#  >  > Living And Legal Affairs In Thailand >  >  > Thailand and Asia News >  >  > Business, Finance & Economics in Thailand >  >  Thai rice exporters warn of rising prices after polls

## StrontiumDog

*Thai rice exporters warn of rising prices after polls
*
*Thai rice exporters warn of rising prices after polls*

                            By Deutsche Presse Agentur
                                             Published on July 4, 2011                

*Bangkok - The victory of the opposition party at the  weekend polls could mean a 50 per cent jump in Thailand's rice prices  in coming months on the back of promised handouts, the country's rice  exporters warned Monday.*

                                                            The Pheu Thai Party, which won a clear majority in  Sunday's general election, promised farmers a minimum price of 15,000  baht (500 dollars) per tonne for regular white rice and 20,000 baht for  jasmine, the country's distinctive fragrant export.

Currently, farmers sell their plain Thai white rice for about 9,000 baht per ton.

"That  means the export price will rise from today's level of 510 dollars to  at least 800 dollars," said Chookiat Ophaswongse, honorary advisor to  the Thai Rice Exporters Association.

Under the outgoing  Democrat-led government, Thai rice farmers were also offered  higher-than-market prices for their crop, but the government pegged the  domestic price to the international market price, and paid farmers a  direct subsidy to assure them a profit on their crops.

Called the  income-guarantee scheme, the programme benefited an estimated 4 million  farmers and cost the government 80 billion baht (2.6 billion dollars)  over a two-year period, which went directly into the farmers' pockets.

The  scheme replaced the so-called pledging scheme devised by the former  Thai Rak Thai Party of fugitive former prime minister Thaksin Shinawatra  during his premiership between 2001 and 2006.

Thaksin is also the  de facto leader of the Pheu Thai Party, which has vowed to bring back  the rice pledging scheme, in which the government essentially buys up  huge stocks of rice from farmers at inflated prices and then stockpiles  it for the export market.

The scheme was prone to corruption, with  about 30 per cent of the subsidy going to rice millers and politicians  instead of farmers, according to research done by the Thailand  Developemnt Research Institute (TDRI), a Thai think tank.

"This is  what I hate about Thai politics," Chookiat said. "Whenever a new  government comes in it changes all the previous government's policies,  even the good ones."

The Pheu Thia plan to raise the domestic  price paid for rice comes at a time when there are no great shortages of  the commodity on the world market, where the annual demand for rice has  stabilised at about 30 million tons, according to the Food and  Agriculture Organization.

Asia's most populous countries, China  and India, have huge stockpiles of rice, while Thailand, Vietnam,  Cambodia and even Burma have growing surpluses.

"If I were the  Thai government I would think carefully about raising rice prices  because the surest way to encourage other countries to increase their  production is to keep international prices heigh," said Sumitr Broca, a  rice industry expert at the Bangkok headquarters of the FAO.

Thailand  has been the world's leading rice exporter for the past five decades.  In 2010, it exported 9.05 million tons, earning the country 5.3 billion  dollars.

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## Gerbil

> Under the outgoing Democrat-led government, Thai rice farmers were also offered higher-than-market prices for their crop, but the government pegged the domestic price to the international market price, and paid farmers a direct subsidy to assure them a profit on their crops.
> 
> Called the income-guarantee scheme, the programme benefited an estimated 4 million farmers and cost the government 80 billion baht (2.6 billion dollars) over a two-year period, which went directly into the farmers' pockets.
> 
> The scheme replaced the so-called pledging scheme devised by the former Thai Rak Thai Party of fugitive former prime minister Thaksin Shinawatra during his premiership between 2001 and 2006.
> 
> Thaksin is also the de facto leader of the Pheu Thai Party, which has vowed to bring back the rice pledging scheme, in which the government essentially buys up huge stocks of rice from farmers at inflated prices and then stockpiles it for the export market.
> 
> The scheme was prone to corruption, with about 30 per cent of the subsidy going to rice millers and politicians instead of farmers, according to research done by the Thailand Developemnt Research Institute (TDRI), a Thai think tank.


Looks as though the 'honeymoon period' for the government-in-waiting is already over as far as the foreign press is concerned!

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## sabang

The plain fact is that the subsidies employed in Thailand to help the rice farmer mainly end up in the pockets of the sinoThai rice millers cartel, and corrupt officials. The cash price the farmer receives is closer to 6,000 bht per ton. A good way to get yourself killed in Thailand is to try to set up an agricultural co-operative, for farmers to share information with and help other farmers.

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## dirtydog

They will need the extra money to pay the 300baht perday salaries when that comes in.

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## Gerbil

> The plain fact is that the subsidies employed in Thailand to help the rice farmer mainly end up in the pockets of the sinoThai rice millers cartel, and corrupt officials. The cash price the farmer receives is closer to 6,000 bht per ton. A good way to get yourself killed in Thailand is to try to set up an agricultural co-operative, for farmers to share information with and help other farmers.


You're missing the point slightly.

DPA appears to be claiming the money under the democrats scheme actually got to the farmers, but the scheme as run under the Thaksin government meant the money went to the millers and politicians instead, and that is what they are planning on bringing back.

Whether that is true or not, I dont know, I have more interesting things to do than learn about some of the more asinine workings of this place - It's just interesting that the foreign press are effectively starting to criticize now what they think is going to happen and to say that things were 'better' under the democrats.

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## peterpan

> Called the  income-guarantee scheme, the programme benefited an  estimated 4 million  farmers and cost the government 80 billion baht  (2.6 billion dollars)  over a two-year period, *which went directly into  the farmers' pockets*.


A barefaced lie.

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## Rural Surin

> The plain fact is that the subsidies employed in Thailand to help the rice farmer mainly end up in the pockets of the sinoThai rice millers cartel, and corrupt officials. The cash price the farmer receives is closer to 6,000 bht per ton. A good way to get yourself killed in Thailand is to try to set up an agricultural co-operative, for farmers to share information with and help other farmers.


I've been yelping about the strong existence of rice farming collectives for years.
Falls on deaf ears.

In theory, countering an elitist control can be overcome, as an overwhelming percentage of rice production still originates from family and independent sources. Rice is politics in the extreme. The influence [either which way] can be devastating. Farmers need to stand their ground and act as one, for their collective benefit.

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## StrontiumDog

*Thailand may release some of 2mn tonnes rice stocks*

Tuesday, 26 July 2011 14:27



BANGKOK:  The Thai state may release some of its rice stocks into the domestic  market if it sees any shortage, a government official said on Tuesday,  after speculators were reported to be hoarding grain, expecting prices  to rise under an incoming government."We  have around 2 million tonnes of milled rice in stocks, ready to be sold  at any time if there is any tightness in the domestic market. However,  we don't see any shortage at this moment," said Anukul Tamprasit,  president of the Public Warehouse Organisation (PWO).

The  PWO, which comes under the Commerce Ministry, manages government rice  stocks. Anukul said stocks had risen to 2 million tonnes from 1 million  early in 2011.

The  Puea Thai party, which won a majority in parliament in the July 3  general election, has promised to reinstate a rice-buying scheme to  support farmers.

The  price it has promised, 15,000 baht ($504) per tonne for unmilled rice,  is way above the current market price of around 8,000 baht, which has  encouraged millers and local traders to hoard grain so they can sell at a  profit when the new policy comes in. 

Domestic rice prices have jumped amid signs of panic buying by consumers in Bangkok.  Some supermarkets limited purchases for a few days recently until the  Commerce Ministry came out and said there was plenty available.

Even so, milled rice has jumped to 15,000 baht per tonne, up 15 percent from the 13,000 baht offered before the election.

The  outgoing government introduced a new price scheme last year, offering  to pay farmers the difference if they had to sell below a guaranteed  level, currently 11,000 baht per tonne. 

However,  farmers found the new scheme cumbersome and, faced with protests, the  government brought back old-style rice-buying, running the two  intervention schemes side by side.

Traders  said they did not expect to see any rice shortage over the next few  weeks as the harvesting of another off-season crop is due late next  month or in September, with around 2 million tonnes expected.
In addition, some hoarders may need to sell soon.

Stockpiling  huge amounts of rice has caused a liquidity crunch for some millers.  The new government is not due to be formed until mid-August and it is  unclear when its new intervention policy will be implemented.
It may not start until the next main harvest from late October.

"Most  local millers and traders don't have strong financial support. You can  see that some of them need to release stocks in order to get money to  run their business," said a trader in Ayuthaya province, a major  rice-growing province.

Thailand,  the world's biggest rice exporter, produces around 30 million tonnes of  paddy rice a year. It aims to export 9.5 million tonnes of milled rice  this year, up from 9.0 million in 2010.

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## StrontiumDog

*Thai rice dealers warn government initiatives would hurt exports - Monsters and Critics
*
*Thai rice dealers warn government initiatives would hurt exports*

    Jul 28, 2011, 5:31 GMT 

  Bangkok - Thailand's rice exporters have warned that  overseas  shipments of the staple could drop by half next year if the  government  goes ahead with a proposed price intervention scheme, a  news report  said Thursday.  

  The price guarantee would push up prices of  Thai rice on the  international market, making it less competitive and  potentially  causing exports to drop by half from the 10 million tons  predicted  this year, the Thai Rice Exporters Association honorary  president  Chookiat Ophaswongse told a meeting Wednesday, according to  The  Nation newspaper.  

  Thailand has been the world's leading  rice exporter for five  decades, but the kingdom faces growing  competition from Vietnam,  Cambodia and India.  

  In addition to  foreign competition, the sector is now threatened  by the incoming  government's policies, the exporters' association  said.  

  The  Pheu Thai party, which won the July 3 election and is due to  set up a  new cabinet next month, has promised farmers fixed prices of  15,000  baht (500 dollars) a ton for plain white rice and 20,000 baht  a ton for  jasmine, a high-quality variety that is popular in premier  export  markets such as Hong Kong and Singapore.  

  The party said the  scheme will be in place by November, in time to  purchase the winter  crop, the largest of the harvest cycle.  

  But Chookiat warned that 'Thai exporters would certainly lose  their competitiveness to their rivals.'  

   Export prices on plain Thai rice will increase from 545 dollars  per  ton at present to 850 dollars, he warned, while jasmine prices  would  jump from 1,050 dollars per ton to 1,400 dollars.  

  The outgoing  Democrat-led government also supported rice farmers,  but pegged the  domestic price to the international market price, and  supplemented it  with direct subsidies.  

  Called the income-guarantee scheme, the  programme benefited an  estimated 4 million farmers and cost the  government 80 billion baht  (2.6 billion dollars) over a two-year  period, which went directly  into the farmers' pockets.  

  The  scheme replaced the so-called pledging scheme devised by the  former  Thai Rak Thai Party of fugitive former prime minister Thaksin   Shinawatra during his premiership between 2001 and 2006.  

   Thaksin is also the de facto leader of the Pheu Thai Party, and  the new  programme is a reincarnation of the pledging scheme, in which  the  government essentially buys up huge stocks of rice at inflated  prices  and then stockpiles it for the export market.  

  The scheme was  prone to corruption, with about 30 per cent of the  subsidy ending up in  the pockets of rice millers and politicians  instead of farmers,  according to the Thailand Development Research  Institute, a think tank.   

  Asia's most populous countries, China and India, have huge   stockpiles of rice, while Thailand, Vietnam, Cambodia and even  Myanmar  have growing surpluses.  

  Thailand has been the world's leading  rice exporter since 1963,  when it replaced Myanmar, also called Burma,  which had previously  claimed the top slot.  

  Myanmar's socialist regime nationalised all industries including  the rice industry when it took power in 1962.  

  In 2010, Thailand exported 9.05 million tons, earning the country  5.3 billion dollars.

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## StrontiumDog

Thai-ASEAN News Network

Anti-graft Measures Pondered for Rice Price Program 

UPDATE : 8 August 2011                     *

The National Rice Policy Committee is  planning to propose measures to prevent corruption in the price pledging  program to be brought back to use by the incoming government.

Director General of Internal Trade Department Watcharee Wimuktayon has  announced as secretary-general of the National Rice Policy Committee  that the department is planning to submit a report on the implementation  of the price pledging policy in the past to the new government.  
*

The Pheu Thai Party has promised to reinstate the program and to bring up the price of rice to 15,000 baht per ton. 

The department will also propose preventive measures against corruption in the program. 

The department will ask provincial rice committees to step up their  monitoring effort while the Public Warehouse Organization must closely  supervise at all time so any problem can be addressed in a timely  manner. 

The guideline will also call for officials to pay attention to the  registration process to prevent possible fraud and authorize rotation of  rice stocks. 

Watcharee is confident that the pledging policy will increase farmers'  income which will in turn boost consumption and the economy.  

Meanwhile, President of the Thai Farmers Association Prasit Boonchoey  has reported that from talks with the Thai Chamber of Commerce and the  Thai Rice Millers Association, the association will ask the new  government to form a committee which will oversee the price and  distribution system of rice at the national level. 

Prasit believes this will stabilize the price and provide financial  security for farmers who would no longer need to rely on state  assistance during periods of low rice price.

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## StrontiumDog

*Bangkok Post : Rice scheme a money pit, TDRI says
*
*Rice scheme a money pit, TDRI says*

*Economists claim govt will lose tens of billions* 
Published:  5/09/2011 at 12:00 AMNewspaper section: News
 The government will lose tens of billions of  baht in taxpayer money annually if it revives the rice mortgage scheme  as planned, economists warn.

 The programme will also significantly distort prices in the local  market, Thailand Development Research Institute economists said  yesterday.

 TDRI economist Ammar Siamwalla said the high prices promised under  the mortgage scheme would encourage farmers to increase their  plantations, resulting in a vicious cycle where the government would  have to spend an "unlimited amount of taxpayer money" to keep rice  prices at the promised levels.

 He dismissed as impractical plans to coordinate with Vietnam and other regional rice exporters to push global prices higher.

 "Being able to set rice prices in the world market has been a pipe  dream of politicians from almost all of the parties," Dr Ammar said.

 Thailand is the world's largest rice exporter, with a target of 11  million tonnes in exports this year, or one-third of the total global  trade in rice.

 Commerce Minister Kittiratt Na-Ranong said last week the mortgage  programme would begin on Oct 7, with farmers able to pledge "every  single grain" from the second crop.

 The Pheu Thai Party attracted strong rural support with its pledge to  reinstate the government crop mortgage programme with prices fixed at  15,000 baht per tonne of paddy rice and 20,000 baht per tonne for Hom  Mali rice, prices that are significantly higher than current market  prices.

 According to the Agriculture Ministry, white rice paddy prices have  averaged 8,500 baht per tonne in the first seven months of the year,  with Hom Mali paddy averaging 12,244 baht per tonne.

 The scheme, essentially a subsidy programme for farmers, was  cancelled by the Abhisit Vejjajiva government in favour of a price  insurance programme that paid cash if market prices fell below benchmark  prices.

 Under the mortgage programme, the government is the primary buyer of  rice, using funds paid through the Bank for Agriculture and Agricultural  Co-operatives (BAAC). The bank estimates first-year costs for the  programme at 190 billion baht.

 Mr Kittiratt said the government was committed to the programme and  that it was his responsibility, as deputy premier and commerce minister,  to ensure transparency.

 Last week, he said the mortgage programme could be limited or farmland shifted to other crops if supply increases significantly.

 But Dr Ammar said such a policy was ludicrous.

 "I would like to ask which amat (elite) will tell farmers to stop  growing rice," he said. "It's their inalienable right." he said.

 Rice prices have begun to increase ahead of programme launch, with  traders warning that Hom Mali rice could rise by 25%, or 40-50 baht, per  five-kilogramme bag starting next month.

 Dr Ammar said the government may have to set aside additional funds to help subsidise rice prices for consumers.

 "I believe the cabinet members are just trying to come up with a  solution to implement their election promises," he said. "Obviously, the  promises were poorly thought out."

 Nipon Poapongsakorn, the TDRI president, agreed it was practically  impossible to imagine the government avoiding losses from the programme.

 Export prices are far below the level required to match the pledging  prices. And the government is unlikely to risk consumer anger by selling  the rice domestically at a price required to cover costs.

 Dr Nipon said the government could be forced to buy more than 10  million tonnes of paddy next year to meet its promises. Any delays in  selling its stocks, or if it is sold at a discount, would impose a  liability on the state-owned BAAC.

 During the 2004/2005 and 2006/2007 rice harvests, the last time the  crop mortgage scheme was implemented, the government incurred 141  billion baht in liabilities for 300 billion baht in crop loans by the  BAAC.

 Of the 10.3 million tonnes in paddy purchased by the government under  pledging schemes from 2004 to 2007, only 53%, or 5.5 million tonnes was  sold. The rest remains in storage, with its value declining by the day  due to storage losses.

 The TDRI said the government also incurred 7.6 billion baht in  operating expenses over the period from warehouse rentals, miller  processing charges and other losses. In 2006, 5.2 million tonnes of  paddy were pledged at 316 baht per tonne above market prices. The  government lost 19 billion baht as rice was sold at a discount to  exporters.

 Dr Nipon said that if the government had used a crop insurance  programme at the same price, with the same returns offered to farmers,  it would have cost 7.4 billion baht to cover the entire year's crop of  23 million tonnes.

 He said the programme benefited only 38% of all rice farmers, less  than one-quarter of all rice millers and perhaps 10-20 exporters out of a  total of 150 firms. The top two rice traders captured as much as 60% of  the total benefits, owing to the lack of transparency in the auction  process.

 "The mortgage scheme also led to a doubling in the capacity of  millers, who have since seen their operations fall sharply under the  insurance scheme. It is no surprise then that it is the millers, not the  farmers, who have lobbied for the return of the mortgage policies," Dr  Nipon said.

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## StrontiumDog

*Thailand's rice scheme seen as a boon for Vietnam exporters - Monsters and Critics
*

*Thailand's rice scheme seen as a boon for Vietnam exporters*

    Sep 5, 2011, 3:57 GMT 

  Bangkok - Thailand's populist scheme to support rice farmers  this year will cost the government millions of dollars while   benefiting exporters in Vietnam, news reports said Monday.  

  The  new government will on October 7 begin buying up the main rice  harvest  at the fixed prices of 15,000 baht (500 dollars) per ton for  plain  white rice and 20,000 (667 dollars) for the premium jasmine  variety.  

  The populist policy was a campaign promise in the July 3 general  election.  

   Rice traders warn that the strategy will price Thailand out of the   export market, since world prices are considerably below the fixed   prices offered by the government.  

  The Thailand Development Research Institue, a respected think  tank, joined rice traders in criticising the new price policy.  

  'Obviously, the promises were poorly thought out,' TDRI economist  Ammar Siamwalla said.  

   'Rocketing prices will force Thai rice out of the world market,  but  rice export rivals such as Vietnam will gain substantially,'  Ammar told  The Nation newspaper.  

  Thailand is expected to lose its status as the world's leading  rice exporter for the past forty years to Vietnam next year,  according to the Thai Rice Exporters Association.  

  Thanks to stockpiles and robust sales during the first eight  months, rice exporters are expected to ship more than 10 million tons  of the grain this year,  compared with about 8 million from Vietnam,  but prospects for 2012 are  dim.  

  Under the scheme, the government will become the major  purchaser  of rice from farmers, allowing it to control both domestic  sales and  exports.  

  The Bank of Agriculture  and Agricultural Cooperatives estimated  the purchases will cost about  190 billion baht (6.3 billion dollars)  in the first year.  

  Losses will depend on market prices.  

   The ruling Pheu Thai party's de facto leader is fugitive former  prime  minister Thaksin Shinawatra, whose populist policies won him a  mass  following during his two-term premiership from 2001-06.  

   Thaksin implemented a similar rice-pledging scheme in 2005, which   resulted in a stockpile of 5.2 million tons that were sold at a loss  of  19 billion baht (633 million dollars) to select traders, according  to  TDRI studies.  

  Similar losses can be anticipated this year and next, TDRI's Ammar  warned.

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## StrontiumDog

*Bangkok Post : Give rice mortgage scheme a chance, Yingluck pleads
*
*Give rice mortgage scheme a chance, Yingluck pleads*
Published:  6/09/2011 at 12:00 AMNewspaper section: News
 The government is reviewing the rice policy to  ensure it results in a desirable outcome, Prime Minister Yingluck  Shinawatra said yesterday.

 In response to leading economist Ammar Siamwalla's comment on the  Pheu Thai government's rice mortgage scheme, Ms Yingluck said her  administration was ready to listen to all criticism.

