined in the bidding because most of them were worried about whether the caretaker government has the mandate to borrow. The government now owes the farmers 130 billion baht and the money from rice stock sales is insufficient to make the payments. 

The caretaker government has tried to find ways to pay the debts owed to the farmers as it cannot afford to lose their votes. 

If this were an enterprise, the word "bankruptcy" would not be sufficient to explain the massive losses and hefty damage caused to the country to explain the massive losses and hefty damage caused to the country and its people. More importantly, corruption allegations are tarnishing the country as a whole. 

The cost of this failure is enormous. In the past two years, the government has borrowed a total of 700 billion baht, equal to a two-year government investment budget. Even worse, the borrowing and debts continue to mount. 

And those bearing those bearing the brunt are the taxpayers. But that is only the financial loss. What else have we lost along the way? And what costs are we about to pay if this much-denounced scheme carries on? 

Many  renowned economists, academics and public figures have slammed the subsidy and urged the government to end it. However, the Yingluck Shinawatra government has played deaf and continued with the scheme. 

What will happen if the government continues the scheme? 

Mounting debts : Based on Thailand Development Research Institute (TDRI) data, rice pledging has raked up a bill of 728 billion baht. After the money received from rice sales is deducted, the figure is 700 billion baht. 

After more than two years, or five rice crops, the total amount of paddy rice pledged under the scheme stands at 54 million tonnes, equal to 32.4 million tonnes of milled rice. However, the total received from rice sold only stands at 158 billion baht. 

"If this rice pledging scheme continues, the country will be broke," said Nipon Puapongsakorn, a rice expert at the TDRI. 

The key reason is the government will continue to seeks ways to finance the project, which means the debt will continue to mount. 

The interest the the government has to pay or rather that the taxpayers must shoulder is estimated at 21 billion baht a year, given annual interest of 3%. 

"The government has to keep borrowing money to finance the interest too. Additionally, the debt will escalate if the scheme is pushed forward," said Mr Nipon. 

A serious concern is the total debt incurred by the one-year pledging is 350 billion baht, and that goes beyond the annual actual disbursement of government investment budget. To carry on this project, the government will likely have to squeeze its other budgets, which will eventually hurt the country's long-term development in infrastructure, economy, gross domestic product, competitiveness and productivity. 

"In the worst-case scenario, the state will run out of money and not be able to pay salaries to civil servants," said Mr Nipon, adding that the grass roots will eventually be affected. 

"The programme was initially aimed at reducing income disparities and making the farmers richer. However, now it is widening the gap. Only large-scale farmers are benefiting from the scheme." 

Crony capitalism and corruption : Apart from mounting debts, we cannot deny the rice pledging scheme has induced "crony capitalism" and bred huge corruption. And sooner or later, taxpayers will have to shoulder this enormous cost. When the programme is over, some unpleasant facts will be brought into the limelight, and will, again, largely depend on the Thai law enforcement and justice system, if it ever brings down the culprits. Crony capitalism has long set its roots in Thai society, and it is unlikely to go way. 

Social costs and Thailand's reputation : For many decades, Thailand had been a champion rice exporter of reputable quality. However, as soon as the scheme was implemented, export volumes began falling sharply, as prices have gone way over market prices. Even Thailand's signature rice strain Hom Mali, has seen its reputation dented. 

A look at paddy rice prices explains why. Over the period, Thai farmers received received 15,000 baht a tonne for paddy compared with 10,912 baht a tonne for US rice, 7,130 baht for Indian rice and 6,975 baht for Vietnamese rice. In 2012, Thai rice exports totalled 6.93 million tones, down by 35% from 2011. Exports for last year are expected to show a further decline despite the fact that global trade in rice rose last year to 39.8 million tonnes from 38 million in 2012. 

In the first half of last year, Thai 5% white rice averaged US$572 a tonne free on board compared with an average price of $388 a tonne for Vietnamese rice. Authorities are understandably loathe to reduce prices for fear of undermining the market entirely and escalating the already-massive inventory losses carried by the state. 

Regardless, Thailand's competitive position in the global rice trade has clearly been affected by the pledging policy. Following years as the world's largest rice exporter, Thailand now ranks third after India (26%) and Vietnam (19%). 

Since sales have been extremely slow rice stocks are piling up every day. Nobody actually knows how much rice has been kept in stock, nor how much has been sold. The government has disclosed few figures. 

However, Somporn Isvilanonda, an economist at the Knowledge Network Institute, believes the sums are massive. He estimates the government has stockpiled as much as 18 million tonnes of milled rice, the equivalent of 17% of total global stocks. Thai rice holdings are the third largest in the world after China and India. 