 
_Chalerm: Brushes aside criticism._

 Mr Ammar, of the Thailand Development Research Institute (TDRI), said  during a forum on Sunday that the government would lose tens of  billions of baht in taxpayers' money annually if it revives the rice  mortgage scheme.

 The government may have to set aside additional funds to help subsidise rice prices for consumers, he said.

  The economist also said the Pheu Thai government was "only good at bragging".

   Ms Yingluck said the Commerce Ministry had been working on the rice policy and would look into concerns from all sides.

 "Please give us more time to work," she said. "The government is  focusing on urgent policies, including tackling the rising cost of  living and flood rehabilitation."

 The government plans to reinstate the rice mortgage scheme on Oct 7  with prices fixed at 15,000 baht per tonne of paddy rice and 20,000 baht  per tonne for Hom Mali rice.

 The programme was replaced during the Abhisit Vejjajiva  administration by a price insurance programme that paid cash if market  prices fell below benchmark prices.

 Deputy Prime Minister Chalerm Yubamrung brushed aside the TDRI's  criticism. "The government has only been working for seven days, how  much do you expect to be done? The TDRI should worry about themselves, "  he said.

 
_Prompong: Farmers ‘remain poor’._

 The Pheu Thai Party yesterday shrugged off the economist's criticism  about its rice mortgage scheme, saying it was biased and could be  politically motivated.

 Pheu Thai spokesman Prompong Nopparit said the comment by Mr Ammar was to be expected and had no merit.

 He also challenged Mr Ammar to quit his job if the rice mortgage scheme could fulfil its promise.

 "I wonder if he'd place his job as a bet. But I think he is no  different from the leader of a certain political party which is known as  'talk only'," he said, referring to the previous Democrat-led  government.

 Mr Prompong doubted that the price insurance scheme was as good as  claimed, saying farmers remained poor and blocked roads to demand  government attention to their plight.

 "Pheu Thai welcomes criticism, but not the kind which is intended to discredit," he said.

 Former deputy prime minister Suthep Thaugsuban said yesterday the  opposition would keep tabs on every government policy. He also said  there is still time for Pheu Thai and the government to prove their  policy.

 "If there is something serious, it will be scrutinised.

 "It is too early to say if we will hold a censure debate," he said.

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## StrontiumDog

*Bangkok Post : Rice hoarding soars ahead of pledge plan
*
*Rice hoarding soars ahead of pledge plan*

*CP chief says the days of cheap rice are over * 
Published:  6/09/2011 at 12:00 AMNewspaper section: Business
 PHUKET : The rice-pledging plan has led to  widespread hoarding, with an estimated 3 million tonnes of rice having  been stockpiled in recent weeks to gain from higher prices offered by  the plan.

 All parties _ exporters, traders, millers _ have stocked up and  expect prices to rise when the mortgage plan begins next month, said  Sumeth Laomoraphorn, the chief executive of CP Intertrade Co, a rice  unit of CP Group.

 While some portion of the rice might be kept as regular business  inventory, operators will definitely benefit as the launch of the  pledging plan on Oct 7 drives up rice prices by at least 30%.

 The plan, which will pay 15,000 baht per tonne for paddy rice and  20,000 baht per tonne for Hom Mali paddy rice, will raise milled rice to  26 baht a kilogramme from 16-17 baht this week and Hom Mali rice to  37-38 baht/kg from 30 baht this week.

 CP, a leading local rice seller and exporter, declines to reveal its  existing stock, saying its reserves is essential to ensure constant  delivery to customers.

 Mr Sumeth assumes that not all traders will benefit from the rice  they have in stock, as market prices will not increase instantly. Those  who have export orders must honour sales at agreed-upon older prices, he  said.

 How much the industry will gain from escalating prices is unknown,  but a market source expected more than 20 billion baht in profit gained  by hoarders, based on an increase of 10 baht per kilogramme.

 Mr Sumeth predicted that high mortgage prices would cut the volume of  Thai rice exports by at least 20% but would be offset by higher selling  prices.

 Some 8-9 million tonnes are expected to ship out next year, compared  with 11 million tonnes this year, but revenue income will increase 30%  in line with the cost of paddy.

 Local consumers as well will have to pay extra, and Mr Sumeth  stressed that there will be no cheap rice any more. He supports the  pledging plan, citing the benefits to farmers.

 Over the past few years, all key commodities _ wheat, maize, soybeans  _ have enjoyed strong prices except rice, while the income guarantee  that cost the previous government 120 billion baht has even dampened  Thai rice prices, Mr Sumeth said at a seminar in Phuket over the  weekend.

 He added that farmers do not need to sell high when their income is  guaranteed. While the pledging programme could lead to heavy malpractice  among officials and traders, he suggested that all parties, including  the Department of Special Investigation, step in to prevent any scandal.

 He added that 7-8 million tonnes of rice in state stock is a  sufficient reserve in case of a food shortage caused by natural disaster  or drought.

 China and India hold as reserves a combined 46 million tonnes out of the entire 90 million tonnes worldwide.

 CP is one of a handful of exporters that largely benefited from state  rice sales in the past. The company is upbeat that the rice-pledging  scheme will raise revenue by 10% this year from its previous target of  30.30 billion baht.

 CP's new 4-billion-baht rice processing facility in Ayutthaya  province, to be opened officially Nov 11, will support the company's  expansion goals.

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## StrontiumDog

Thai-ASEAN News Network

Explanations, not Excuses 

UPDATE : 7 September 2011                     *

The Yingluck Shinawatra adminsitration's  rice price pledging policy is being heavily criticized from all sides  due to its potential to distort world pricing mechanisms for the major  food crop. Warnings against the scheme's implementation are not only  coming from domestic groups, international analysts are advising against  such a guarantee. International economic news agency Bloomberg has even  assigned economists to observe the effects of the project, signalling  concern for the world rice trade.

Thailand Development and Research Institute (TDRI) analyst Ammar  Siamwala pointed out the rice price pledging project will cause massive  financial losses for the government.* 

He explained that the losses are inevitable as the state will be buying  up large amounts of rice at above the market price of 15,000 baht per  ton, and simply stock-piling the supplies. The Thai rice prices will  increase because of the state price guarantee, in turn making the stocks  undesirable to international buyers and finally pushing Vietnam into  the position of number one global supplier of rice.

Domestically, Ammar also painted a grim picture, pointing out that the  majority of the benefits from the price guarantee would not be pocketed  by farmers but millers who are already buying up crops in preparation  for the project's launch. 

The TDRI analyst has called Yingluck's government a Cabinet of “big  talkers”, declaring plans that they are not ready to be implemented and  often unfeasible. 

The government itself, instead of at the very least acknowledging these  widespread concerns and taking them into consideration, has responded on  many occasions in a very frustrated manner, hitting back at the  warnings with anger. Deputy Prime Minsiter Police Captain Chalerm  Yoobamrung has responded to TDRI's criticisms by saying it's biased. 

The unsupported rebuttals of the government do not help to alleviate the  public concerns over the very valid arguments being presented by  experts and are an unconstructive approach to governance. Even if the  administration is resolute in going forward with the rice price pledging  scheme, it does not have to take such a defensive stance against  criticism. If there are holes and shortcomings in the plan, the  government should remedy them not simply lash out at those who pointed  them out. 

With both domestic and international observers intently watching how the  project will pan out, it is important that the government begin to  inspire assurance even at this preliminary stage.

*Post Today, September 7 2011
Translated and Rewritten by Itiporn Lakarnchua*

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## The Bold Rodney

> Called the income-guarantee scheme, the programme benefited an estimated 4 million farmers and cost the government *80 billion baht (2.6 billion dollars) over a two-year period, which went directly into the farmers' pockets*.





> *The scheme was prone to corruption, with about 30 per cent of the subsidy going to rice millers and politicians instead of farmers*, according to research done by the Thailand Developemnt Research Institute (TDRI), a Thai think tank.


Sounds like the previous governments usual modus operandi. ::chitown::

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## StrontiumDog

*Thai rice subsidy scheme to push up world prices - Houston Chronicle
*
*Thai rice subsidy scheme to push up world prices*

*THANYARAT DOKSONE, Associated Press*

*                                                                                 Updated 05:45 a.m., Friday, September 9, 2011            *  

                 BANGKOK  (AP) — Thailand's plan to pay its rice growers far above market rates  is expected to push up prices for the staple that feeds almost half the  world's people as rice importing nations look to other countries for  tightened supplies.

A  new government in Thailand, the world's biggest rice exporter, has  promised growers higher prices for rice in a scheme that will take  effect Oct. 7. It's putting no limit on the amount of rice it will buy.

What's  good for Thai farmers, who have long complained of being shortchanged  by middlemen, is proving less popular elsewhere in Asia. The effects of  the rice policy are rippling through the region, where many countries  are already struggling with fast rising food prices.

Thailand's  rice exporters say they will ship less overseas because they will be  unable to compete with the price the government pays. That in turn will  tighten the global rice market, forcing up the staple's price in  other countries.

The  U.S. Department of Agriculture forecasts that Thailand's rice exports  will drop 20 percent to 8 million metric tons in 2012 because of the  rice buying scheme. That could see Vietnam overtake Thailand as the No.  1 exporter.

"The  rice prices in the global market will definitely escalate, since the  supply from Thailand, the biggest exporter, is seeing a downturn," said Witchuda Chummee, an analyst at Siam Commercial Bank's Economic Intelligence Center in Bangkok.

"Using the Thai prices as a benchmark, other countries, like Vietnam, will likely increase their prices also."

The Pheu Thai Party  that swept to power in July 3 elections has said the government will  pay farmers baht 15,000 ($500) per ton for unmilled paddy rice and baht  20,000 ($665) for unmilled jasmine rice. Before the election, unmilled  paddy rice sold for baht 8,150 ($271) a ton and milled paddy rice sold  for baht 13,000 ($432) a ton.

What's  causing particular angst for exporters is that the government intends  to buy as much rice directly from growers as they want to sell.

"We will take as much as we can," Commerce Minister Kittirat Na-Ranong told The Associated Press.

Chookiat Ophaswongse, the honorary president of the Thai Rice Exporters Association,  said the international price for "white rice 5 percent" — long grain  white rice with a 5 percent broken rice component — could reach $830 per  ton "as soon as the scheme is fully implemented," compared with the  current market price of $613 per ton.

"The  government's price is too high and will definitely undermine the  nation's competitiveness in rice exporting," said Chookiat. "If  exporters cannot compete with the subsidized price, they may have to  switch to trade rice of other origins."

Elsewhere  in Southeast Asia, Thailand's move has underlined the importance of  boosting local production and having a broad range of possible sources.

"This just shows how correct we are in pushing for self-sufficiency," said Proceso Alcala, Agriculture Secretary for the Philippines, which is the world's top rice importer.

The country's National Food Authority  is assessing likely demand for rice from other Southeast Asian  countries for 2012 and subsequent years to get a clearer picture of  whether Thailand can maintain high prices or if "natural market forces  will also get them to reconsider the plan," said its administrator Lito Banayo.

Banayo  said if local rice growing targets are met, the Philippines would need  to import only a million tons or less for 2012 — about the same amount  bought for this year's stocks.

Sutarto  Alimoeso, chief of Indonesia's state logistics agency, said the Thai  scheme is a challenge to Indonesian farmers to improve  their productivity.

The  agency known as Bulog is currently importing 300,000 tons from Thailand  and 500,000 tons from Vietnam for stockpiles, Alimoeso said.

In  anticipating higher rice prices, Alimoeso said Indonesia is arranging  possible imports from India and Pakistan. Imports from Myanmar and  Cambodia are also an option.

Thailand first introduced a rice subsidy scheme in 2004 during the government of Thaksin Shinawatra,  who was ousted in a coup two years later following prolonged protests  in the capital Bangkok against his alleged corruption and CEO-style  rule. The scheme was criticized for graft and its high cost.

Kittirat,  the Thai Commerce Minister, told lawmakers last month that the rice  scheme is expected to cost less than baht 100 billion ($3.32 billion) a  year and will result in losses for the government of less than baht 10  billion ($332 million) a year.

A 2010 study by Thailand Develop Research Institute,  a nonprofit think tank in Bangkok, found that the earlier rice buying  program caused losses of baht 19.1 billion ($628 million) for the  government in 2005. It said the program was "plagued with corruption at  all stages" and that most of the benefits did not go to the farmers.

The  latest plan, however, enjoys strong support from farmers, whose votes  helped Pheu Thai, led by Thaksin's younger sister Yingluck Shinawatra,  win government with a strong parliamentary majority in July elections.

"This program directly benefits Thai farmers. We will no longer be taken advantage of by middlemen," said Wichien Puanglumjiak, a representative of the farmers' network in central Thailand.

----------


## StrontiumDog

Thai-ASEAN News Network

Larger Stock for Rice Pledging Program 

UPDATE : 9 September 2011                     *

The Bank for Agriculture and Agricultural  Cooperatives has increased the amount of rice in the rice pledging  project from ten million tons to twelve million tons. 

The bank estimates a budget for the program at about 200 billion baht.

Bank for Agriculture and Agricultural Cooperatives Manager Luck  Wajananawat said the bank has forwarded the rice pledging proposal to  the National Rice Policy Committee with an increase in the amount of  rice from ten million to twelve million tons. 
*

He explained that the rice pledging procedures will cost no less than 190 billion baht. 

The bank, itself, has budgeted 90 billion baht, but the other 100 billion baht will be required from other state banks. 

Meanwhile, the manager also purposed that a special rice pledging  committee be set up comprising representatives from the Marketing  Organization for Farmers, the Public Warehouse Organization, community  leaders and the provincial governor. 

The committee will be responsible for overseeing the pledging process.

Luck also proposed that surveillance cameras be installed at rice  warehouses and GPS systems be installed on transport trucks to prevent  corruption. 

The bank manager added that rice mills participating in the scheme  should be required to put down a 40-percent guarantee from the original  amount of 20 percent. 

He has also asked the Agriculture Ministry to register farmers to prevent smuggling of rice.

----------


## StrontiumDog

*http://www.bangkokpost.com/news/poli...o-harvest-rice
*
*Farmers get more time to harvest rice*
Published: 10/09/2011 at 12:00 AMNewspaper section: News
 The government will delay diversion of flood  water into rice fields until farmers finish harvesting, Natural  Resources and Environment Minister Preecha Rengsomboonsuk has said.

 Mr Preecha yesterday chaired a meeting with 12 governors from  flood-hit provinces in the Central Plains to draw up flood management  measures.

 State agencies have been holding back water from flooding rice-growing areas, which will be used for temporary storage.

 Authorities had asked the farmers to complete harvesting the  unripened rice by next Thursday, when the water was to be diverted into  the fields.

 Mr Preecha, however, instructed the governors to delay water  diversion further until the end of this month to give more time for rice  farmers to harvest.

 "We ask the people [in flooded areas] to be patient a while longer.  The government will not release water into the fields until the harvest  is completed," Mr Preecha said.

 "We will try our best to manage water flow to ease the flood situation."

 The minister also asked governors to ready heavy machinery in  flood-prone areas so they can build flood-prevention structures before  they are inundated.

 "Please tell people that the government is working on the problem. I  will try my best to allocate finances for long-and short-term flood  prevention projects which you have proposed," Mr Preecha told the  governors.

 Paiboon Prachak, deputy governor of Nakhon Sawan province, said he  planned to increase the water storage area in his province to 482,737  rai, with a capacity to hold about 2.08 billion cubic metres.

 Nakhon Sawan has about 1.6 million rai of paddy field, which can be used for temporary water storage after the harvest.

 The province has also proposed the construction of a reservoir in Mae Wong as part of a flood prevention scheme.

 Ayutthaya governor Witthaya Piewpong said the province has prepared  six rice-growing areas, covering about 100,000 rai, for water storage.  More than 186 million baht has been set aside as compensation for  farmers.

----------


## Albert Shagnasty

> The plain fact is that the subsidies employed in Thailand to help the rice farmer mainly end up in the pockets of the sinoThai rice millers cartel, and corrupt officials. The cash price the farmer receives is closer to 6,000 bht per ton. A good way to get yourself killed in Thailand is to try to set up an agricultural co-operative, for farmers to share information with and help other farmers.


Why not make a farmers information website where farmers can utilise technology to find direct buyers abroad and learn new techniques?

If they don't know who you are, who are they going to kill?

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## The Bold Rodney

> If they don't know who you are, who are they going to kill?


Probably the web master administering the site!  :Roll Eyes (Sarcastic):

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## nostromo

> Originally Posted by StrontiumDog
> 
> Called the income-guarantee scheme, the programme benefited an estimated 4 million farmers and cost the government *80 billion baht (2.6 billion dollars) over a two-year period, which went directly into the farmers' pockets*.
> 
> 
> 
> 
> 
> 
> ...



The middlemen and politicians are many. Actual farmers are paid very little compared to what middlemen merchants get from selling rice/other produce on, or compared to what they (middlemen) pay to corrupt politicians to keep this going on. Just as lately as 15-20 years ago, farmers could at places be little more than slave labour. This is not market economy, because methods of competition are closed.

For some historical background, you could read Pira Sudham. (Asiabooks, Amazon)

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## Albert Shagnasty

> Originally Posted by Albert Shagnasty
> 
> If they don't know who you are, who are they going to kill?
> 
> 
> Probably the web master administering the site!


nah man..
a website hosted in Florida full of anonymous tips and contacts posted via proxy servers?.
it would take somchai hi so  at least 10 years to figure it out. 
and what would he figure out anyway? - that there's a lot of information?
UP THE WORKERS!  :Smile:

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## StrontiumDog

Thailand Wagers on Rising Rice Prices - WSJ.com
SEPTEMBER 12, 2011*Thailand Wagers on Rising Rice Prices* 

*By JAMES HOOKWAY                And WILAWAN WATCHARSAKWET* 

UTHAI THANI, Thailand—Thailand, the world's biggest  rice exporter by volume, is placing a hefty, and some economists say  reckless, bet that prices for the grain will spiral higher as demand  increases.

 During an election campaign this year, recently appointed Prime  Minister Yingluck Shinawatra pledged to use government funds to buy  unmilled rice from farmers at 15,000 baht, or about $500, a ton at the  coming harvest. That was nearly twice the market rate before Ms.  Yingluck's landslide July 2 election win.


_Bloomberg News                 
Laborers spread rice out at a rice processing facility in Surin, Thailand._

Ms. Yingluck pitched the promise as a  way to generate more income for Thai farmers and help push international  prices higher in the process. Thailand provides about one-third of the  rice that is traded internationally, and any policy change in this  country of 67 million people can have an impact on the cost of one of  the world's most important foods from the Philippines to Nigeria. 

 That is especially true because so little of the world's rice  production is traded across borders, leaving Thailand in an especially  influential position. The United Nations' Food and Agriculture  Organization projects the country will export about 29% of its total  production this year.

 Already, prices for Thailand's milled benchmark grade B white rice  have risen more than a third since April to $640 a ton, a level not seen  in 18 months. Some analysts expect prices to top $800 a ton if the Thai  price-support program is put into full effect.

 "Prices are rising in anticipation of the Thai policy kicking in, and  there's already hoarding taking place. Farmers are waiting to sell to  the government for a higher price," said Samarendu Mohanty, an economist  with the International Rice Research Institute in Los Banos, the  Philippines.

 Farmers in Uthai Thani in the heart of central Thailand's  rice-farming belt said in recent interviews that they weren't hoarding,  though they thought it was possible others were. They said there is  strong support for the government's buying plan, which is set to begin  Oct. 7.

 


"I'm very happy now. I'm able to make  ends meet and have a little left over," said Chaliew Samphanbai, 55  years old, while taking a lunch break from her harvest. "Even if the  price was only 10,000 baht, I'd be happy."

 Another farmer, 61-year-old Sam-ang On-laor, said there was a risk  that fertilizer prices could shoot up if there is a sudden rush to plant  more rice, but reckons that the added costs would be worth it if there  were a guaranteed income on which to rely.

 But while Ms. Yingluck's campaign pledge to buy rice at $500 a ton  helped her follow her elder brother, ousted leader Thaksin Shinawatra,  into Thailand's top job, a number of economists warn that she could  spend more money than she bargained for.

 One question: Is the world in the midst of a long-term surge in the  price of food and other grains that will be exacerbated by Thailand's  policy, or are expansions in production in recent years, and the threat  of a possible global recession, enough to counter Thailand's move to  push prices higher?

 Some analysts doubt prices will go much higher. Ammar Siamwalla at  the Thailand Development Research Institute said Thailand may be  overplaying its hand. He warns that it risks falling into a vicious  cycle in which it forks out large amounts of cash to farmers to produce  more and more rice, whose prices may not be sustained at their current  levels.

 Mr. Mohanty, the economist with the International Rice Research  Institute, said more rice is being grown compared with 2008, and India  soon could be exporting rice in significant quantities for the first  time in three years if a court rules that private shipment licenses were  awarded correctly.

 "Overall, the situation looks good. The crop looks solid all over the  world," Mr. Mohanty said. "At this point, we would need a really severe  weather event to cause a serious disruption."

 Some commodity analysts said Thailand could lose market share to rivals such as Vietnam because of its rice-buying program.

 Still, prices for some crops have continued to rise even with  significant increases in production in recent years. Wheat, for  instance, still is trading at record levels despite improving production  numbers, the U.N.'s Food and Agriculture Organization said.

 Indeed, global food prices remained near records last month, particularly in the developing world.

 The U.N. agency said last week that its food-price index slipped less  than a point in August to 231 points, just 3% below a record set in  February. The  agency warned that grain inventories are tight as poor  harvests have failed to keep up with demand.

 The Organization for Economic Cooperation and Development argued in a  joint report with the U.N. agency last week that the world needs to  increase its agricultural output by 70% by 2050 to keep up with global  demand as countries such as China and India continue to expand.

 Soaring food prices played a role in some of the political upheavals  rippling around the Arab world this year. Some economists and industry  leaders are urging places such as the U.S. and the European Union to  rethink policies on subsidizing biofuel or banning imports of  genetically modified crops that might otherwise increase yields, or else  run the risk of more instability.

 In the long run, Mr. Mohanty said, "we have to be open to all potential tools available."

----------


## StrontiumDog

Thai-ASEAN News Network

Rice Prices Climb on Pledging Scheme Speculation 

UPDATE : 12 September 2011 

*The prices of some types of rice have  begun to climb, while most customers say they have no problem with the  price adjustment as long as it is reasonable.

Following the announcement made by the Commerce Ministry that it would  kick off its rice pledging scheme on October 7 for in-season paddy rice,  for which it has promised to purchase jasmine rice at 20,000 baht a ton  and white rice at 15,000 baht per ton, a survery was conducted in the  Yingcharoen Market to inspect the rice prices there.
*

The survery uncovered that retail prices of some types of rice have begun to climb. 

Rice vendors at the market said millers have raised their selling price of jasmine and sticky rice by 50 to 100 baht.

They have expressed confidence that after the rice pledging scheme is  implemented, the prices for all types of rice would go up by around two  to three baht per kilogram.

Currently, sticky rice is being sold at 32 to 33 baht per kilogram,  while the price of jasmine rice and brown rice is at up to 39 and 34  baht per kilogram, respectively.

For the current price of 49-kilogram rice sacks, sticky rice is at 1,400 baht, while jasmine is selling for 1,200 to 1,800 baht.

Overall rice prices have yet to increase as they are still part of older inventories.

The vendors said the scheme will not have much of an effect on them  assuming the increase is made in accordance with the market mechanisms.

However, they are concerned about the possibility of people hoarding  rice stocks and waiting to reap profits from the new government's rice  pledging scheme. 

They have called on the government to put measures in place to prevent hoarding, to negate a major spike in prices.

People are continuing to spend normally. 

They said they have no problem with the price increase as long as it is  not too much, as they want to be part of helping Thai farmers earn  higher incomes.

The regulations and conditions regarding the rice pledging program will be forwarded to the Cabinet for consideration tomorrow.

----------


## Octagon

I'm trying to understand how this scheme works - the government buys the rice at the agreed price directly from farmers (since the agreed price is for unmilled rice) then sells it to millers who sell it to exporters/traders? The govt sells the rice to the millers at the price they bought it for, hence the price rise? That's in theory how it works, right? In which case all farmers should be able to get the government's money with no middlemen screwing them over. The problem last time the scheme was introduced by PPP - as I understand it - was that the policy was introduced after the harvest, meaning the government bought the rice from millers, who had storage facilities which a lot of farmers don't have (especially the poorest, one would assume, who the policy is most intended to benefit). So that shouldn't happen if the govt buys rice at harvest time... have I understood correctly? 

But in general, even if the farmers did need to store their rice (for whatever reason), the govt could easily cut the middlemen out if it wanted by providing storage facilities at a nominal low fee. I assume the only reason they haven't done this is because of millers political connections...

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## Octagon

> The plain fact is that the subsidies employed in Thailand to help the rice farmer mainly end up in the pockets of the sinoThai rice millers cartel, and corrupt officials. The cash price the farmer receives is closer to 6,000 bht per ton. A good way to get yourself killed in Thailand is to try to set up an agricultural co-operative, for farmers to share information with and help other farmers.


I think I read 6000 was about what they were getting under the Democrat scheme. They must be getting more with the PT policy even if middlemen are involved - or why would they prefer it? 

Actually there was an article today in the BKK Post about rice co-operatives around Khon Kaen: Bangkok Post : Drying the tears and another one about a co-op in Roi Et; Bangkok Post : Rice cooperative in Roi Et hopes to manage its own exports

I note that there is a govt agency which assists co-ops but I guess if this whole co-op thing takes off and becomes more widespread, as you say, there may be pressure applied to both the govt and directly to the co-ops themselves.

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## StrontiumDog

*Thailand May Cede No. 1 Rice Ranking to Raise Rural Incomes - Businessweek
*
*Thailand May Cede No. 1 Rice Ranking to Raise Rural Incomes*

 September 13, 2011, 1:43 AM EDT                                                  

 By Supunnabul Suwannakij and Daniel Ten Kate                     
 (Updates futures price in fifth paragraph.)

      Sept. 13 (Bloomberg) -- Thailand is willing to  relinquish its role as the world’s biggest rice exporter as the  government prepares to buy grain directly from farmers to boost prices  and rural incomes, Deputy Prime Minister Kittiratt Na-Ranong said.

      “We will not back off,” Kittiratt said in an  interview yesterday. “If we cannot help our farmers, what is the point  of being the government in this country? I’m not proud of being the  largest exporter. I’m proud that Thai farmers can grow and sell their  products at reasonable prices and they can smile.”

      Prime Minister Yingluck Shinawatra aims to  insulate the country of 66 million people from a global slowdown by  lifting incomes of poorer Thais who propelled her party to victory in a  July election. The plan to guarantee rice prices may boost export rates  by almost 20 percent and erode the nation’s share of the global market,  said Sarunyu Jeamsinkul, deputy managing director at Asia Golden Rice  Ltd., Thailand’s largest shipper.

      “That will be trouble for exporters,” Sarunyu  said by phone from Bangkok. “It would be difficult to get deals done at  that price.” The export price may climb to $750 a metric ton, Sarunyu  said. It was at $629 as of Sept. 7, the highest level since December  2009, according to the Thai Rice Exporters Association.

      Rice futures rose 0.2 percent to $18.40 per 100  pounds on the Chicago Board of Trade as of 11:54 a.m. Bangkok time,  poised for the highest close since Sept. 30, 2008.

                       Shipments to Decline

      Shipments from Thailand, which account for about  30 percent of world rice exports, are expected to fall to 8 million  metric tons next year from an estimated 10 million tons this year,  according to the U.S. Department of Agriculture. Exports by Vietnam, the  second-largest shipper, may fall 8.6 percent to 6.4 million tons next  year, the USDA estimates.

      “I believe that if we have to suffer with smaller  export amounts, the total value of exports will be more,” Kittiratt  said in Bangkok. Overseas sales jumped 55 percent to 8.3 million tons  this year through Sept. 5, according to the Thai Rice Exporters  Association.

      The government plans to pay 15,000 baht per ton  ($498) for unmilled white rice and 20,000 baht for Hom Mali fragrant  rice, as much as 47 percent above current market rates, according to  Bloomberg News calculations based on data from the Thai Rice Mills  Association. Purchases are due to start on Oct. 7.

      Thailand’s effort to raise farm incomes may fuel  price gains across a region that the USDA estimates accounts for 87  percent of global rice consumption. Thailand has been the world’s  largest exporter since 1981, according to the USDA.

                      Prices Are ‘Reasonable’

      “We’re not talking about pushing up the price  three, four, or fivefold so that people will switch to consume bread or  other grains,” Kittiratt said. “I’m confident the price we’re offering  is reasonable. I’ll not be happy if the price surges higher than what we  suggest.”

      Competing suppliers may also take the opportunity  to raise prices, Abah Ofon, an analyst at Standard Chartered Plc, said  in an interview with Bloomberg Television today. “Up to 12 months, there  is a risk we see that elevation staying in place. The question is how  long can Thailand continue to buy rice at the rate it has set?”

      The price of 100 percent grade-B Thai rice, the  benchmark for Asia, has gained 21 percent since the July 3 election on  expectation that Yingluck would resurrect a policy first introduced by  her brother, Thaksin Shinawatra.

      About 35 percent of Thailand’s 67 million people  made their living growing crops last year, according to data from the  Office of Agricultural Economics. During the election, Yingluck’s Pheu  Thai party won 153 of 195 seats in the north and northeast, where  incomes are about a third of those in Bangkok.

                         Thaksin’s Policy

      In 2008, when Thaksin’s allies were last in power  and the government had a similar policy, it bought a total of 10.5  million tons of rice from almost one million farmers, according to the  Bank for Agriculture & Agricultural Cooperatives. Losses from  selling rice below purchasing costs were estimated at 43 billion baht,  data from the bank showed.

      Local prices rose to a record 17,000 baht per ton  in April that year and export rates hit an all-time high of $1,038 per  ton the following month after India, China and Vietnam curbed shipments,  spurring unrest from Haiti to Egypt.

      “Everyone in the business can look at the price  of rice five years ago and the price of wheat five years ago and look at  the percentage increase,” Kittiratt said. “What we’re suggesting isn’t  even trying to outpace other comparable choices. What we’re trying to do  is to beg for the understanding of buyers and consumers.”

      The Bank for Agriculture is expected to spend  about 400 billion baht on the program, the Thai-language Krungthep  Turakij newspaper reported today, citing President Luck Wajananawatch.

                       ‘No Supply Shortage’

      The USDA raised its estimate for global rice  production to a record 458.4 million tons for the 2011-2012 crop, buoyed  by larger expected harvests in Brazil, China, the Philippines and the  U.S., according to a Sept. 12 report. That would be a second year of  record supply, outpacing consumption and lifting ending stocks to the  highest level in nine years, the USDA said.

      Global trade in rice is estimated to fall 4.2 percent to 31.8 million tons next year, the USDA said.

      “As we go forward, demand and supply fundamentals  are going to come to bear,” Ofon said. “There isn’t a shortage of rice  in the market. We’re actually seeing a decrease in per capita  consumption of rice in this region. As people get richer they switch  from rice to other higher protein meals.”

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## SteveCM

*Asia Sentinel - Thailand's Half-Baked Rice Plan*

Written by John Berthelsen                                                                                                                                        Tuesday, 20 September 2011                
_The farmers' friend_

 *Subsidizing rice will be expensive, may hurt exports and could depress prices*

  The Thai governments plan to fulfill a populist campaign pledge by  subsidizing rice could leave it holding vast stocks of rice with nowhere  to sell it, economists say. At some point, Thailand may be forced to  dump the excess at a loss on the open market. 

Despite a 26 percent spike in prices as a result of a promise to buy  rice from farmers at a steep premium, earlier expectations that world  prices would soar further do not appear likely to come true, analysts  and economists say. Instead the Pheu Thai government headed by Prime  Minister Yingluck Shinawatra, could preside over a drop in prices  everywhere but in Thailand, where the subsidized prices are likely to  end up irritating consumers. 

Its a buyers market, said Samarendu Mohanty, the chief economist for  the International rice Research Institute in the Philippines.  Global  stocks to usage ratios have been rising for six straight years despite a  series of panics, including the current one, and are expected to do so  for a seventh year despite bad weather in some rice-growing regions,  with 2011-2012 output expected to rise by 3 million tons more than  demand. 

Thailand is currently the worlds biggest rice exporter, controlling  25.2 percent of global trade, followed by Vietnam at 22 percent,  Pakistan at 12.3 percent and India at 11 percent.   

The Thai price intervention resurrects an earlier policy by Yinglucks  brother Thaksin Shinawatra in 2004, before he was ousted in a 2006 coup.  It is expected to begin in mid-October, with the government paying rice  farmers a minimum price of about US$500 per ton, more than 60 percent  higher than the market rate before the July election. The original  scheme was criticized for graft and high cost. A 2010 study by the  Thailand Development Research Institute found that the government lost  US$628 million in the scheme and that few of the benefits actually went  to farmers.  

If human nature works as it always has, the higher price will motivate  Thai farmers to plant every hectare they can get their hands on to sell  the rice to the government.  It is expected that the government will  have to buy as much as 2 million extra metric tons of rice. Local Thai  stockpiles are currently at 6 million tons, and are expected to rise to 8  million tons by mid 2012. 

As I look at it, it is a very confused market, said IRRIs Mohanty.  They have too much rice, and so I dont expect a price increase unless  we have major weather problems. In the long run, there is a lot of  confusion on how Thai policy is going to work  how can they buy it and  what they will do with it. 

At some point, as stocks build, Mohanty says, the government may be  forced to sell its expensive rice in the global market, creating a  market overhang that would drive prices down and create bigger losses  for the government  unless, as he says, bad weather or some other  catastrophe intervenes, creating a global shortage. That would make  Yingluck look like a genius, Mohanty said.  

A plan under discussion to form a cartel with Vietnam and other  Southeast Asian nations to drive up world prices is probably a  non-starter as well, given the vociferous opposition of the World Bank  and the World Trade Organization.  A similar plan was dropped in 2008.  

Thailand might learn a lesson from both United States and European Union  agricultural policies from the 1970s, when both had price supports in  place. The United States in the 1970s and 1980s subsidized durum wheat  production in the northern Midwest, resulting in vast mountains of  wheat, forcing the US to subsidize sales below world prices.   

The European Union has paid dearly for subsidies on dairy products and  wine.  In 2009, the European Commission artificially boosted prices by  buying 130,000 metric tons of dairy products at a cost to the taxpayer  of 237 million pounds sterling. 

Once in place, subsidies and price supports are extremely difficult to  remove. In 2007, the European Commission sought to scrap such payments, a  reform that was blocked by Germany and particularly France, whose  farmers rioted in the streets.  Indonesia, Malaysia and the Philippines  have already learned their lesson by subsidizing fuel and other  commodities. A decision to end the fuel subsidy in Malaysia played a  role in making former Prime Minister Abdullah Ahmad Badawi unpopular in  the run-up to the 2008 election in which the ruling party for the first  time in 50 years lost its two-thirds majority in Parliament. 

Notwithstanding the price rises since the policy was announced, Mohanty  and others say thats probably about as high as they will go, news  stories to the contrary.  Although at first there were concerns that the  policy would create a global rice shortfall, it appears that Vietnam  and India are more than willing to step in to sell.  Given the  steepening price of Thai rice, importing nations have turned to other  countries, already forcing Thailand to cut its export forecast for  2011-2012 by 20 percent, to 8 million metric tons.  

Despite bad weather in various rice exporting regions, output has been  steadily gaining across the globe, with global stocks on the rise.  Pakistans crop is expected to rebound by 45 percent in 2011-2012, to  6.8 million tons. Pakistan is expected to export as much as 3.9 million  tons, 12.3 percent of world trade, according to Research-Works, a  Shanghai independent research firm specializing in commodity research.   Strengthening monsoon rains in India have improved local crop conditions  to the point where exports are expected to rise to as much as 4 million  tons.   

Rice prices have been volatile. Despite the rise since July, there seems  little reason other than market panic. In 2007-2008, the price soared  from US$300 per metric ton to over US$1,100 before falling back to about  half that. The International Food Policy Research Institute, in a  report earlier this year, said that while financial market speculation  may have played some role, export restrictions and panic purchases  turned a critical situation into a full-blown crisis.

----------


## SteveCM

From the blog world.....


*FCCT event : What are the pros and cons of the Thai government*

_By Bangkok Pundit 
Sep 21, 2011_

8pm, Wednesday September 21, 2011 (tonight!)  at the FCCT there is an event entitled Rice wars: re-opening old wounds. Below is the blurb:_Rice has always been more than just a commodity: it sits  in the inflammable area of the national psyche where economics, food  security and politics meet.

 It is little wonder that Yingluck Shinawatras pledge to re-introduce  a rice intervention buying scheme has proved to be one of her most  controversial campaign promises.

 The government says that Thailand has been subsidising global  consumers for years, that the new policy will raise prices to a more  realistic level and the scheme will impose, or reimpose, a system that  actually requires farmers to grow rice to receive their subsidy.

 The schemes detractors say it will bring back the corruption,  storage costs will run into billions of baht, and warn that a prolonged  rise in global rice prices will put even more pressure on hundreds of  millions of poor people who are already struggling with the rising cost  of other essential commodities.

 This is a battle that goes to the core of Thailands political  conflict: is it just expensive populist demagoguery, or a long awaited  rebalancing of the national balance sheet towards a social constituency  that has long trailed the countrys economic boom?

 Speakers:
 Ammar Siamwalla, one of Thailands most prominent economists, is a  former professor at both Yale and Thammasat Universities and has served  as president of the Thailand Research Development Institute. He has  established a reputation as one of the most trenchant critics of key  elements of Thaksinomics.

 Chanchai Rakthananon, CEO of of Nakornton Rice Co and president of the Thai Rice Mills Association.

 Vichai Sriprasert, CEO of Riceland International, an leading  exporter, and President Emeritus of the Thai Rice Exporters Association.  A graduate of the University of Michigan and Wayne State University, he  is a member of Thailands Board of Trade.
_*BP*: The new scheme is planned to start on October 7 and there has been plenty of criticism  see this _Asia Sentinel_ piece.

 Ammar is a vocal critic of the new policy as per _The Nation_s headline earlier this month entitled Rice scheme will hurt Thais and help Vietnam. Key excerpt:_While consumers and taxpayers will suffer from the governments controversial rice policy, Vietnam will substantially gain, the Thailand Development Research Institute (TDRI) has warned.

 Ammar Siamwalla, a prominent economist, yesterday asked the  government to answer hard questions on the rice pledging scheme  its  cost burden, impact on consumers, and farmers and government ability to  boost global market prices.

 As the government is set to buy paddy at Bt15,000 per tonne from  farmers, it has to build up a large stockpile this year  and years  later it must accumulate ever larger and larger stockpiles in order to  maintain these high prices, which will in the end lead to high costs for  taxpayers, Ammar warned at a TDRI press conference yesterday.

When the government releases rice from the stockpile, the  price would drop in the global market, which would result in more  losses. Its a dilemma,_ _ he said.

 High prices would hit consumers and if the government provided a  subsidy to consumers, the cost burden to the public would be ever  higher, said Ammar, a distinguished scholar at the independent  think-tank.
..
TDRIs study said the Thaksin government had faced a loss of  Bt19.13 billion from rice pledging in 2005/06 by pledging 5.24 million  tonnes of rice,_  _while the income guarantee by the Abhisit regime recorded a loss of only Bt7.38 billion in 2009.

Some 300-500 millers from 2,000 mills, and 10-20 giant  exporters would benefit from the pledging scheme. Only 500,000 farmers  from a total of four-million households stood to gain from rice  pledging, TDRI chairman Nipon Poapongsakorn said. Outstanding costs  totalling Bt141 billion from the rice subsidy in 2005 to 2009,_  _included a smaller Bt44.6 billion incurred from the income guarantee scheme.
_*BP*: Ammar notes that the previous rice pledging  scheme cost the government a lot of money* although, as Viroj Na Ranong,  the Research Director for Health Economics and Agriculture of TDRI,  noted in an article for _Kom Chad Luek_  the new pledging scheme is quite different from the old scheme (นโยบาย  จำนำข้าว  ของรัฐบาลยิ่งลักษณ์มีเนื้อแท้ที่กลายมาเป็นโครงการป  ระกันราคาที่แตกต่างไป จากนโยบายจำนำข้าวในอดีต). He says the differences is in the past that it  was not a comprehensive scheme so the benefits accrued to a few because  of the quotas in place.