"It would take 5-7 years for the government to reduce its stocks to just 2 million tonnes. If the government wanted to clear its stocks faster, we'd have to price exports below Vietnamese and Indian rice," said Mr Somporn. 

Generally, the quality of rice in stock reduces by 10% a year. Hence, the longer it is kept the bigger the loss will be. 

A way out of the imbroglio 

Many rice experts say it is essential the government end the scheme in order to contain the damage and losses. 

The first and most important step is for the government to stop the scheme or any interference in market prices and let market mechanisms work their way. 

Farmers are the most in need of immediate help here. Mr Nipon said the best approach his to find ways to sell the mounting rice stocks to gain money and reduce damage caused to the rice. 

However, since the reputation of Thai rice has been ruined over the past two years, it is necessary for the government to "grade" the rice in the piling stocks carefully and select to sell only those still in good and premium quality. 

"In this case, the government is required to announce it will sell only good-quality rice while abandoning low-quality grains in order to regain the trust of buyers including government-to-government sales," said Mr Nipon. 

Presently, many countries such as Indonesia, the Philippines and China are demanding premium-quality rice. Therefore, it is essential that Thailand regain this market, as it used to hold solid competitiveness, while the price can also be set at be set at a higher level. 

However, the government should not offload stocks quickly through bulk sales, as that would hurt prices in the domestic market as well globally. 

This approach would also encourage farmers to grow premium rice. And sooner or later, the market will return to where it used to be when Thailand produced premium rice and was the champion exporter. However, the stance should be that we focus on quality rather than volume. 

"The price of rice will also rise, as it is premium in quality," said Mr Nipon. 

But one possible obstacle is that all warehouses and stocks must be open for inspection for the grading of rice quality. "That could be a problem since the government may not be ready for such inspection and scrutiny," he said. 

With the rice sales, the government should have more money to pay farmers and pay off some of its debts as well as the interest on loans. However, this is on the condition that the scheme is terminated. Otherwise, the borrowing will continue with ensuing massive debts. 

Meanwhile, it is unlikely that rice farmers will pledge their harvest to the government for the next crop for fear they will not get paid. It is also unlikely that the next government will continue the scheme, as it comes with too high a cost and faces public opposition. However, it will need to continue repaying the debts incurred by the present scheme. 

"All the government has to do is to terminate the scheme and let market mechanisms take over. Then things should return to normal," said Mr Nipon.

----------


## Seekingasylum

People here can be sooooo stupid.

Interventionist policies only work if they are designed to introduce stability.

Thaksin's scam was employed to cream off fat kickbacks, to issue a blank cheque buying elections and to manipulate the world rice market.

To say Thailand's rice subsidy scheme was analogous to subsidy schemes in operation in the developed world is quite laughable but then, equating Thailand with the rest of the world is, in itself, an absurdity. This country is a standing joke. 

Typically. the usual frazzled farang Thaiphiles are too daft to see it.

----------


## sabang

Compared to your underperforming economies, the thaiophiles certainly have a point. Amazing what 'monkeys' can do, innit?

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## robuzo

> This country is a standing joke.


And you are living in it. What does that make you? Not the punchline, presumably.

----------


## S Landreth

China cancels deal to buy Thai rice due to graft probe: Thai minister

(Reuters) - China has canceled a deal to buy 1.2 million tonnes of Thai rice after Thailand's anti-corruption agency launched investigations into a state rice-buying scheme, the Thai commerce minister said on Tuesday.

The cancellation will add to the pressure on Thailand's government, which is struggling to secure funds for the rice scheme at a time when farmers who have not been paid are protesting in the provinces.

"China lacks confidence to do business with us after the National Anti-Corruption Commission started investigations into the transparency of rice deals between Thailand and China," Niwatthamrong Bunsongphaisan told reporters.

The deal between Thailand and Chinese state enterprise Beidahuang was signed on November 20, for delivery starting in December. The shipment was delayed, however, after Prime Minister Yingluck Shinawatra dissolved parliament in December.

Niwatthamrong said the government would open a tender to sell 400,000 tonnes of rice from its stocks next week. Industry experts estimate those stocks could be about 15 million tonnes.

The government is desperate to get funds for the scheme because some farmers who have sold grain to the state have been waiting for months for their money.

The World Bank has estimated annual losses of 200 billion baht ($6 billion) since it was introduced in 2011. The government has struggled to sell the rice because of its high price at a time when global demand is thin.

Opponents of the government are angry that taxpayers are footing the bill for a program they call tantamount to vote-buying.