 BP is unsure of the views of the person from the Rice Exporters  Association, but understand the Thai Rice Mills Association agree with  the new policy (and one assumes the President does too). There is this  interesting snippet from _Bloomberg_ just after the election:_Unmilled rice in Thailand has advanced almost 10 percent to 10,000 baht a ton on July 11, compared with 9,100 baht on July 1, according to Thai Rice Mills Association._
*BP*: So you can see some of the benefits were already being gained in anticipation of the new scheme.

 Hence, tonights FCCT event is not likely to just be Ammar  criticizing the government. We will have speakers providing a different  view and their own perspective of the policy and its pros and cons.

 On BPs view, this from the _Bangkok Post_ is interesting:_Kampon Adireksombat, a senior economist in Tisco Securities Economic Strategy Unit, says the programme will cost the government 112 billion baht, or 1% of gross domestic product, in 2012.

His projection is based in part on the fact that the guarantee sets rice  prices at 15,000 baht per tonne for white rice, a 57% increase, and  20,000 baht per tonne for Hom Mali rice, a 54% increase. The loss will also come from 10 billion baht in subsidies used to keep local rice prices unchanged.

With rice accounting for 20% of the raw food basket, analysts expect rising consumer prices._ _ Local subsidies should partly offset the increase in retail domestic prices.

 The pledging programme, planned for Oct 7 to Feb 12, is forecast to  increase the headline inflation figure to 3.9% in 2012, while core  inflation is expected to rise to 2.4% from 2%. The Bank of Thailand will  be under pressure to raise the policy interest rate by a quarter  percentage point to 3.75% by year-end.

Jun Trinidad, a senior economist at Citibank, expects the scheme to have  a bigger effect on the fiscal deficit and a muted contribution to  growth and consumer prices.

 He said the fiscal cost from direct rice stock purchases and the loss  from selling rice would range between 124 billion and 310 billion baht,  based on 20% to 50% of total paddy output being bought by the  government.

The net fiscal effect, excluding an increase in tax, would be 105  billion, or 1% of GDP at a minimum, to 271 billion baht, or 2.3% of GDP._ _

 But Mr Trinidad expects a lift in economic growth by 0.7% to 2.2% in fiscal 2012 as the income transfer fuels consumption of non-durable goods.
_*BP:* As you see there is a great divergence in views  on the cost of the scheme and hence the benefits that will be gained  although we will have to wait and see if farmers will really be getting  the 15,000 Baht a tonne for plain white rice. As noted in DPA the other day, the governments new scheme has affected the world price:_Rice export prices hit 580 dollars per ton in August, up 16 per cent from May,  due to strong demand and expected changes to Thailands subsidy policy  for farmers, the United Nations Food and Agriculture Organization (FAO)  said Tuesday.

 Strong demand from importing countries and changes in Thailands  price support system were the reasons for the rise, the FAO said in its  latest Asia-Pacific Food Situation Update.

 Thailand, the worlds leading rice exporter for the past four  decades, generally sets the pace for the price on the world market._
*BP*: If the world price for Thai rice is high and  Thailand is able to sell at that price, this reduces the cost for the  government, but then what about domestic supply? Also from the FAO report:_Prices were also up in Thailand, but the impact  of floods striking the central provinces, the countrys rice basket,  during September, have yet to be assessed as far as prices are concerned._
*BP*: Perversely, the recent floods will help as  limited supply means less rice the government has to buy and store (and  thus sell in the market later) although there are still costs for any  necessary subsidies to keep the domestic price low for people with lower  incomes.

 There are so many variables that is difficult to predict whether the  plan will be a success or not. There are variables with the  international market which the government does not have control over  (although their policies will influence  prices for Vietnamese rice are  up 25%  in Jan-Aug 2010). If things fall into place for the government, it  could be a success, but with so many other policies on its plate to  juggle and to watch how they are implemented,  the government is taking  quite a few gambles that while some policies may not come off that  enough of them will. Will its rice pledging scheme be one of them?

 One thing that BP should note is that the rice pledging scheme is  part of the government scheme on indirectly supporting informal labor.  If rice prices were flat, it is hard to expect that farmers will receive  increases in wages and pay out higher salaries to those who work for  them, but the situation is different if farmers are getting 15,000 Baht a  ton. Hence, this is part of the reason, the government will be willing  to take a financial loss although a large loss will be unsustainable.


 *This sentence got caught out in a blockquote so have corrected now.

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## StrontiumDog

*Analysis: All-time high rice price: Inflation threat | The Jakarta Post
*
*Analysis: All-time high rice price: Inflation threat*

Arga Samudro, Bahana Securities | Thu, 09/22/2011 8:00 AM                    

 After winning Thailand’s general election in July, Yingluck  Shinawatra, the nation’s first woman prime minister, has implemented a  popular move to cement her rural support by planning to buy November’s  harvest of unmilled rice from farmers at THB15,000 (US$502) per ton, 51  percent higher than previously. 

Today, global rice prices have  risen 13 percent to $629 per ton — not a surprise given Thailand’s 32  percent share (9.7 million metric tons) of 2010 global rice exports  (Chart 1), making it the world’s largest exporter. Thus, we expect  Thailand’s policy shock to apply inflationary pressures across Asia,  which accounts for 87 percent of global rice consumption. 

At this stage of the cycle, it is worth pointing out that Indonesia’s domestic rice price has reached Rp  7,700 per kilogram (87 US cents), up 9 percent year-to-date (ytd) and  10 percent year-on-year (y-o-y), reaching an all-time high. This is  undoubtedly a source of concern, and is high time for the government to  ensure sufficient domestic rice supplies, leading up to Thailand’s  higher rice prices in November.

Note that the Thai government has  not set a target on how much rice would be purchased, with the amount  dependant on how close prices rise “close to or above” the guaranteed  level. Going forward, we expect rice price volatility ahead to threaten  our domestic food inflation in the first semester of 2012, particularly  given Indonesia’s falling rice production growth (Chart 2).

Separately,  from the domestic side, we note that government plans to raise  electricity base rates (TDL) by 10 percent in April 2012 to help ease  the electricity subsidy from Rp 65 trillion to Rp 45 trillion in the  draft 2012 State Budget. This will increase inflationary pressure as  electricity rate weighting is 3.5 percent of CPI’s calculation (Chart  3). 

Thus, we expect 2012 inflation to rise to 5.7 percent y-o-y,  even without accounting for electricity and rice price hikes. This  means that the central bank will remain vigilant on the prospect of  higher inflation, making it unlikely that Bank Indonesia’s 6.75 percent  benchmark rate will fall from the current level in our view. 

Leading  up to this, we provide a sensitivity analysis (Chart 3) on the effects  of our inflation forecast, assuming several possible shocks ahead, such  as higher global rice prices, increased TDL and subsidized fuel prices,  although the latter is unlikely to occur given current low oil prices. 

Our  sensitivity analysis reveals that every 10 percent increase in global  rice price would add 0.48 percent to our current 2012 inflation rate of  5.66 percent. On TDL, a 10 percent electricity rate increase would  result in 0.35 percent higher towards our 2012 inflation. 

On the  back of a lower global economic growth outlook, we believe oil prices  will be well contained, allowing the government to retain its current  fuel subsidy policy into 2012, particularly as political campaigns start  in 2013 for the 2014 elections. Nevertheless, we show that for every 10  percent hike in subsidized oil prices, inflation will rise by 0.24  percent. 

Finally, inflationary pressure could also stem from the  recent sudden weakness in rupiah against the dollar, which broke  through the Rp 9,000 level on Monday. With all of the rupiah’s gains  wiped out, a stronger dollar does not bode well for imported inflation  going forward, unless the central bank can imbue confidence in the local  currency. On this note, we believe that the government should consider  revising its exchange rate assumptions for the 2012 State Budget, which  displayed a depreciating rupiah trend of Rp 8,800 at the end of 2012,  down from Rp 8,700 per dollar at end 2011. This is necessary to restore  confidence in our exchange rate, particularly given recent BI rulings  restricting foreign borrowing, which might be perceived as some sort of a  soft capital control on the foreign investment community. 
_
The writer is an economist at PT Bahana Securities_
__

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## SteveCM

Uploaded by AlJazeeraEnglish on Sep 22, 2011        

                Thailand's government is planning to boost the income of millions of farmers by subsidising rice prices.

But  the policy could also significantly drive up global costs of the  dietary staple since Thai rice accounts for a massive percentage of  international trade.

Aela Callan reports from Bangkok, where Thai  rice exporters complain that higher prices could cause them to lose  their competitiveness in the business to other countries in the region.

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## StrontiumDog

*Bangkok Post : Rice pledging _ a recurring corruption nightmare
*
*Rice pledging _ a recurring corruption nightmare*
Published: 24/09/2011 at 12:00 AMNewspaper section: News
 Finally the Yingluck cabinet has approved the  reintroduction of the rice pledging scheme as proposed by the National  Rice Policy Committee to fulfill Pheu Thai's campaign promise. It will  have a budget of 430 billion baht for the total production of 25 million  tonnes of paddy for the main rice crop from Oct 7, notes a Thai Rath  economic news analyst.

 
_Mortgaged rice at a go down in Nakhon Si Thammarat’s Hua Sai district.  Experts believe the reintroduction of the rice-pledging scheme will  re-ignite old systems of corruption and not benefit farmers. NUCHAREE  RAEKROON_

 However, Thai Rath does not think well of the scheme arguing that it  could enter the corruption cycle again as most of the money will not  fall into the hands of farmers as claimed by the government but leak  into the pockets of all sorts of people involved in carrying out the  scheme. There was so much corruption during the terms of all previous  governments that carried out the rice pledging scheme, and Thai Rath  does not think the Yingluck government will be an exception.

 Even without any corruption, the scheme will incur losses of up to  50% of the allocated fund as the government has to sell paddy stockpiles  at prices much lower than the mortgaged prices owing to inefficient  management and market pricing mechanisms.

 Because of the huge losses from the scheme and corruption, the  Abhisit government abandoned the rice pledging scheme and adopted the  rice guarantee scheme instead, which did not involve any state  management and farmers got all the subsidies directly from the  government if they could not sell their paddy at the government's  guaranteed prices.

 However, people who once profited from the rice pledging scheme, were  able to convince Pheu Thai to make a campaign promise to reintroduce  the scheme. To make it more attractive to voters, these people convinced  Pheu Thai to promise an even higher mortgaged paddy price than the  previous government's guaranteed price.

 Thai Rath discounts the Yingluck government's claim that the scheme  will benefit farmers more and that Thailand could raise the prices of  Thai rice in the global export market as the government would own all 25  million tonnes of paddy.

 Thai Rath cites Dr Virabongsa Ramangkura, a former finance minister  and deputy prime minister, as saying that in theory, exported grain is  not an inelastic product. There is competition from other kinds of grain  as they can be easily substituted. For example if rice is expensive,  global consumers can substitute it with wheat and corn. All grains  including rice are determined by global market price mechanisms, not by  an exporting nation, even if Thailand is the leading rice exporter.

 In short, Thai rice exporters are price takers, not price makers.

 Dr Virabongsa warns of possible massive corruption and that the  benefits would go to rice millers who are hired to keep the mortgaged  paddy _ rice exporters would then buy cheaper paddy from the  government's stockpile.

 Dr Virabongsa also warned the Yingluck government that all cash crops  cannot be hoarded to create artificial shortages to drive up prices  because Thailand is not alone in producing rice and that the longest  that the government can hoard paddy is about 3-4 months as the next crop  has to go onto the market. Buyers can wait for the new crops to hit the  market, depressing prices. For this reason, hoarding paddy is only  incurring losses due to expenses involved in paying storage fees and  fees to maintain the paddy quality.

 The Yingluck cabinet approved the pledging scheme for the 2011-12  main rice crop from Oct 7 to Feb 29, while the pledging scheme in the  South starts on Feb 1 and goes through to July 11 due to the different  planting seasons. The pledging price for Hom Mali is 20,000 baht a tonne  at no more than 15% moisture content, the highest ever. For 100% white  rice and 10% sticky rice it is 15,000 baht/tonne.

 The pledging scheme this time around is no different from the  previous schemes and Thai Rath does not believe that the state can  prevent corruption as those who used to profit illegally from the scheme  are still there. Further evidence involved attempts by certain  government officials, rice traders and millers to convince the Abhisit  government to abandon the rice guarantee scheme and revert to the old  scheme.

 Thai Rath outlined how the rice pledging scheme benefited certain individuals and officials.

 The first step is to declare the pledging price at a much higher level than the market price.

 Second, collude with certain rice mills to operate the scheme. The  selected rice mills would buy paddy from farmers at lower prices before  the government officially announces the date of pledging. Some millers  don't even buy the paddy but hire farmers to sign a letter stating  falsely that they have sold the rice to the millers during the pledging  period. When Commerce Ministry officials come to check stocks, they pay  the officials tea money to look the other way.

 Third, when it is time for the government to sell the accumulated  stockpile, no farmer would be stupid enough to redeem the pledged rice  as the price in the market is always lower. Certain preferred rice  exporters are allowed to buy from the government's stockpile at a much  reduced price.
 Other rice exporters cannot compete as they don't know how much they have to pay for the government's stocks.

 Not only does the rice pledging scheme benefit certain rice millers  and rice exporters at the expense of honest rice millers and exporters,  the state suffers huge losses from the the expense of paying the  difference in pledged prices and prices offered to rice exporters and  retail rice packagers. The state also has to pay additional costs for  rice storage and maintaining the quality as well as other management  expenses for Commerce Ministry officials to survey and inspect rice  throughout the country.

 Thai Rath cites several studies that point to the loopholes of  previous rice pledging schemes that enable widespread corruption. Yet  the Pheu Thai government is not improving the conditions of the pledging  scheme, arguing it must approve the scheme quickly for the current main  rice crop and to fulfill the promise to farmers made during election  campaign.

 Thai Rath also does not believe Commerce Minister and Deputy Prime  Minister Kittirat Na-Ranong's assurance that the Yingluck government  would ensure transparency and honesty in carrying out the pledging  scheme. All previous governments which carried out the pledging scheme  also promised this but failed to stem corruption.

 It will be the first time that Mr Kittirat is personally involved in  the administration of the rice pledging scheme. He will have to rely on  the same Commerce Ministry officials who were involved in massive  corruption under previous governments.

 Thai Rath outlines three scenarios for the rice pledging scheme.

 The best scenario is that global prices shoot up due to adverse  weather conditions in several countries, causing a reduction in global  stockpiles. The government can sell all its stock more or less at the  pledged prices and thus recoup the 410 billion baht investment. The  government pays only 25.5 billion baht to manage the scheme. If this  occurs, the scheme could then be judged a huge success.

 The second scenario is that the government sells its rice stockpile  at prices about 25% less than the pledged prices, getting about 75%  worth of the initial investment back and creating a loss of about 102  billion baht. Coupled with the 25.5 billion baht management cost, the  damage to the state would be about 128 billion baht, which is similar to  the Abhisit government's rice guaranteed scheme which paid out 123  billion baht directly to farmers.

 The worst scenario is that after 4 months, no farmer comes to redeem  the pledged paddy. The government delays selling the stockpile, hoping  to get higher prices. When rice stocks are kept for a long time, the  quality deteriorates so much that it cannot be sold to exporters. The  paddy has to be disposed of cheaply as animal feedstock for as low as 10  baht/tonne.

 In the worst case scenario, the government has to face losses of more  than 430 billion baht due to higher storage fees for a long period and  an interest burden.

 More than 13 million voters chose the Yingluck government to solve  the country's problems, not to come to power to exploit the state for  their own benefit. Now that the government is going ahead with its  campaign promise to reintroduce the rice pledging scheme even though  facing severe opposition from academics who have studied rice issues for  decades, Thai Rath would like to remind readers to keep a close watch  on the scheme to see whether farmers really benefit or vested interests  do. What is even more important is the high cost to the state in  implementing the scheme.

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## SteveCM

*Bangkok Post : Controls planned ahead of pledging*

RICE SMUGGLING 
*Controls planned ahead of pledging*
Published: 24/09/2011 at 12:00 AMNewspaper section: BusinessThe Commerce Ministry has ordered rice millers and traders to declare the amount of rice they possess.

 The order is a pre-emptive measure against possible malfeasance by  traders attempting to receive high payments for low-priced or imported  paddy rice in the pledging scheme set to start on Oct 7.

 Millers and traders in 32 provinces are subject to compliance with the order.
 The new scheme is promising 15,000 baht a tonne for white paddy rice  and 20,000 tonnes for Hom Mali, 30% above current market prices and an  incentive to cheat.

 Deputy Commerce Minister Poom Sarapol said the measure was aimed at  preventing millers and traders from colluding with each other to pay  farmers for pledging their grain.

 The authorities must grant permission for rice to be transported, he said.

 Yanyong Phuangrach, the ministry's permanent secretary, said the  ministry would closely watch for rice smuggling along the border.

 Imports of the crop are banned except for broken rice, which is imported for industrial use.

 Mr Yanyong admitted the high payouts in the scheme would make it  tempting for participants to try to circumvent the law. Millers buying a  tonne of paddy for 9,760 baht this week would make a profit of 53.7% by  pledging the same grain at 15,000 baht under the scheme.

 He expects rampant substitution of inferior rice, as the government intends to mortgage all grains produced this season.

 Meanwhile, a rice industry veteran has given advice for catching the cheats.

 Niphond Wongtra-ngan, a former president of the Thai Rice Mills  Association, said he disagrees with the plan, which kicks off about a  month before harvesting of the main crop.

 "Not much grain is harvested in October, as the bulk comes in  November and December, but an estimated 2 million tonnes of paddy may be  in the hands of millers for wrongful use in reaping higher payments  from the scheme," he said.

 The profit to be made is attractive enough for millers and officials  to collude with each other, said Mr Niphond, who is also an adviser to  former deputy prime minister Trairong Suwannakhiri.

 He said if the programme must be carried out, then officials should carefully examine grain quality.

 "If the grains are dry or have a low moisture content, it can be  assumed they are not from a fresh harvest, considering the recent heavy  rains and flooding," he said.

 The lists of farmers registered with the programme should be checked  carefully, as they should not be the same persons who obtained  compensation for damaged rice fields.

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## StrontiumDog

*Bangkok Post : Rice plan loss could hit B250bn
*
*Rice plan loss could hit B250bn*

*Pridiyathorn warns of possible crippling cost* 
Published: 26/09/2011 at 12:00 AMNewspaper section: News
 Taxpayers could be hit with a 250 billion baht  bill under the government's return to a loophole-ridden rice mortgage  subsidy programme, MR Pridiyathorn Devakula, a former deputy prime  minister says.

 The programme could also result in Thailand losing its status as the world's top rice exporting nation, he charged.

 The Yingluck Shinawatra government next month will launch the rice  mortgage programme offering 15,000 baht per tonne for paddy _ or  unhusked _ white rice, and 20,000 baht per tonne for jasmine hom mali  rice.

The prices are about 5,000 baht per tonne over current market prices.  Under the Abhisit Vejjajiva government, the mortgage programme was  scrapped in favour of an insurance programme that compensated farmers if  market prices dipped below benchmark prices.

 Under the mortgage scheme, rice is pledged as collateral against  loans from the state-owned Bank for Agriculture and Agricultural  Co-operatives (BAAC). If rice prices exceed the pledging price, a farmer  can sell the rice in the market, repay the loan and pocket the  difference as profit. But if market prices are under the pledging price,  the BAAC essentially buys the rice, which is then held in government  stockpiles and sold at auction to mills and exporters.

 MR Pridiyathorn, a finance minister and deputy premier under the  Surayud Chulanont government, said the high pledging price set by the  current government would lead to farmers defaulting on their bank loans.

 If 27 million tonnes, or 90% of the country's estimated 30 million  tonnes of paddy harvested in the 2011/2012 season, was left in  government hands, it would result in a loss of 135 billion baht, based  on the difference between the pledging price and current prices.

 Further losses could be expected, based on spoilage, declining global  prices and a lack of bargaining power on the behalf of the government  with local traders as it has held large stocks.

 MR Pridiyathorn said the programme is also vulnerable to corruption and manipulation.

 The project could be the "most damaging in history", he said, with  potential losses including interest ranging from 135 billion to 250  billion baht.

 MR Pridiyathorn said the government's economic leaders _ Kittiratt  Na-Ranong, a deputy prime minister and commerce minister; and Thirachai  Phuvanatnaranubala, the finance minister _ may have underestimated the  potential scale of losses.

 "I see that the finance and commerce ministers, who are responsible  for the programme, didn't actually initiate the project. It was launched  by some heavyweights within the [Pheu Thai] party who are currently  banned from politics," MR Pridiyathorn said.

 "I have watched the situation with profound regret, watching some vicious politicians press ahead with such a damaging project."

 MR Pridiyathorn warned that Mr Thirachai, as BAAC chairman, could be  liable for "gross negligence" if the programme leads to losses for the  bank.

 "I do not want either [Mr Thirachai or Mr Kittiratt] to not help  farmers. But they should pass on the pledging scheme and look for other  systems that work for farmers while limiting the cost to the country,"  he said.

 Mr Kittiratt, when contacted by the Bangkok Post, declined to  comment. Mr Thirachai, who is attending the annual IMF/World Bank  meetings in Washington, was unavailable.

 MR Pridiyathorn said making the government the sole buyer of the rice  crop would squeeze exporters, giving competitors such as Vietnam a  chance to boost their share in the global market.

 "Historical records show that whenever the government pledged rice at  a premium to market prices, the country's rice exports decreased," MR  Pridiyathorn said.

 "We might see Vietnam pass us as the leading rice exporter for the first time ever in 2012."

 The rice mortgage programme was first launched by the Commerce  Ministry in 1981 as a measure to help ease oversupply in the market.

 The government booked large losses for the first time in 2004 under  the now-disbanded Thai Rak Thai Party, when pledging prices were set  well above market prices. Critics said then-premier Thaksin Shinawatra,  Ms Yingluck's brother, had intentionally set high pledging prices to  pander to rural voters.

 State rice stockpiles rose to 6 million tonnes in 2003/2004 and 7.5  million tonnes in 2004/2005. Losses were put at 26.49 billion baht.

 After the September 2006 military coup, the Surayud government cut  the pledging price to match market prices. The loss for the first crop  in 2006 was 319 million baht compared to 12.94 billion baht the year  before. No loss was recorded in 2007/2008.

 But a 26.63 billion baht loss was posted for the second crop in 2008  under the People Power Party led by Samak Sundaravej. During the  2008/2009 season, under the Democrat-led government, the second-crop  loss was 33 billion baht.

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## StrontiumDog

*China relies on science to fight Thailand&rsquo;s rice war - The Globe and Mail
*
*China relies on science to fight Thailand’s rice war* 

* carolynne wheeler* 

* BEIJING—  Globe and Mail Blog* 

*Posted on Monday, September 26, 2011 11:22AM EDT* 

  No commodity price in Asian markets carries quite the emotion of rice, a staple in about half the world’s diet. 

  A decision by a new Thai government to guarantee its farmers a higher  price for their rice crops -- winning the hearts of the working-class in  the aftermath of that country’s political turmoil -- is having some  rocky consequences. 

  Thailand is the region’s main exporter of rice, providing an estimated  10 million tonnes annually. Earlier this month, new Thai prime minister  Yingluck Shinawatra -- sister to ousted favourite of the working class  Thaksin -- pledged to begin paying farmers nearly 15,000 baht, or just  over $480 (U.S.) a tonne, up from the present 10,000, starting in  October. That, in turn, has pushed the price of 100 per cent B-grade  Thai white rice up to around $619 a tonne this week. 

  There are moderating influences; India, normally a careful hoarder of  its rice stores, has just released two million tonnes for unrestricted  export. Neighbouring Vietnam is also expected to help compensate with  its own growing production. 

  And China -- by far the largest consumer, but also the world’s  seventh-largest exporter of rice -- has its own stable supply. Analysts  say the country has overall stock levels “comfortably” higher than they  have been in years. 

  Still, even Chinese officials must have some concerns -- which may be  why state-controlled newspaper headlines here this week crowed about the  accomplishments of scientist Yuan Longping, who has achieved a  world-record yield --13.9 tonnes per hectare, or more than double the  average -- with one of his hybrid rice strains. Improving the yield of  limited farmland is a high priority in a country with 1.3 billion people  to feed, particularly when rising food prices are driving the country’s  inflation. 

  “If the international price of rice rises, this can put upward pressure  on rice in China as well: locals will have greater incentives to  export,” wrote Frederic Neumann, co-head of Asian economics for HSBC, in  an e-mail interview. “That said, rice is not the main driver of food  costs currently in China, where the biggest jump over the past year has  been in pork and vegetable prices, as well as wheat due to a drought in  the North … Increases in the international price of food should have an  only marginal impact on China's domestic food prices.” 

  However, Mr. Neumann warned in a separate report that the rising cost of  rice may well impact inflation in the rest of the region. “If  sustained, the rise in the cost of rice could stem any downdraft in  headline inflation across the region, “ he wrote.

----------


## StrontiumDog

*Thai government cancels rice sale to Indonesia | Reuters
*
*Thai government cancels rice sale to Indonesia*

                      BANGKOK, Sept 27 |          Tue Sep 27, 2011 1:10am EDT         

  (Reuters) - Thailand's government has cancelled the sale of 300,000 tonnes of rice to Indonesia  agreed under the previous administration that left office last month,  although Indonesia's state procurement body said on Tuesday it had not  been informed.    

   "The Public Warehouse  Organisation signed an MOU in the middle of August, which would have  become effective when the minister signed the deal,  but I didn't sign," Thai Commerce Minister Kittirat Na Ranong told  reporters, referring to the body that looks after government stockpiles.     

 "The price does not match the price the government will guarantee farmers, so that deal won't happen, and we expect Indonesia will understand," he added.    

 The new government, formed in August after an election in July, has promised farmers 15,000 baht ($481) a tonne for paddy from October. Exporters say that could push export prices above $800 a tonne, versus around $600 now for the benchmark export grade.    

 Bulog's CEO, Sutarto Alimoeso, told Reuters he was not aware the government-to-government deal had been scrapped.    

 "We have not got official information on the cancellation from the Thai government. On the other hand, we have sent a letter to the Thai government to ask for information on progress on the contract," he said. ($1 = 31.135 Thai Baht)

----------


## StrontiumDog

Thai-ASEAN News Network



PM Fires Back at Critics of Rice Mortgage Scheme 

UPDATE : 27 September 2011                     *

The prime minister has urged critics of  the government's rice mortgage scheme to be receptive to the policy,  saying it will directly benefit farmers.

Prime Minister Yingluck Shinawatra lashed out at former Deputy Prime  Minister Pridiyathorn Devakula after he urged the government to ignore  the rice mortgage scheme and to use appropriate means to avoid a huge  loss. 

The budget spending to subsidize the program is estimated at 250 billion baht.
*

Yingluck argues that the government’s rice mortgage scheme ensures that farmers will benefit directly.

Meanwhile, Commerce Minister Kittirat Na-Ranong said he is ready to  clarify the government’s rice pledging scheme to those who oppose it. 

At the same time, he welcomes all criticisms to improve the policy. 

He insisted that all processes are transparent.

He expressed confidence that the policy will not damage the country, but said it will, on the other hand, increase rice prices.

Earlier opposition leader Abhisit Vejjajiva voiced concern that  flood-affected farmers will have no crops to gain from the policy. 

Kittirat insisted that the government will provide aid for the affected farmers.

----------


## StrontiumDog

*Indonesia urges Thailand not to breach sales commitment

Indonesia urges Thailand not to breach sales commitment* 

*Business Desk*
*The Jakarta Post*
Publication Date : 27-09-2011

Indonesian State logistics agency Bulog wants Thailand to fulfill its commitment to sell rice to Indonesia under existing contracts, despite Thai claims that the stipulated price is too low. 

“They have to fulfill the rice sales contract signed by both the Indonesian and Thailand governments in August,” Bulog chief Sutarto Alimoeso said. 

Under the contract, Thailand must ship 300,000 tons of rice to Indonesia this year. Sutarto said Bulog had not received a response to two letters sent to Thailand’s Commerce Ministry in early September.

Thailand, the world’s largest rice exporter, previously canceled plans to sell rice to Indonesia, citing low prices, Thai Commerce Minister Kittiratt Na Ranong said on Wednesday as reported by Bloomberg.

Indonesia, the third-largest rice consumer in the world, signed a contract in August to import 300,000 metric tons of rice from Thailand to rebuild its stockpiles and curb domestic price hikes.

“The rice price in the contract is quite good for Indonesia but it is not too low,” Sutarto said, adding that Indonesia would reduce the price it paid for rice by 10.5 per cent under the bargain.

Sutarto said that Bulog, the Trade Minsitry, the Foreign Ministry and the Indonesian embassy in Bangkok were currently attempting to persuade the Thai government not to cancel its contract.

Indonesia remained optimistic that Thailand  would not cancel the agreement, Sutarto said, as the two nations had a  long-standing record of friendship and business deals. However, Bulog  was aware that Thailand’s rice producers were currently experiencing difficulties.

“We have other markets, such as Vietnam, which have never breached any agreement,” he said, adding that Indonesia was also considering importing rice from China, India, Myanmar and Pakistan.

The suspension of Thai rice imports has not affected current supplies in Indonesia, as the imports would be used to increase stockpiles next year.

As of September, 200,000 of a planned 500,000 tons of rice imports have arrived from Vietnam.

Indonesia  previously planned to import a total of 800,000 tons of rice this year,  including 500,000 tons from Vietnam and 300,000 tons from Thailand, to maintain a 1.5-million ton stock for market operations to stabilise prices, Sutarto said. 

Existing supplies would be enough for the next four to five months, he said.

Separately, Coordinating Economic Minister Hatta Rajasa said the Indonesian government was committed to increasing its minimum rice stockpile to 2 million tons by 2012 or 2013.

Hatta said additional rice imports were  needed to curb rice price spikes in the domestic market, which had  become the largest contributor to inflation in August.

----------


## SteveCM

> *Bangkok Post : Controls planned ahead of pledging*
> 
> RICE SMUGGLING 
> *Controls planned ahead of pledging*Published: 24/09/2011 at 12:00 AMNewspaper section: BusinessThe Commerce Ministry has ordered rice millers and traders to declare the amount of rice they possess.
> 
>  The order is a pre-emptive measure against possible malfeasance by  traders attempting to receive high payments for low-priced or imported  paddy rice in the pledging scheme set to start on Oct 7.
> 
>  Millers and traders in 32 provinces are subject to compliance with the order.
>  The new scheme is promising 15,000 baht a tonne for white paddy rice  and 20,000 tonnes for Hom Mali, 30% above current market prices and an  incentive to cheat.
> ...


*Ministry of Commerce to Restrict Rice Transport in 24 Provinces*

30 September 2011



Yanyongpuangrach,  Permanent-Secretary for Commerce revealed that the governments central  committee on commodity and service prices had approved a measure to  restrict the transport of paddy rice in  24 provinces in the Northern,  Central, Eastern and North Eastern regions of Thailand.

Permission   from  Department  of  Internal  Trade  or  their  authorized  agents   is  required  for the  transport of  paddy  rice  over  5 tonnes  per  truck   in  order  to  prevent  fraud  in  the  rice  mortgage scheme   which  may  damages  the   internal  rice  system.

Moreover,  operators  of  rice  mills  and  rice market  need  to  report  amount   of  rice  in their possession if it is over  15  tonnes.  Making false   statements  punishable with a 3  years sentence  or  6000  baht  fine  or  both.

Source: Manager

----------


## SteveCM

*Bangkok Post : Second crop to be included*
Published:  1/10/2011 at 12:00 AMNewspaper section: Business
        The government is extending its rice pledging scheme to include second-crop paddy after the first-crop portion ends.

 Commerce Minister Kittiratt Na-Ranong insisted the government stood  firm in its policy to allow farmers to pledge all grains despite rumours  that the government would limit the quantity.

 The minister met with millers yesterday to discuss details of the  scheme. Millers asked for it to be introduced nationwide at the same  time and not delayed in the South as announced.

 Some millers told Mr Kittiratt they did not want to join the scheme  for fear of being accused of corruption. The minister responded that  politicians and civil servants had also been accused, and the only way  to counter such allegations is through transparent actions.

 The government has tasked several agencies with fighting corruption  in the scheme including the Interior Ministry and the Department of  Special Investigation along with the police.

 The Thai Rice Mills Association had estimated more than 900 millers  would join the programme, but so far fewer than 650 have registered.

 An estimated 8.8 million rai of rice fields have been ravaged by floods and heavy rains in the past two months.

 The Agriculture Ministry expects this will shave 4.5 million tonnes of paddy off the forecast of 27 million tonnes this season.

 The cabinet this week agreed to an additional 7.2 billion baht for  relief efforts, covering payouts of 1,437 baht to farmers for each tonne  of paddy they sold before the pledging scheme starts next Friday.

 Floods have soaked the grain, and high moisture content leads to lower selling prices.

 If most of their harvest area is affected, then farmers also have  access to funding for rice seed in the volume of 10 kilogramme per rai  with a maximum 10 rai per farmer.

----------


## StrontiumDog

*Bangkok Post : Rice export chief says mortgage plan a feast for big firms, famine for small farmers
*
*Rice export chief says mortgage plan a feast for big firms, famine for small farmers*
Published:  2/10/2011 at 12:00 AMNewspaper section: News
 Any change in government rice policy enters the  volatile area of the national psyche where economics, food security and  politics overlap.

_ 
WITH THE GRAIN: Vichai Sriprasert of the Thai Rice Exporters’  Association says that African nations will not be able to afford Thai  rice once the government’s rice mortgage scheme goes into effect. PHOTO:  BKK POST ARCHIVE_

 The government rice mortgage scheme, set for introduction on Friday,  will guarantee farmers 15,000 baht per tonne for paddy (unhusked) rice,  up 50% over that guaranteed under the Abhisit administration.

 With a 30% share of global exports, Thailand is the biggest player on  the international rice market. And with government control over  national supplies, there are concerns that the government will  manipulate global prices or that buyers will look instead to Vietnam,  India, Brazil and elsewhere for cheap rice, leaving Thai farmers to bear  the brunt of a downturn in exports.

 After Thailand's cancellation of a 300,000-tonne  government-to-government rice contract last week, Indonesia announced it  would scrap a separate plan to buy 70,000 tonnes of rice, worth 1.37  billion baht, from Thai exporters in protest, and look to purchase more  from Vietnam.

 The Yingluck Shinawatra government hopes the new policy will bring  rice prices to a level it considers more realistic, which will benefit  farmers. Detractors worry it will benefit landowners and companies with  close ties to the government, and that it will encourage corruption and  have huge additional storage and implementation costs.

 Bangkok Post Sunday spoke to Vichai Sriprasert, CEO of Riceland  International Ltd, a leading rice exporter, president emeritus of the  Thai Rice Exporters' Association and a member of Thailand's Board of  Trade, about the programme's implications for the global rice market,  the Thai economy and local farmers.

*What will change through the rice mortgage programme?*

 The competitiveness of the Thai rice industry will be retarded  significantly by the government setting prices rather than letting  market forces dictate them. We can expect disastrous effects on the  currently healthy rice sector. A massive amount of tax money will be  needed to implement the government's rice policy. The government plans  to set the paddy price at US$500 (15,565 baht) per metric tonne compared  to $350, which is what it is trading at in Thai and US markets. That  will result in paddy from Thai farmers flowing into government hands.  Low farm income cannot be blamed on low prices as the margins are more  than adequate but small farm sizes. Thailand has been selling rice to  the world market at top prices which provide 50% to 100% profit margins  to our farmers. The high mortgage price will prevent rice surpluses from  being exported and a lot will remain in the warehouses until it becomes  unfit for human consumption.

*Who will benefit most?*

 I don't think it will support small farmers. Under mortgage schemes  only big farmers benefit. Thailand has four million farmers, but only  600,000 have signed up to the mortgage programme. One assessment by  Ammar Siamwalla [former president of the Thailand Development Research  Institute], said 37% of the increase would go to farmers, 46% to  businessmen, the rest for warehouse costs, etc.

*Can the global market absorb the changes?*

 If some of them do, it will be just short term. Thailand normally  ships about four million metric tonnes to Africa. The poor consumers  there cannot afford such a huge hike in the rice price.

 India has 25 million metric tonnes in stock, 10 million of which they  want to keep for food safety. Just India alone will make the high price  policy of Thailand unworkable.

 Burma used to export four million tonnes prior to World War II. They can rise to that position again without much difficulty.

 China is so advanced in rice technology that their hybrid rice can yield double what our best can do.

 The financial woes in the EU and US are spreading. Our pricing must  be flexible and is best set by market forces, not the government.

*Will the government have to subsidise exports to keep them competitive?*

 The Pheu Thai government has said it won't sell government rice  stocks below the mortgage price plus costs, which means they won't  subsidise the price for exporters.

*Will this result in large stockpiles?*

 Stockpiles will be so great the small farmer will have to stop  growing rice eventually. Under the previous government's 10,000 baht  scheme, there was no surplus as the government did not interfere with  the workings of the market mechanism.

*Will buyers look to other markets?*

 It is natural for buyers to look for a better alternative or a substitute. India alone has 15 million tonnes available for sale.

----------


## lom

> Will buyers look to other markets?  It is natural for buyers to look for a better alternative or a substitute. India alone has 15 million tonnes available for sale.


Noo!
It should be known to everyone that Thailand grows the best rice in the world.

Say after me: There is no other country that can produce the same quality rice as Thailand, not India, not Bangladesh, not Vietnam, not Cambodia.

Say after me: The international market will accept to pay any price for Thai rice since it is so superior., there is no limit for what the market can accept.

 :Roll Eyes (Sarcastic):  :Roll Eyes (Sarcastic): 


Thailand is shooting itself in the foot right now. 
Rice farmers deserve a better income but it shouldn't be through state subsidiaries, they should instead work for higher yields , a second crop, removal of the middlemen that Thais love so much, and less manual back-breaking labour.

----------


## SteveCM

> they should instead work for higher yields


From improved seed strains, more/better fertiliser? At what cost?



> a second crop


With the required water coming from where? At what cost?



> removal of the middlemen


Agreed - wherever possible. At the very least, reducing enforced dependence on them and reining-in/controlling their scams.



> less manual back-breaking labour


More mechanisation? At what cost?

Some of what's mentioned _is_ likely to come about - when a] the ability to pay for it works through and b] the profits are there to motivate the outlay.

----------


## StrontiumDog

Thailand
October 3, 2011, 8:58 AM SGT*Thailand’s Rice Policy Already Causing Ripple Effects*

*By Sameer Mohindru* 

 
_AFPA Thai vendor fills bags with a variety of rice at a shop at a market in Bangkok on September 25, 2011.

_ It’s not yet in effect, and yet Thailand’s controversial new rice policy  is already having some unintended consequences. Farmers are reported to  be hoarding crops, while some buyers overseas are shifting to consuming  more noodles instead of rice – a phenomenon that could have long-term  effects on the global rice market if it continues.

 In the run-up to national elections earlier this year, Thailand’s  Puea Thai party promised the government would buy un-milled, or paddy,  rice from growers at THB15,000/ton, or about 50% above the market prices  then. Now in power, Puea Thai is gearing up to honor its election  promise by Oct. 7. The government is likely to do this by arranging for  rice to be bought by millers, instead of via direct state purchases.  Sensing opportunity, growers and millers are hoarding rice to be  delivered to the government program – likely at a substantial profit –  once the program begins. Moreover, with millers likely deputed to buy  paddy from growers and store the grain on the government’s behalf, a  window has opened to pass off some of the old crop as this year’s new  crop at sharply higher prices, pocketing the government subsidy,  Chookiat Ophaswongse, former president of Thai Rice Exporters  Association told Southeast Asia Real Time.

 Industry calculations show higher procurement prices would mean the  export price of 5% broken Thai rice should be around $830/ton. Growers  and millers have seen prices of 5% broken rice move from $500/ton to  above $600/ton since early July, so it makes sense to hoard.

 Ironically, the Thai policy will also push up the country’s rice  inventories despite a bumper crop. Last week, the London-based  International Grains Council revised lower its forecast of Thailand’s  rice exports in 2012 by 9% to 8.0 million tons, as high government  procurement prices slow shipments. The world’s largest rice exporter’s  shipments will likely be 20% lower compared with 2011, the IGC said.

 The impact has been felt beyond national borders. Export prices in  neighboring Vietnam have also risen by $80-$100/ton. Exporters have  washed out trades or renegotiated earlier contracts at higher prices.

 Indonesia, the world’s largest rice importer this year, is grappling  with high inflation and consumers are changing dietary habits to keep a  check on the monthly food bill.

 In one of those changes, the country is undergoing a shift in  consumption towards noodles from rice, and the trend may accelerate as  prices of rice rise, a senior research analyst with Standard Chartered  Bank, Nirgunan Tiruchelvam told Southeast Asia Real Time.