THIN DEMAND

"The tender will be held next week and we expect to get around 10 billion baht to pay farmers," Niwatthamrong said.

That compares with the 130 billion baht it needs to pay up to a million farmers.

Traders and industry officials are not sure the tender will generate much interest, given the likely cost and thin demand at the moment.

The Chinese cancellation is the latest in a series of setbacks for Yingluck, who campaigned on the rice scheme to win support in the vote-rich north and northeast, where many households live off income from rice farming.

Her government has faced three months of at times violent protests by a political movement trying to oust her and an election held on Sunday to try to defuse the crisis has failed to resolve anything.

It could be months before the official results of the disrupted poll are known, leaving her in charge on a caretaker basis with no authority to make budget or spending decisions.

The government's efforts to secure loans from banks to rescue the scheme have been unsuccessful. About 500 employees of state-owned Krung Thai Bank held a demonstration on Tuesday urging the bank not to give the government a loan.

----------


## lom

> "China lacks confidence to do business with us after the National Anti-Corruption Commission started investigations into the transparency of rice deals between Thailand and China," Niwatthamrong Bunsongphaisan told reporters.


  :rofl: 

Why on earth would a buyer pull out because of a transparency investigation?
Oh, wait..

----------


## sabang

> Why on earth would a buyer pull out because of a transparency investigation?


Well, China anyway- they normally ain't bothered. At minimum, PT has got major egg on it's face over this fiasco, at max, if corruption is uncovered that implicates PT, yet another Thai government may fall in a corruption scandal- seemed to be an annual occurrence in the 90's.

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## Necron99

^ And in the process has perhaps permanently damaged it's position in the rice market. 
Having increased production and knocked Thailand off the top of the table, India and Vietnam will not back off now. Thai farmers may well find themselves in a depressed and glutted marketplace...

----------


## Mid

*Thai govt to offer $615 million of debt to help fund rice-subsidy scheme* 
(Reporting by Kitiphong Thaichareon and Pairat  Temphairojana; Writing  by Orathai Sriring and Alan Raybould; Editing by  Kim Coghill)
February 26, 2014

*BANGKOK*  (Reuters) - Thailand's caretaker government plans to sell up to 20  billion baht ($615 million) of short-term debt this week to help fund a  controversial rice-buying scheme, according to documents seen by Reuters  on Wednesday.

              The Finance Ministry's Public Debt  Management Office (PDMO) will auction eight-month, state-backed paper on  Thursday, according to a letter sent by the PDMO inviting the  Metropolitan Waterworks Authority to bid.

                                                                                                                                                                                                                                                                                          PDMO officials were not available for comment.

                                                                                                                                                                                                                                          The proceeds would be for the Bank  for Agriculture and Agricultural Cooperatives (BAAC) to pay rice  farmers, some of whom have been waiting months for payment for crops  sold to the government program.

              The state-owned  BAAC manages the scheme, which has run into funding problems, compounded  by political unrest that has left a caretaker government with little  power to raise money.

              As of February 24, the  government had bought 11.02 million tonnes of rice from the 2013/14 main  crop valued at 185 billion baht, a BAAC official told Reuters on  Wednesday.

              The bank had paid farmers 69.5 billion  baht of that, with 115.5 billion baht still outstanding, the official  said, declining to be identified because he was not authorized to speak  to the media.

              The arrears have built up because the government has been unable to sell enough rice from its stockpiles.

              Prime Minister Yingluck Shinawtra dissolved parliament in December to try to end a protracted political crisis.

              A general election was held on February 2 but that was  disrupted by anti-government protesters, leaving a caretaker  administration with limited powers to borrow or use government funds for  the rice scheme.

              Some spending has to be approved  by the Election Commission and on Tuesday it authorized 712 million baht  to be used from a central budget to pay farmers.

               After a cabinet meeting the same day, Commerce Minister Niwathamrong  Boonsongpaisan said the government would seek approval to use an  additional 20 billion baht from the budget, adding the finance ministry  was still working on securing "a large loan" to help with rice payments.

              The Commerce Ministry has also sold 600,000 tonnes of rice  from its stocks this month to raise funds and has opened a second  tender for another 500,000 tonnes.

              ($1=32.5 Thai baht)

courant.com

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## hazz

given that the EC are apparently a core part if the amart,  padite conspiracy to do anything to bring down the PT government one has to wonder, why given how wound up these unpaid farmers are with PT, they had a collective brain fart and allowed the government to raise this money to pay the farmers what they are owed.

Seems a sensible decision to me, there is a logic to preventing a caretaker government from raising new debt obligations for the next proper government. but raising money to pay off a financial obligation created by the previous government should be an exception to that rule.

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