 Noodles are made from wheat, which can be imported at less than $350/ton compared with rice prices  above $550/ton.

 Those ripple effects are examples of how government policies  sometimes unwittingly increase rather than control food prices. Rice is  the world’s most widely-consumed staple food. Almost half of the world’s  rice exports are accounted for by Thailand and Vietnam, which have had a  string of bumper crops, but to no avail as far cooling prices is  concerned.

 Indeed, the world is heading for the second successive year of record  rice production. International Grains Council forecasts show 2011-12  production at 461 million metric tons, up 2.2% on year. Carry-over  stocks in five major exporters – Thailand, Vietnam, Pakistan, India and  the U.S. – are projected to hit a record 33.2 million tons.

 Yet, prices are still rising. In the past year when prices of wheat,  corn and oilseeds rose to multi-year highs, rice was an exception. Not  anymore. Export prices in Thailand and Vietnam, have risen by up to 25%  since the start of July.

 All this is happening when India, with government stocks of 22.7  million tons – nearly as much as the annual global trade of 32 million  tons – is expecting another bumper harvest this month onwards.

 Indian supply can be a cooling factor in rice prices, but the  government there has allowed exports of only two million tons from the  open market, for now.

 With governments refusing to let markets function freely, it may take  more than a good crop to make rice cheaper. It may become a classic  case of rice, rice everywhere, not a grain to eat.

----------


## StrontiumDog

*Thai Rice Stirs the Global Pot - IPS ipsnews.net

Thai Rice Stirs the Global Pot*

By Marwaan Macan-Markar

*BANGKOK, Oct 3, 2011  (IPS) - Thailand is preparing to stir the pot in the international rice market with its  fragrant jasmine rice nurtured by a new policy. But while the new policy pays  farmers a great deal more, there are fears that the high prices could make Thai  rice uncompetitive.*

"Thailand will be able to test consumer loyalty once its new rice policy impacts the global market,"  Samarendu Mohanty, senior economist at the International Rice Research Institute (IRRI) tells IPS.  

"Consumers will have to pay higher prices for jasmine rice and other rice brands," he said in a telephone  interview from the Philippines, where the IRRI is based. "The markets have already started reacting, with  rice prices steadily increasing from May through August."  

Regular white rice has joined the long, tapering jasmine rice in putting this Southeast Asian kingdom on  the map as the world’s leading rice exporter. Finally, says Mohanty, "it will be a matter of taste." 

The trial with new Thai rice exports cuts across four continents. African countries like Nigeria, Cote  d’Ivoire and South Africa are among the major buyers. In Asia, the Philippines, the world’s largest rice  importer, and Indonesia lead the list. Europe and the United States are turning out to be steady markets for  Thai rice in the developed world.  

The spike in the price of rice could inch higher as the three-month-old administration of Prime Minister  Yingluck Shinawatra ploughs ahead to implement an election promise: to buy rice from farmers in the  poor, rural belts of the country’s north, central and northeastern regions at rates nearly 50 percent higher  than the current market rates. 

Under this new rice policy, the government has promised to pay farmers directly 15,000 baht (517 dollars)  per ton for unmilled white rice and 20,000 baht (689 dollars) per ton for jasmine rice. The prices mark a  substantial increase from the 10-year average of the country’s benchmark white rice, which sold on the  international market at 400 dollars per ton. 

According to Thai agriculture officials, some four million rice farmers have registered for the scheme. The  financial carrot comes at a time when farmers have been grappling with rising production costs of  fertiliser, pesticides and oil. 

The Thai Rice Exporters Association (TREA) says the price for Thai rice could reach 800 dollars per ton in  the global market later this year, a figure dramatically higher than the 629 dollars per ton in mid- September. That September figure for rice is the highest since December 2009. This, it warns, presents  risks. 

"The government is increasing rice prices by 50 percent overnight. This will put Thai rice out of global  competition," Vichai Sriprasert, former president of the TREA told journalists last week. "It is very strange  that the government is spending billions of baht to intervene in the rice market." 

But the government appears unruffled. Commerce minister and deputy prime minister Kittiratt Na-Ranong  says government officials will join Thai delegations at international road shows to explain the new pro- poor policy of the government. "We want to help our farmers," Kittiratt told local media. 

The Yingluck administration’s rice policy, which secured a thumping rural endorsement at the Jul. 3 polls,  will be launched at a time when there is no global shortfall in rice supply. Thailand, which ships close to 10  million tons annually, accounts for 30 percent of global rice exports. 

Neighbouring Vietnam is its main competitor, exporting 6.7 million tons of rice last year, accounting for  22 percent of the export market. Other leading exporters are Pakistan, China and the United States. 

Thai rice policy will also be up against India’s return to the international rice market following the end of a  four-year-old export ban on non-basmati rice. Indian rice traders have been given the licence to export up  to two million tons of rice. 

"Normally if a player like Thailand implements a programme like this you would expect global prices to rise  rapidly," says IRRI’s Mohanty. "But the prevailing supply and rice from emerging rice suppliers like Burma,  Cambodia and Brazil will not see a repeat of the 2008 rice crisis." 

In that year, the price of rice soared to more than 1,000 dollars per ton, hitting the stomachs of the  world’s poorest, two-thirds of them, some 600 million, in Asia. Low rice stock was to blame, after major  exporters like Vietnam and China placed restrictions to meet food insecurity at home.  

"Thai farmers need to be helped to keep them growing rice," says Chanchai Rakthananon, president of the  Thai Rice Mills Association. "The government pledge to offer high prices will keep them from shifting to  crops that have better prices like tapioca and rubber."

----------


## StrontiumDog

Thai-ASEAN News Network

Rice Pledging Scheme to Be Launched in 32  Provinces 

UPDATE : 3 October 2011                      *

A deputy commerce minister says the rice  pledging scheme will be kicked off in the North and the Northeast for  its first phase scheduled to begin this Friday.

 Deputy Commerce Minister Phum Sarapol said the first phase of the rice  pledging scheme will be implemented in 32 provinces in the North and  Northeast as rice crops there will be released to the market this month.  
*

Phum stated he believed farmers still have rice that has not been damaged by floods. 

The minister then remarked more than 600 rice mills nationwide have  already expressed interest in joining the program and they are now ready  to stock the pledged rice. 

Phum maintained the government is capable of preventing fraud or illegally imported rice from being mortgaged in the program. 

He insisted the scheme can afford to mortgage all rice from farmers.

----------


## StrontiumDog

*Bangkok Post : Poll: Graft in rice scheme inevitable
*
*Poll: Graft in rice scheme inevitable*
Published:  5/10/2011 at 11:43 AMOnline news:
 Most economists polled recently believed there  would certainly be corruption in the government’s rice mortgage scheme,  Bangkok Poll said on Wednesday.

 The poll on “Future of the Rice Mortgage Project: who loses, who  gains” involved 67 economists at the country’s 31 leading economic  research and analysis agencies between Sept 26 to Oct 3.

 The pollsters reported that 82 per cent of the respondents believed  corruption would definitely taint the scheme, and  86 per cent felt that  rice millers and silos would gain the most benefit, not farmers.

 A total of 74 per cent of the economists thought that consumers would  be ththe biggest losers,  and 60 per cent said the farm income  guarantee programme of the Democrats was better, according to the  pollsters.

 Slightly more than half (51%) of the respondents believed the rice  mortgage prices the farmers would get would be lower than the promised  prices, 39 per cent of them disagreed.

 Asked whether the price of milled rice on the world market would  higher than than the price  the government plans to sell at in 2012, 57  per cent of the economists said probably not, 19 per cent of them said  no,  and about 18 per cent believed it was possible.

 On the question about the groups that would gain the biggest benefit  from the rice plan, 87 per cent of the respondents said rice millers and  silos, followed by politicians (61%) and rice exporters (43%).

 And about 75 per cent said consumers would lose the most, followed by farmers (42%) and the government (37%).

 Asked about what was the best solution to the low rice prices problem  that they would suggest to the commerce minister, 59.7 per cent of the  economists said there should be no price intervention and price  guarantee at a suitable price comparing to the cost scheme should be  introduced as the Democrats had implemented the farm income guarantee  policy in the past.

 Only 17.9 per cent of them agreed that the supply side management  should be used as it is going to be done under the rice mortgage  programme of the government.

-----
Bangkok Post : Dems open rice complaints centre

*Dems open rice complaints centre*

Published:  5/10/2011 at 12:01 PMOnline news:
 The opposition Democrat Party has opened a  centre to hear any complaints about the government paddy pledging  programme, which is set to start on Oct 7, shadow deputy commerce  minister Warong Detkijwikrom said on Wednesday.

 Mr Warong, a Phitsanulok MP, said this was decided at today's meeting  of the Democrat Party's shadow cabinet chaired by party leader Abhisit  Vejjajiva.

 He said the meeting expressed concern the paddy pledging programme  would be plagued with corruption and the people would not benefit from  it.

 The meeting agreed to set up a centre where people with grievances could file complaints.

 The centre is chaired by Apirak Kosayodhin, the shadow commerce minister, and he is deputy chairman, Mr Warong said.

 People can file complaints with the centre seven days a week via hotline 02-2700036 from 8am to 6pm.

----------


## SteveCM

*Bangkok Post : Kittiratt: Rice scheme to cost less*
Published:  5/10/2011 at 12:56 PMOnline news:
        The governments rice mortgage scheme would  boost rice prices and as a result less than 15 million tonnes of paddy  would have to be mortgaged by farmers, Commerce Minister Kittiratt  Na-Ranong predicted on Wednesday.

 Therefore, the cost of the rice price pledging programme will be  less than the previously estimated 400 billion baht, said the deputy  prime minister in charge of economic matters.

 Deputy government spokeswoman Anuttama Amorwiwat said the cabinet  meeting yesterday approved a plan for the Bank for Agriculture and  Agricultural Cooperatives to allocate a budget of 3.82 billion baht to  the Marketing Organisation for Farmers for funding the rice mortgage  scheme until it gets additional budget funding in the 2012 fiscal year.

 It is expected that the marketing agency would be able to absorb  about 10 million tonnes of mortgaged paddy during the 2011/12 harvest  before the 2012 fiscal budget arrives, she added.

 In addition, the cabinet also approved the signing of an amended  memorandums of understanding on government to government rice  sales between Thailand and Indonesia and between Thailand and  Bangladesh.

 Under these deals, the Thai government agreed to sell a maximum of  one million tonnes  of 15-25% white rice to Indonesia and Bangladesh  annually, depending on the rice output in each country and the rice  prices on world market, said Ms Anuttama.

 The MoU between Thailand and Indonesia will be effective from 2012 to  2016, while the memorandum  with Bangladesh is effective from 2011 to  2016. These agreements guarantee that Thailand will certainly have rice  export markets in the long-term, she said.

 Deputy Commerce Minister Phum Saraphol said a total of 667 rice  millers had agreed to join the rice mortgage programme. He confirmed  that the pilot rice pledging scheme will start on Friday, Oct 7, in 31  provinces.

----------


## SteveCM

*Thailand&rsquo;s Rice-Buying Plan Will Spur Economy, Yingluck Says - Businessweek*

*Thailands Rice-Buying Plan Will Spur Economy, Yingluck Says*

October 06, 2011
By Supunnabul Suwannakij 

                                              (Updates with price survey starting in third paragraph.)

      Oct. 6 (Bloomberg) -- Thailands plan to buy rice  at above- market rates will allow farmers to make a living and boost  growth in Southeast Asias second-largest economy, Prime Minister  Yingluck Shinawatra said.

      This is a significant policy of the government  to boost crop prices and increase rural income, which will help spur  domestic spending and stimulate economic growth, Yingluck told  reporters today in Bangkok.

      Yingluck aims to insulate the country of 67  million people from a global slowdown and the nations worst flooding in  half a decade by lifting incomes of poorer Thais who propelled her  party to victory in a July election. The plan to guarantee rice prices  may boost export rates by 20 percent to $735 a metric ton and erode  Thailands share of the global market, according to a Bloomberg News  survey of exporters, millers and traders.

      Thailand will be the last resource for buyers  when there is no rice left elsewhere, said Kiattisak Kanlayasirivat, a  local director with Novel Commodities SA, which trades about $600  million of rice a year. The government may be lucky to see the rice  price climbing to $800 a ton without having to spend a lot of budget as  floods across the region cut supply.

      The worlds largest rice exporter plans to buy grain at 44 percent above local market rates starting tomorrow.

      The governments plan to pay 15,000 baht ($482)  per ton for white rice and 20,000 baht per ton for jasmine rice is  appropriate because they take into account production costs and profits  that are enough for farmers to make a living, said Yingluck, who took  power two months ago.

                           Price Rally

      The policy has already helped fuel a 26 percent  rally in global food prices in the past year. Costlier rice, staple for  half the world, may fan inflation, complicating policy decisions for  Asian central banks that are grappling with a faltering global recovery  and Europes deepening debt crisis.

      The price of 100 percent grade-B Thai rice, the  benchmark for Asia, has gained 18 percent to $615 a ton since Thailands  July 3 election. Rice futures have climbed 12 percent in Chicago this  year, boosted by the Thai policy and a smaller crop in the U.S.  Thailands export price may rise to $735 a ton, according to the median  estimate in a Bloomberg News survey of six exporters, millers and  traders on Oct. 5.

      We can expect global prices to rise if Thailand  decides to sell at a price that will cover costs of procurement,  Samarendu Mohanty, a senior economist at the International Rice Research  Institute, said in a phone interview on Sept. 30. If the Thai  government sells rice at subsidized prices, it may lower global prices.  Unclear details of the plan raise speculation and increase uncertainty.

      Yingluck didnt say how or when the government  will sell stockpiled rice. 

Thailand is confident it will be able to  sell the grain through government-to-government contracts, Commerce  Minister Kittiratt Na-Ranong said on Sept. 28.

      Thailands finance ministry last week cut its  2011 growth forecast to a range of 3.8 percent to 4.3 percent, from an  earlier estimate for a 4 percent to 5 percent expansion.


 --Editors: Tony Jordan, Jake Lloyd-Smith

 To contact the reporter on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij[at]bloomberg.net

 To contact the editor responsible for this story: James Poole at jpoole4[at]bloomberg.net

----------


## SteveCM

From Twitter:

TAN_Network   TAN News Network                                                                 

       Rak Thailand Party leader  Chuvit shows video clip during Parliamentary session of Cambodian rice  smuggled into Sakaew for pledging scheme

13 minutes ago

----------


## StrontiumDog

*IRIN Global | GLOBAL: Thai rice policy sows worldwide uncertainty | Djibouti | Global | Haiti | Cambodia | Myanmar | Philippines | Somalia | Thailand | Aid Policy | Economy | Food Security
*
*GLOBAL: Thai rice policy sows worldwide uncertainty*


_Photo: Ryan Harvey/Flickr__
Thailand, the world's largest rice exporter, is driving up prices globally_

BANGKOK,  6 October 2011 (IRIN) - A new paddy-pledging programme in Thailand that  has already pushed up the cost of rice globally will go into effect on 7  October, amid uncertainty and scepticism. 

    The move by the world’s leading exporter has stirred humanitarian  concerns far beyond Thailand’s borders, particularly for rice-consuming  countries that do not produce much at home. The government plans to pay  its farmers more than double the market value for rice. 

    “We have been very concerned about this, mostly because this is  going to affect [African] markets – definitely,” said Aliou Diagne, an  economist with the Benin-based Africa Rice Center. 

    USAID last month warned that prices were likely to climb 20 percent  over the next three months, while others predict the greatest short-term  impact has already been felt. What happens next, economists say,  depends on how Thailand implements the programme. 

    In the long term, analysts said they expect it to encourage other  countries to step up exports and thus dampen the price of rice –  consumed by three billion people daily. But some say what Thailand is doing is unsustainable, and doubt it will last long. 

    “This is going to be detrimental to the rice sector in Thailand,  especially in the long term,” said Concepción Calpe, a senior economist  with the UN Food and Agriculture Organization (FAO) in Rome. “They’re  pricing themselves in a manner that doesn’t make them competitive.” 

*Measuring the impact* 

    Under the plan – a campaign pledge by recently appointed Prime  Minister Yingluck Shinawatra – the government is raising the minimum  guaranteed price for farmers by more than 60 percent, to 15,000 baht, or  US$480, per ton. 

    The policy is aimed at supporting farmers and boosting Thailand’s  agriculture sector, government spokeswoman Anuttama Amornvivat said. 

    “If the farmers have more income, they will spend more money in the  economy,” she said. “When we spend more, the GDP will definitely  increase – significantly." 

    But it has drawn criticism over whether it is an effective policy  for Thailand and the best way to help farmers. Because payments are  linked to production, the bigger farmers stand to gain most, Samarendu  Mohanty of the International Rice Research Institute in the Philippines, said. 


Photo: FAO  

                               Subsistence farmers may even be hurt by the scheme, as it could push  up input costs. The best way for governments to support smaller farmers  was through programmes that did not link payment to production, said  Mohanty, who researches rice policy and trade as head of IRRI’s social  sciences division. 

    “That way you are not distorting the market, domestic or global,” he said, “and you still support the farmer.” 

*If there is a surplus* 

    The higher price would likely lead to a surplus, as Thai farmers  produce more and Thai people buy less, said Mohanty. “The impact on the  global market depends on what they [Thai officials] do with this  surplus.” 

    Thailand has two options: it can aggressively sell the surplus rice  in foreign markets - at a loss. This would cost Thai taxpayers billions  of dollars, he said, and likely drive global rice prices below what they  would have been without the pledging scheme. 

    “Then basically the Thai government has decided to subsidize the  rest of the world,” said David Dawe, a senior economist at the FAO in  Bangkok. “Everybody’s happy except for the Thai taxpayer.” 

    Alternatively, Thailand can export the amount of surplus rice at a  price to cover its costs, implementing cost-control measures and storing  the remaining rice. This could lead to higher prices worldwide, Mohanty  said. But they would not last long, because other countries would  increase their rice exports in response, which could be good for  long-term food security. 

    “On the bright side, this process could provide an opportunity for  countries with abundant land and water, such as Cambodia, Myanmar and  Brazil, to emerge as alternate suppliers to the global rice market,”  Mohanty wrote in a recent IRRI article. 

*Food security questions* 

    Global rice prices have risen by about 20 percent since May. The  recent lifting of a government ban on rice exports in India, which frees  up two million tons of rice for international trade, has helped temper  the impact. But there is speculation that rice is being hoarded in  anticipation of higher profits. 

    The countries most vulnerable to price increases are those that rely  on imports and have limited local production: coastal countries in West  Africa, Central America, Djibouti, Somalia and Haiti, according to  USAID. 

    In response to the 2008 global food crisis,  African countries have been investing in local rice production,  measures that guard against outside volatility, Diagne said. Rice  production has grown 9 percent each year across Africa. 

    But many countries still depend heavily on imports, with as much as  80 percent of rice consumed from foreign markets. “So any fluctuation in  prices is felt right away,” Diagne said. 

    In Somalia,  the new Thai rice policy is one of several factors expected to increase  the number of people in crisis in 2012, said Tamara Nanitashvili, a  food security technical manager at FAO Somalia. More than half the  country depends on rice as a main food staple. Rice prices also act as a  ceiling for cereals such as maize and sorghum. 

    In addition, rice comprised 9 percent of the World Food Programme’s  2010 food purchases, spokesman Marcus Prior said. Volatile food prices  are a big challenge, he said, but forward-purchasing acts as a  protective measure.

----------


## StrontiumDog

Thai-ASEAN News Network

Rice Association Welcomes Price Pledging Program 

UPDATE : 6 October 2011                      *

The Thai Rice Mills Association welcomes the government's rice pledging scheme.

 Thai Rice Mills Association President Banjong Tangjitwattanakul welcomes the government's rice pledging scheme. 
*

However, he said there would be a problem as there is not enough rice  mills in Chiang Mai, Payao and Lampang provinces to support the scheme. 

He also expressed concern over the rice mortgage quotas, adding that  quotas assigned by the Commerce Ministry are less than that of the  Agriculture and Cooperatives Ministry. 

Consequently, farmers in Phichit, Nakhon Sawan and other eastern  provinces that are expected to produce more rice this year may be left  out. 

Banjong pointed out that around ten to 11 million tons of rice are  expected to enter the government stockpile under the pledging scheme,  but the government is hoping to pledge 25 million tons.   

The Thai Rice Mills Association president also suggested the National  Rice Policy Committee issue effective measures to prevent non-Thai rice  from being pledged. 

Moreover, he asked the committee to set a different price between 100 percent and five percent white rice. 

As of now, the mortgage price for 100 percent and five percent white  rice is very close at 15,000 and 14,800 baht per ton respectively.

-----
Thai-ASEAN News Network

Farmers' Group Ready for Rice Scheme 

UPDATE : 6 October 2011                       *

The Thai Farmers Association is ready for the rice pledging scheme that will come into effect tomorrow.

   Thai Farmers Association Chairman Prasit Boonchoey reiterated that  farmers are ready to enter the rice pledging scheme which will be  launched tomorrow. 

He insisted that after harvesting, farmers could take crops to rice mills immediately. 
*

However, he wondered whether state officers would handle the scheme effectively. 

Prasit also urged the government to clarify its rice quotas. 

The government has pledged to accept 550 to 553 kilograms of rice yield per rai. 

However, the previous government accepted around 778 kilograms a rai. 

He expressed concern that farmers would be confused by the vague policy. 

He added that the yield's humidity during the rainy-season should be at 25 percent. 

In the event that the rice's humidity is less than the figure, it may be  proof that rice mills may have used rice in their old stock to benefit  from the scheme.

-----
Thai-ASEAN News Network

State Agencies Set for Rice Pledging Scheme 

UPDATE : 6 October 2011                       *

The Commerce Ministry assures that state officers are ready for the rice pledging scheme that is starting tomorrow.

   Commerce Minister Kittirat Na Ranong said after a talk with the  Provincial National Rice Policy Subcommittee that agencies concerned  have affirmed their readiness for the rice pledging scheme that is  starting tomorrow.  

Kittirat insisted that every process would be carried out transparently. 
*

Prime Minister Yingluck Shinawatra promised not to let anyone seek advantage from the scheme. 

The government expects around 25 million tons of rice to be pledged. The project would cost the government 430 billion baht.  

She said that the project would raise the rice price which will help  boost farmers' well-being although it would increase the export price.

----------


## StrontiumDog

BBC News - Thailand's new rice policy 'may threaten exports'

6 October 2011 Last updated at 16:25 GMT                    *

Thailand's new rice policy 'may threaten exports'*

 
By Rachel Harvey                 
BBC South East Asia Correspondent

 
_Thailand is the world's largest rice exporter_ 

                       Thailand, the world's biggest rice exporter, introduces a new pricing scheme on Friday.

         The government says it will boost the incomes of farmers and help alleviate rural poverty.

         But critics fear the new policy will skew the market at home and, potentially, globally as well.

         The government is offering to buy paddy, or unmilled, rice at  15,000 Thai baht ($482.6; £312) per metric tonne, which is a 50%  premium on the current market rate.

         However, private exporters say the high price will place them  at a disadvantage, putting Thailand's dominant global position in  jeopardy.  

         "Private millers, private traders, private exporters will go  out of business if the government keeps one price way above the market  price for too long," complains Vichai Sripraset, President of Riceland  International. 
         Fixed prices, Mr Vichai says, are too inflexible.  

         "When the [fixed] price is too low, the producer, the farmer,  cannot survive. When it's too high, the consumer cannot stand it.  Market forces are better at adjusting to changing circumstances." 

*Radical change* 

The previous government, which lost power in July's election,  introduced its own policy for the rice industry - a subsidy programme  that compensated farmers if market prices fell below a fixed benchmark.    

         Under the new system, however, farmers will be encouraged to  use rice as collateral against loans from the state-owned bank for  agriculture.  

 
_Under the new scheme, farmers are not guaranteed a minimum income if their crop underperforms_ 

       If prices on the open market are higher than the government offer, farmers are free to sell privately.  

         But if the market price falls, they will have the option of selling at the government fixed price.   

         One of the fundamental differences between the two schemes is  that under the old system, farmers were guaranteed a minimum income  based on the amount of rice they normally produced, even if their crop  underperformed.  

         With the introduction of the new government programme,  farmers will need harvested paddy rice to sell before they get any  money. 

*Global impact* 

Ammar Siamwalla, senior economist at the Thailand Development  Research Institute, says the short term impact on the global market will  depend on how much of the government-bought rice it decides to store  and how much it exports. 

         "If they put it in storage, it means that much rice is taken  away from the world market which we used to export [to], and I expect a  substantial amount will be put in storage.

         "That will effect international prices because there will be less rice in world markets."

      If the government does decide to store large quantities of rice, it could be good news for owners of private warehouses.

         But it would also be an additional cost to the Thai taxpayer.  

         It also raises fears that the government might be tempted to  dump large quantities of rice on the market as the price moves up, and  before the rice spoils, forcing a sudden correction.   

         An alternative scenario would see the Thai authorities trying to control supply by discouraging increases in production. 

         But that could hurt the very farmers the new policy is designed to help.  

         The government argues that any shortfall in production will be offset by the higher price. 

         Thailand currently supplies about a third of global rice  exports, which means decisions made in Bangkok can have far reaching  implications. 

         The US Famine Early Warning Systems Network says a recent  spike in global prices can, in part, be explained by the market  anticipating the Thai government's new scheme. 

         Other exporters, the FEWSN says, are poised to take advantage.  

         India has just lifted an export ban on rice other than  basmati and is thought to have a surplus of 15 million metric tonnes  ready for market (another 10 million is being held back for food  security).    

 
_Critics say the new policy will skew the market at home and globally_ 

       Mr Ammar, a prominent critic of the new scheme, is less worried  about the quantity of rice Thailand exports than he is about  reputation.

         "Thai rice in the marketplace is known for its high quality.  Only the private sector can make distinctions and pay everybody along  the supply chain according to quality. We have a dominant share in that  [high quality rice market] and we're going to lose it."   

         The government is determined to press ahead, describing the new rice pricing scheme as one of its most important policies.  

         The ultimate test will be whether rice farmers like the new arrangement.  

         An unscientific survey of a handful of farmers contacted by  the BBC suggested a good deal of confusion, along with a feeling that  the new price plan is coming into effect too late to be of benefit.  

         "We have lots of debts so we have to sell the rice as soon as  it's harvested, even though we know that if we wait we can make more  money under the new scheme," said one.  

         Another added forlornly: "With so many rice fields flooded right now, farmers are not going to have rice to sell."

----------


## StrontiumDog

*The World's Biggest Rice Exporter Is About To Take A Huge Risk
*
*The World's Biggest Rice Exporter Is About To Take A Huge Risk*

Sam Ro 
Oct.  6, 2011,  7:20 PM              


Image: tamaki on flickr

The Thai government is about to become a major player in the global rice market. On Friday, Thailand, which controls a third of the world's rice exports, will start fixing rice prices at close to a 50% premium over the current market rate.

 “This is a significant policy of the government to boost crop prices  and increase rural income, which will help spur domestic spending and  stimulate economic growth,” said Prime Minister Yingluck Shinawatra according to _Bloomberg_.

 The effort is intended help Thailand's struggling rice farmers.

 Under the plan, rice farmers will be free to sell their crop at the  market price.  But the Thai government will be offering 15,000 Thai baht  per metric ton of white rice, which farmers can take advantage of  should the market price fall below that level.

 The losers in this deal are likely to  be Thailand's rice exporters  as foreign rice importers turn to countries offering a lower prices.

 India, which lifted a ban on certain rice exports in September, could  really clean up.  Especially if a spike in demand for non-Thai rice  boost prices for Thailand's foreign competitors.

----------


## StrontiumDog

*Thailand launches fixed prices for rice despite experts' warnings - Monsters and Critics
*
*Thailand launches fixed prices for rice despite experts' warnings*

   By Peter Janssen  Oct 7, 2011, 5:04 GMT 

  Bangkok - The Thai government on Friday ordered thousands of  rice  mills nationwide to purchase rice from farmers at fixed prices  as part  of its efforts to boost rural incomes.  

  The scheme promises  farmers prices of 15,000 baht (500 dollars)  per ton of plain white rice  and 20,000 baht per ton of high-quality  jasmine rice, providing the  humidity level is less than 5 per cent.  

  The fixed prices were promised by the Pheu Thai Party as part of  its successful campaign for the July general election.  

  The policy, which went into effect Friday, has been widely  criticized by rice exporters and economists for failing to take  market forces into account and for  being a form of government  intervention in what has traditionally been a  private sector  activity.  

  Under the scheme, the government  would purchase all rice from  millers and stockpile it to be sold to  exporters or in  government-to-government sales.  

  Thailand has  been the world's leading exporter of rice for the  past four decades but  was expected to lose that position to Vietnam  next year as a direct  result of the price-fixing programme.  

  Thai rice exporters said they would need to boost their prices to  more than 800 dollars a  ton on the world market if the domestic  purchase price is 500 dollars  for plain white rice. The current world  market price is about 600 to  620 dollars a ton.  

  'Any government in the world when they  subsidize their  commodities, they subsidize them in order to be more  competitive, but  Thailand has done the opposite,' said Vichai  Sriprasert, chief  executive officer of Riceland International Ltd, a  leading exporter  of rice to Africa. 'We want our prices to be very  high, higher than  anybody.'  

  The government has argued that the price fixing would help boost  rural incomes, which would lead to more domestic spending.  

   But economists warned that the government intervention in the  market  would affect the competitiveness of rice exports in both price  and  quality and eventually lead to less market share, which would  mean less  income for farmers as they are forced to reduce their crop  production.   

  'The minute the government takes over the rice business in  any  country, the quality of the rice goes to pot,' said Ammar  Siamwalla,  one of the country's leading rice industryexperts and an honorary  president of the Thailand Development Research Institute, a think  tank.  

   Thailand's effort to boost both domestic and global prices of rice   comes at a time when there is a looming surplus of the commodity on  the  international market, according to the Food and Agriculture   Organization.

  'Harvests have been good throughout the world,'  said Sumiter  Broca, the UN agency's Bangkok-based commodities trade  expert. 'India  is sitting on a gigantic stockpile, and they are  expecting a very  good harvest this winter.'  

  India recently  announced its decision to allow exports of 2  million tons of rice this  year, and the quota could be lifted to 3  million to 4 million tons,  depending on the surplus.  

  Broca predicted that recent flooding in Thailand and Pakistan  would have only a minor impact on the rice trade.  

  'Over the next year, I don't foresee much chance of rice prices  actually rising,' Broca said. 'If anything, they will come down in  the international market.'

----------


## StrontiumDog

*Yingluck’s rice policy helps fight local corruption, farmers say | Asian Correspondent
*
*Yingluck’s rice policy helps fight local corruption, farmers say*

_By Siam Voices Oct 07, 2011 10:56AM UTC_ 


_Article courtesy of The Isaan Record_

 KHON KAEN – As the Pheu Thai government launches its rice mortgage   scheme today in 31 provinces, experts fear that the new policy will   offer little benefit to small-scale farmers and instead invite increased   graft and corruption among millers and national politicians. Many of   Thailand’s rural rice farmers, on the other hand, commend the policy as   one that actually helps discourage corruption at the village level.

 “Abhisit’s  rice price guarantee policy—it’s the same as teaching  farmers how to be  corrupt,” said Mr. Udom Phanphrasee, a jasmine and  sticky rice farmer  in Ban Yan Yong village in Khon Kaen Province. “I  sometimes only planted  five rai on my 18 rai of land, and I would get  the price guarantee for  all 18 rai,” he said with a smirk. (One rai is  roughly equivalent to  two-fifths of an acre.)

 Today, these farmers welcome not only a  promised salary increase,  but also a pro-business policy that they  believe rewards hardworking  farmers and enables the informal labor  market to reap more benefits.

 The campaign promise of Prime  Minister Yingluck Shinawatra won the  hearts and votes of the rural  constituency much as it had for former  Prime Minister Thaksin  Shinawatra, Ms. Yingluck’s older brother. Ms.  Yingluck’s policy raises  the price of rice nearly 50%, offering farmers  mortgages of 20,000 baht (US$650)  for one ton of unmilled jasmine rice  and 15,000 baht for one ton of  unmilled white and sticky rice.

 Under Abhisit’s price guarantee  policy, landowning farmers could  register with the local office of the  Agriculture Bank (BAAC) as soon  as they had planted their rice.  Government representatives from the  bank would calculate the landowners’  expected rice production and later  pay the landowners the difference  between the market value and the  government-guaranteed price. Though  representatives of the Agriculture  Bank claim that farmers’ paddies were  frequently monitored, the farmers  of Ban Yan Yong village talk openly  about how trickery and corruption  at the village level were par for the  course.

 Ms. Jongkolrat Kanruensri, the manager of the Khon Kaen  branch of  the Agriculture Bank, recognized this tendency. “Under  Abhisit’s plan,  people with mortgages often didn’t have as much rice as  they claimed  they did,” she said in an interview.

 Many villagers  complain that landowners would bribe or beg neighbors  to falsely vouch  for how much rice they had planted. With signatures  of witnesses, the  landowners could trick government representatives by  under-planting on  their fields, poorly tending to their rice plants, or  claiming floods  ruined land that had never even been seeded.  Ultimately, landowners were  often rewarded for the number of rai they  owned and not for the amount  of rice they actually harvested.

 “I thought Abhisit’s policy was  good because the government  subsidized us just for being rice farmers.  But it was bad when people  started taking advantage of that,” said Mrs.  Nongyao Reuthaphrom, a  27-year-old sticky rice farmer.

 Under Pheu Thai’s new mortgage policy, farmers are rewarded with a loan only _after_ they have harvested their rice. This way, villagers argue, landowners cannot lie about how much rice they are producing.
 Prof.  Somporn Isvilanonda of the Knowledge Network Institute of  Thailand  (KNIT) explained in an e-mail interview that he, like most  academics, is  more concerned with the opportunities for corruption in  Ms. Yingluck’s  plan than he was in Mr. Abhisit’s. “[Under Abhisit,]  there could be  minor corruption at the cultivated-area registration  process,” wrote  Prof. Somporn. “But I consider it to be very small.”

 Instead,  Prof. Somporn focuses on how poorly regulated rice millers,  for example,  now have more incentive to replace good quality rice with  poor quality  rice. In addition, national politicians who are assigned  to specific  mills are each asked to meet a certain quota of rice. This  mandated  relationship between the millers and the politicians, the  National Rice  Committee member argues, can often lead to increased  corruption.

 Ban  Yan Yong farmers, however, are less concerned about corruption  that  occurs at the mills and more concerned with the ways in which this   policy brings fairer pay to its community members.

 With the launch  of Pheu Thai’s rice mortgage policy, some farmers  are also glad to see a  return to a system that helps support those who  informally rent land  from their wealthier neighbors. According to a  2011 World Bank report,   Thailand’s informal agriculture workforce stands at 14.4 million   people, a large percentage of which farms rice. Under Abhisit’s price   guarantee policy, landlords could exploit millions of these farmers   because it was the landlords, and not their tenants, who directly   received the price difference between the market value and the   guaranteed price. Now, it is hoped that the renters will have more   leverage since the rice is what is valued and not the land.

 One  farmer from Ban Nong Ngu Leuam village said that in her  community most  landowners with over 20 rai of land typically have  renters. “Those who  are renting the land will pay the landowner a  rental fee and then try to  sell their harvested rice commercially. But  under Abhisit, the  landowner received the price difference and never  had to pay it over to  the renter.”

 “If people were honest all of the time, Abhisit’s  policy would work.  But people aren’t honest,” said Mr. Somjai  Reuthaphrom who rents five  rai of land from one of his neighbors in Ban  Yan Yong village. Mr.  Somjai has seen many of his renter friends weather  plummeting incomes  under Abhisit’s administration. Greedy landlords  chose not to pay their  renters the difference between the market price  and the guaranteed  price that the they had received from the government.

 With  Pheu Thai’s policy in place, Mr. Somjai and others believe that  the  informal agriculture sector will see far greater rewards. As the  price  of rice increases nearly 50%, now land renters’ salaries should  increase  as well.

 “Many people cheat,” griped a Ban Nong Ngu Leuam farmer  who asked to  remain anonymous. “But the Pheu Thai policy prevents rice  field owners  from taking advantage of the government and the people  working on  their fields,” she concluded.

 Pheu Thai’s rice mortgage policy is scheduled to end on February 29, 2012.

----------


## StrontiumDog

*Doubts cloud Thailand's rice pricing plan - Channel NewsAsia
*
*Doubts cloud Thailand's rice pricing plan*

By Saksith Saiyasombut           
Posted: 07 October 2011 1517 hrs 

 
_Rice farmers in Thailand. _  

BANGKOK: The Thai government has launched a new programme to  help its rice farmers. But with Thailand being a world leading exporter  of rice, critics said the move could hurt the country's position.

For over 30 years, Thailand has been the world's biggest exporter of rice. 

This  year alone, the country is expected to produce over 20 million tons of  it, despite rising competition from its regional rivals. 

But that could change soon.

One  of the key policies of newly-elected Prime Minister Yingluck Shinawatra  is a rice pricing scheme, under which the government buys rice from the  farmers at a price of 15,000 baht (US$480) - 50 per cent more than the  regular market price. 

What is primarily aimed to help Thailand's  eight million rice farmers could have broader implications on the  domestic and international markets.

It was one of the factors that helped the Puea Thai Party win the elections last July, thanks to its rural supporter base. 

But according to critics, not all farmers will equally profit from this scheme.

Dr  Nipon Poapongsakorn, president of the Thailand Development and Research  Institute said: "Those farmers who have rice to sell to the government  benefit. But farmers and consumers, particularly farmers who do not have  rice to sell, do not benefit at all."

Dr Poapongsakorn explained  that farmers who do not produce rice for their own consumption will  have to buy the staple at a higher price.

Thailand's Commerce  Ministry has tried to calm fears of spiralling costs for both the market  and the taxpayer, saying the pricing scheme will cost much less than  the estimated US$12.8 billion. 

But opponents see too many fault lines and much prefer the price guarantee scheme of the previous Democrat-led government.

Niphond  Wongtra-ngan, former president of the Thai Rice Millers Association  said: "Under the price guarantee programme (of the Democrat-led  government), money went to the farmers faster. The guaranteed price was  10,000 baht per ton. Should farmers sell rice at 6,000 to 7,000 baht,  they will get compensated."

Furthermore, private rice exporters  accuse the government of monopolising the rice trade, as collusion among  a few exporters close to the administration and price fixing could  occur.

Internationally, the pricing scheme will also cause ripple effects on the market.

Dr  Poapongsakorn said: "I expect that the world price of rice will  increase, because we are one of the major exporters... But who benefits?  Our competitors - not Thailand!"

After all, the consumer could be the one who ultimately pays the bill, as the price of rice is set to increase. 

As for the farmers, it has yet to be seen if they will really benefit from the new pricing scheme.

----------


## StrontiumDog

*Thailand Starts Rice-Support Program at Prices 
*
*Thailand Starts Rice-Support Program at Prices ‘Way Too High’*

                                                                                                                    By                     Supunnabul Suwannakij                  -                                  Oct 7, 2011 2:57 PM GMT+0700                             

Thailand, the largest rice exporter, started a government-purchase program for the grain aiming to boost rural incomes amid criticism from industry executives that the guaranteed prices are excessive and distort the market. 

 “This is a very important policy of the government to boost crop prices and increase rural income,” Prime Minister Yingluck Shinawatra said at the program’s opening today. The policy would also help growers to recover from floods, she said. 

 Yingluck aims to shield the country from a global slowdown and the nation’s worst floods in half a decade by lifting incomes of poorer Thais who propelled her party to victory in a July election. The guaranteed prices to be paid to farmers may boost export rates and cut Thailand’s share of the global market, according to a Bloomberg survey of exporters and traders. 

 The prices the state is paying are equivalent to an export rate of $800 per ton and are “way too high,” Vichai Sriprasert, president of Riceland International Ltd., an exporter, said today. “Government interference with a market mechanism amid a global economic slowdown is the wrong time to boost prices.” 

 Under the plan, the government is paying 15,000 baht ($482) per metric ton for white rice and 20,000 baht per ton for jasmine rice. That’s as much as 44 percent above local market rates, according to calculations based on data from the Thai Rice Mills Association. The export price of 100 percent grade-B Thai rice, the benchmark for Asia, has gained 18 percent to $615 per ton since Thailand’s July 3 election. 

*‘Make a Living’* 

 The guaranteed prices are “appropriate because they take into account production costs and profits that are enough for farmers to make a living,” Yingluck, who took power two months ago, said yesterday. 

 The policy has helped to fuel a 26 percent rally in global food prices in the past year. Costlier food, driving faster inflation, complicates the challenges facing central bankers as they seek to sustain the global economic recovery. 

 “The amount of rice joining the program today isn’t that much as floods devastated crops,” Permanent Secretary for Commerce Yanyong Phuangrach said. “Total rice purchase under the program may be less than targeted.” 

 Floods have swept across Thailand since late July, killing 252 people and damaging almost 10 percent of nation’s rice production, data from the Department of Disaster Prevention and Mitigation and the Ministry of Agriculture and Cooperatives show. 

*Vietnamese Shipments* 

 Exports of rice from Thailand may fall to 8.5 million tons next year, from an estimated 10.3 million tons in 2011, according to the United Nations Food & Agriculture Organization. Vietnam, its nearest rival, will ship about 7.3 million tons. 

 “Exports from Vietnam could come even closer to those of Thailand, or even match them by 2013,” Concepcion Calpe, a senior economist at the FAO, said by phone from Rome. 

 The Thai government has said it will spend as much as 410 billion baht on the program between Oct. 7 and Feb. 29. It may buy about 15 million tons of unmilled rice, Deputy Prime Minister Kittiratt Na-Ranong said Oct. 5. 

 The plan may boost government stockpiles and increase government control of the rice trade, heightening uncertainty in the market, Samarendu Mohanty, a senior economist at the International Rice Research Institute, said on Sept. 30. 

 Thailand has about 3.3 million rice-farming households and total planted area of 60 million rai (9.6 million hectares), according to the farm ministry. The ministry cut its forecast for production from the main harvest by 12 percent to 22.73 million tons because of the floods.

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## SteveCM

*Inside Thailand -- Rice-Pledging Scheme to Provide Income Security for Farmers*

(08/10/2011)

People involved with the Governments rice-pledging scheme have been  urged to monitor the project closely, so that farmers would fully  benefit from the scheme.

                                         Prime Minister Yingluck Shinawatra said that the  project is part of the Governments urgent policies to be implemented in  its first year in office in order to provide income security for  farmers and improve their quality of life. 

She pointed out that the project would ease poverty and bring about a  balanced economic structure for the country, so that Thailand would not  heavily depend on international trade. Moreover, farmers would also have  higher purchasing power.

The rice-pledging scheme for the 2011/2012 production year was launched  on October 7, and it will continue until February 29 next year. As for  the southern region, the scheme will begin on February 1 and end on 31  July 2012. The redemption period is four months as of the month when the  rice-subsidy program begins.

Prime Minister Yingluck stated that rice is one of Thailands major cash  crops, and 3.7 million families, or about 20 million people, are  engaged in rice farming. The pledging price for paddy with moisture not  exceeding 15 percent is 15,000 baht a metric tonne, and that for the Hom  Mali paddy price is 20,000 baht a tonne. 

During her meeting with provincial governors and representatives from  various agencies on October 6, Prime Minister Yingluck called on the  people involved with the scheme to ensure transparency and prevent  corruption by strictly complying with the criteria of the scheme.

She said that the Government attached greater importance to rice  releases and exports, as well, in order to ensure a balance between  domestic and foreign markets. The objective is to provide farmers with  the maximum benefit. She also stated that the Government is ready to  listen to comments and consider suggestions on the project in order to  improve this policy.

Meanwhile, Deputy Prime Minister and Commerce Minister Kittiratt  Na-Ranong said that the Government had prepared a fund of 430 billion  baht to buy rice from farmers under the rice-pledging scheme. He said  that, as many people needed better understanding about the project, the  Government would proceed with its plan to give more explanations.

It believes that the project will boost rice prices rather than bring  huge losses, as believed by some people. In this regard, rice traders  and exporters have been told to continue their business as usual, since  the Government reaffirmed that it would not allow the rice-pledging  scheme to affect their business at all.

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## StrontiumDog

*Bangkok Post : Rice mortgage scheme sowing seeds of corruption?
*
*Rice mortgage scheme sowing  seeds of corruption?*

*Critics of the initiative say despite its staggering cost  small-scale farmers won't benefit and that it is rife with loopholes  ready for exploitation   * 
Published:  9/10/2011 at 12:00 AMNewspaper section: Spectrum
 Despite strong public opposition, the government  finally managed to implement its rice mortgage scheme on Friday.  Farmers are now able to mortgage rice with government-contracted rice  mills across the country.

 
_CASHING IN: A farmer counts his money after selling his rice._

 The rice mortgage scheme is one of the most controversial of the new  government's programmes, partly because it involves nearly one fifth of  the state's annual budget of 2.25 trillion baht - about 450 billion baht  - and partly because of the unimpressive record of previous mortgage  schemes and the inevitable allegations of corruption.

 Several agricultural analysts and economists have said the new rice mortgage scheme has the same loopholes as previous schemes.

 "Hardly anything has changed. Everything has been set up the same as  before. The only difference is that it is an open-ended operation,  meaning it has been expanded onto a broader scale, but with loose  controls,'' said Narong Petprasert, director of the political economy  programme at Chulalongkorn University, and an editor of the book, Rice  Politics, Under the Monopolised Capitalism by the State.

 _
SUB-GRADE GRAINS: A farmer shows rice prematurely harvested just  before his paddies were flooded. The rice won’t fetch a good price  because it is not fully ripened. PHOTOS: PORNPROM SATRABYHAYA_

 Under the present scheme, as noted in the minutes of a meeting held  by the National Rice Policy Committee on Sept 9, farmers are encouraged  to mortgage rice with government-contracted rice mills, where they will  receive anywhere from 15,000 baht per tonne for paddy white rice to  20,000 baht for jasmine hom mali rice.

 Before they can mortgage their rice, farmers will be required to  register with agricultural officials. Once they take their rice to a  mill, a committee comprising an agricultural official, an official from  the Public Warehouse Organisation and a farmer's representative will  check the quality and strain of the rice and decide a price before  issuing a document called a Pratuan certificate.

 Within three days, farmers will be able to collect their money from  the BAAC. Farmers then will have the option of redeeming their mortgage  or keeping the money, in effect, selling their rice to the government.
 Once the paddy is accepted, the mills are obliged to process it and  send the white rice to a central storage location every 10 days.

 However, the size of losses due to loopholes in the scheme,  opportunities for corruption and other costs called "economic rents'' -  extra amounts paid over what would otherwise be paid for something whose  supply is limited - will not become clear until the scheme has been up  and running for some time.

 The main attraction of the scheme for rice farmers is the difference  between the price for rice on the open market and the mortgage price. If  market prices fall below the mortgage price, then the scheme is an  outright subsidy to farmers. If market prices rise over the mortgage  price, farmers can reclaim their rice and sell it into the market -  either way, they bear no risk.

 For taxpayers, the issue of whether the scheme will generate a loss  depends on the government's success in boosting global prices by  essentially cornering the market. Thailand is the world's largest rice  exporter, with 11 million tonnes shipped annually and accounting for  some one-third of the global trade in rice.

 
_NOT SO SPECIAL DELIVERY: Prematurely harvested rice is unloaded at a rice mill._

 According to a study by economists from the Thailand Development and  Research Institute (TDRI) and prepared for the National Anti-Corruption  Commission to study the mortgage scheme for the 2005/2006 rice season,  it was found that while the government spent about 51 billion baht  supporting the programme, it lost about 19 billion baht. Most of that  was the cost of those who benefited from the economic rent, for example,  by providing storage silos.

 About 37% of this loss was due to differences between the open market  price and the mortgage price, where the mortgaged rice price was 6%  higher than the market price.

 Corruption, often involving collusion between farmers and millers, incurred additional losses.

 The predominant form of corruption by farmers involved false  declarations of the size of their paddy fields and the weight of rice  they mortgaged.

 Once farmers mortgage their rice with government-contracted rice  mills, rice millers will start to process the rice and send it for  storage. At this stage additional economic rent costs come in the form  of rice processing fees, transport, rental of silos for storage and  other operational costs. The TDRI study estimated that for the 2005/2006  rice season this cost the state about 7.6 billion baht.

 Some millers in Ayutthaya said collusion between them and farmers to  falsely declare the amount of rice mortgaged is possible, but it's a  less popular form of corruption than falsely declaring the amount of  mortgaged rice in their warehouses.

 Some millers simply stole the mortgaged rice and sold it in the open  market. One miller in the province was caught red-handed, and is  currently being prosecuted.

 Other forms of corruption involve mixing low-quality rice with  high-quality rice to benefit from the high price set for higher quality  rice. This practice often involves smuggling cheap rice into Thailand  from neighbouring countries to be used to mix with the high quality  rice. This practice happens frequently in the Northeast, where hom mali,  the best white rice, grows.

 "Who actually knows the differences between each type of rice?'' asked one rice miller in Ayutthaya.

 After the mortgaged rice is processed into white rice, more losses  can accrue. By nature, rice degrades over time. The longer it is kept in  storage, the lower its quality, and thus its price.

 The study found that the degradation of the quality of stored rice  alone cost the state about 600 million baht in the 2005/2006 season.

 Dr Narong questions the current scheme. He said several key points  have been left open-ended. For example, the National Rice Policy  Committee does not specify what will happen to mortgaged rice once it is  in storage. It has simply said that the rice distribution sub-committee  can consider procedures for the distribution of mortgaged rice "as  necessary''.

 "The scheme seems to have been designed with plenty of loopholes for  exploitation. The point is, everyone involved in the programme seems to  gain benefits. So, who will speak out about anything fishy?'' said Dr  Narong.

 Nipon Poapongsakorn, president of the TDRI, who led the research team, said the programme was illogical.

 He said while the government claims that it wants to help farmers, the study shows the initiative has the opposite effect.

 It was found that those who benefited from the 2005/2006 scheme were  not the 3.6 million poor rice farmers, but the one million well-to-do  rice farmers, mostly on the Central Plain.

 "If the programme will not benefit the poor as claimed, what is the  purpose of the scheme? What is the purpose of the programme when we know  that it will become a heavy economic burden instead of a benefit?''  questioned Dr Nipon.

 As of July, the 2005/2006 rice mortgage scheme has cost the country 141 trillion baht according to the TDRI study.

*FROM PENALTIES TO SUBSIDIES*

 Formerly concerned with farm price intervention through farm  penalties such as heavy taxation, Thailand began farm subsidies in the  late 1980s. The rice mortgage scheme was introduced in the early 1980s  but first became a major price intervention programme in 1991. In  Thailand, rice mortgaging is similar to the action of pawning, where  farmers can sell paddy rice to the government and buy it back at minimal  interest. The original objective was to provide short-term liquidity  for farmers to be able to delay the sale of their rice.

 In the 2001/2002 season, the Thaksin government raised the price of  mortgaged rice to 100% of the market price. After that, the volume of  mortgaged rice jumped to 38% of total production in 2004/2005 (8.6  million tonnes of 22.6 million tonnes), while the programme was plagued  by problems and corruption.

 
_EYE ON QUALITY: A mill owner inspects the quality of the rice._

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## SteveCM

*Bangkok Post : Damage to paddy may hit 7m tonnes*

         Business          >         Economics       

                               FLOODING 
*Damage to paddy may hit 7m tonnes*

*But officials claim exports won't suffer* Published: 15/10/2011 at 12:00 AMNewspaper section: BusinessFloods have already damaged about 700,000 tonnes  of paddy but the final tally could be 6-7 million tonnes, says the  Commerce Ministry.

 _Fields in Lop Buri are among the hundreds of thousands of rai now under water. PHRAKRIT JUNTAWONG_

 However, the impact on exports of Thai rice this year is expected to  be limited and the country will still be able to export 11 million  tonnes of rice, said Yanyong Phuangrach, the ministry's permanent  secretary.

 The Agriculture Ministry reported total damage of 10 million rai of  cultivated areas, of which 8 million are paddy, meaning rice production  could be cut by 6-7 million tonnes. Prior to the floods, Thailand  expected main-crop paddy production of 25 million tonnes to enter the  government's paddy mortgage scheme. Phitsanulok, Nakhon Sawan, Phichit  and Suphan Buri are among the affected provinces.

 Mr Yanyong said he hoped traders and the public would understand that supplies will be reduced and prices may rise.

 "We have to understand that farmers usually cultivate two crops of  paddy, but they will only get income from one crop this year because of  the floods."

 Though some have speculated that Thai rice exports would be affected,  Mr Yanyong is still optimistic the country can export 11 million tonnes  this year.

 The kingdom has already shipped 9 million tonnes this year. He  admitted the price of Thai rice has increased, but not so high as to  affect orders.

 "There are some problems in transporting rice to the port due to the floods but demand for Thai rice is still high."

 He noted India had exported only 10,000 tonnes of rice, after an  earlier announcement it would export 2 million. India exports mainly to  Pakistan, which is not a main market for Thailand, which is increasingly  focusing on Africa.

 Thai white rice is around US$600 a tonne, while Vietnamese rice is at  $570. Mr Yanyong said traditional customers were still buying Thai  rice, such as the Ivory Coast, which is likely to purchase over 200,000  tonnes this year.

 In another development, Internal Trade Department director-general  Vatchari Wimooktayon said a large suburban construction materials store  was selling 20-kilogramme sandbags at 55 baht, double the normal price.

 The department intends to charge the business under Article 29 of the  Goods and Services Price Control Act. Punishment includes up to seven  years in jail and/or a fine up to 140,000 baht. It will also ask the  Revenue Department to investigate the earnings of the shop.

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## StrontiumDog

*Packers blast rice pledging scheme - The Nation
*
*Packers blast rice pledging scheme*

         PETCHANET PRATRUANGKRAI
THE NATION January 27, 2012  1:00 am 

*Slowing exports and unreasonable prices of Thai rice  have prompted packers to call on the government to stop the pledging  scheme and return to price guarantees for farmers to bolster exports and  domestic trading.*

The government should at least consider lowering the pledging price as  fast as possible to enhance trading, which now faces market sluggishness  due to artificially high prices, they said.

The current policy has not only reduced rice exports but has increased  local retail prices by 5-10 per cent, which directly affects local  consumers, the rice packers said. Overly high subsidised prices will  also encourage rice traders to focus more on overseas business,  particularly in neighbouring countries such as Vietnam, to reduce their  costs.

Prices of packed rice are expected to rise in the second quarter of  this year to cover expected increases in the costs of production, if the  government decides to extend its pledging scheme for the second crop,  said the president of the Thai Rice Packers Association, Somkiat  Makcayathorn.

"If the government prolongs the high subsidy price, rice packers will  need to raise the retail price to reflect the higher cost of  production," he said.

Newly appointed Commerce Minister Boonsong Teriyapirom will today  meet  with rice traders and millers to hear private enterprises' opposition  to government price intervention. The main-crop subsidy will expire next  month.

Commerce permanent secretary Yanyong Phuangrach plans to propose that  the government continue the pledging scheme at the same prices from  March to June.

Somkiat said that not only were rice exporters suffering from the high  pledging prices, the domestic trade was also starting to be affected. As  exports have dropped greatly since the pledging scheme started, the  domestic trade is facing a tough situation on expected higher costs of  production.

To reflect the real cost of production and allow growth of rice  trading, Somkiat said the government should consider change its pledging  policy to guarantees so that farmers would continue to receive high  returns. If the government insisted on prolonging the pledging  programme, it should lower the prices to reflect the real cost of  production and increase competitiveness.

Somkiat said the appropriate pledging price for white rice was Bt12,000  per tonne of paddy, while jasmine rice should be pledged at  Bt17,000-Bt18,000 a tonne. The current pledging price for white paddy  rice is now Bt15,000, and jasmine rice is Bt20,000 per tonne, which he  said was too high.

To ensure businesses survive, Somkiat, who is also managing director of  Patum Rice Mill and Granary, an owner of MBK brand, said many rice  packers would look to export small rice packs to Asean markets to escape  the tough domestic situation.

He said export of Thai packed rice to Asean nations should increase  greatly to 1 million tonnes after the bloc's economic integration and  zero tariffs for rice trading. Moreover, rice packers will promote more  domestic consumption of their product to compensate for lower exports.

He expects that domestic demand for rice will increase by 10 per cent  this year, from growth of only 1-2 per cent in the past few years.

*Thai Ha*

Somroek Tangpiroonthum, chief executive officer of Thai Ha, the  producer of packaged rice and instant food under the Kaset brand, said  that if the government did not revise its rice-pledging policy, the  domestic trade would be sluggish amid low demand for exports.

"Thailand will face an oversupply of rice as a higher supply from other  countries is expected this year. In the end, farmers will suffer from  the pledging as the government will no longer spend a huge amount on  subsidies," he said.

Sumeth Laomoraphorn, chief operating officer of CP Intertrade, producer  of the Royal Umbrella brand, said the serious drop in Thai rice exports  had encouraged more domestic rice trading.

He said many rice exporters and millers who faced difficulties had  become rice packers to stay in the rice industry. Thus rice trading in  the country faces high competition, which to which players must work  hard to adjust.

Sumeth said rice packers would face lower margins as they could not  increase retail prices while facing higher raw-material costs. To remain  in the business, he suggested rice traders create their own brands and  focus on developing rice of high quality or value-added rice products.

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## StrontiumDog

Thai-ASEAN News Network - Commerce Ministry Vows to Continue Rice Pledging Scheme



Commerce Ministry Vows to Continue Rice Pledging Scheme 

UPDATE : 27 January 2012 

*The Commerce Ministry plans to continue  the rice-pledging scheme, while the Thai Rice Packers Association is  threatening to increase rice prices.

 Commerce Permanent Secretary Yanyong Phuangrach has announced that the  Commerce Ministry will extend the rice-pledging scheme, as the 2011  rice-pledging program is set to be terminated on February 29.
*
The permanent secretary plans to ask Commerce Minister Boonsong  Taeriyapirom to propose the same rice-pledging rate to the National Rice  Policy Committee.

In the meantime, Thai Rice Packers Association President, Somkiat  Makkayatorn, said he is willing to urge the commerce minister to reduce  the rice-pledging price when the current scheme finishes next month.

Currently, the rice prices in the market across the country are lower than those of the rice-pledging program. 

The president is concerned that if the government insists on maintaining  the rice-pledging prices, rice business operators will need to raise  the price of rice in bags by 5 to 10 percent to cover high costs.

Furthermore, the bag rice business sector has been facing two negative  factors in the rice market such as declining rice consumption among  Thais, and strong rice competition in the market.

The association will join hands with the government and the private  sector to promote rice consumption and increase it by 10 percent this  year.

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## Mid

*Vietnam may take top rice exporter title from Thailand*
March 17, 2012

 Vietnam may snatch the title of world's top rice exporter from Thailand  this year, saying it aims to match last year's record shipments of 7.2  million tonnes helped by strong demand and a positive outlook for  domestic production.

In contrast, Thailand, which has been the  world's biggest exporter for three decades, looks set to see exports  fall sharply to 7 million tonnes at most due to high prices caused by  government intervention to support millions of poor farmers.

"In  our assessment we can maintain and will strive to reach the level of  last year," Vietnam's Agricultural Minister Cao Duc Phat said on the  sidelines of a regional conference held jointly with the Food and  Agriculture Organisation.

"As of now, the winter-spring rice crop is going very well.

The  output could rise from 2011," he said The comments are more bullish  than a government forecast this month of 6.6 million tonnes and come  despite a government estimate that exports could fall 44 percent in the  first quarter from a year earlier to 1 million tonnes as foreign buyers  wait for prices to bottom.Exports in the first two months  of the year slowed due to thin demand, dropping 46 percent from a year  earlier to 556,000 tonnes.

"But we would like to reaffirm that we do not have policies to limit rice exports this year," Phat said.

Traders  said foreign buyers, including major traditional importers of  Vietnamese rice such as the Philippines and Indonesia, were waiting for  the Mekong Delta harvest to peak and prices to fall before making their  purchases.Indonesia, which plans to import up to 2 million  tonnes this year, should decide on this year's rice imports by no later  than June when the government has a clearer idea about the size of the  domestic crop, a government official said on Thursday.

Demand from Africa, another major buyer of Vietnamese grain, has fallen by two-thirds this year from a year earlier.The  Philippines said on Wednesday it would limit rice imports for the  private sector this year to 380,000 tonnes but government-to-government  deals were still likely to take total imports up to the planned 500,000  tonnes.

Some traders think the figure will be far higher, saying  the Philippines needed to import more and imported grain is still lower  than domestic grain.

brecorder.com

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