slapphead_otool

Long shot but worth asking if anyone here has any connection to the rice industry.

I am thinking of writing a background paper on the Thai Rice Industry along the lines of the Indonesia Coal one that i am currently writing.

Any ideas anyone?

nonthaburi

I know plenty of rice farmers and I know that there isn't much money in it compared to other crops . Part of that depends where in Thailand you grow it . I think in the central plains they can get 3-4 crops a year but in other places they are lucky to get two. Using where my wife comes from as an example , anyone who grows rice is poor whereas if you have rubber then you are well-off . Cassava / tapioca , somewhere in the middle.

slapphead_otool

Again its a really interesting topic with far reaching consequences.

From memory of bar room conversations and without any research as yet:

The growing disparity between the poor rice growing areas of Thailand compared to the more industrialised areas led the government to agree to buy rice off the farmers at a fixed (and subsidised) price. This to some extent attempted to spread wealth across the nation.

It had a side effect of increasing production as the subsidised price allowed the farmers to introduce better growing and management practices. This meant more and more rice was being grown.

The Thai government responded to this by selling the subsidised rice cheaply on the world markets. Other nations then became "addicted" to cheap Thai rice.

Then a couple of years ago Thailand had a bad season due to excessive flooding which damaged the crop and destroyed the paddy field structures. The result was a rapid increase in the global price of rice and therefore cost of living in Asia.

I remember being on a remote Pacific atoll where the locals were complaining about the rising price of rice - which had "product of Thailand" on the sacks.

I also hear rumours that Thailand was classing the sale of subsidised rice into Asia as aid..... Might be interesting if its true.

Can anyone comment on the above before I start my research?

Disclaimer - any or all of the above may well be complete rubbish.

slapphead_otool

A quick google bought up this:



http://www.bangkokpost.com/business/...scheme-grilled

Published: 20/08/2012 at 12:00 AMNewspaper section: Business
Rice, long the crown jewel of Thai exports, is fast slipping in world rankings where it led for three decades, and few blame it on floods or climate change.

All fingers seems to be pointing to the rice pledging programme, which offers farmers up to 15,000 baht a tonne for white rice paddy and 20,000 baht for Hom Mali, well above world market prices.

Critics of the programme point to the huge budget used by the programme, only to distort market mechanisms and put the country's rice exports in peril.


That seems to indicate at least part of my hypothesis was on the right track...

Anyone?

nonthaburi

I know there were a lot of critics from the opposition about the scheme saying how it was costing the government too much money.

wolf5370

There is a lot of money in rice here. However, like rubber, much of it never gets to the farmers. Most money goes tothemillers and the middlemen (those that buy the milled rice and sellit enmasse to exporters). Subsidies also end up mostly in the middle. Powerful families control this middle ground - there have been talks of farmer's rice syndicates, but it has always been stymied by these middlemen.

Fixed price/minimum price etc, will do little to help, cost the country much and just price Thailand out of the market.

There were severallarge price hykes following bad years for rain (lack of, and then floods) - again the farmers madenothing fromthis,and prices have not returned even though supply has. Thailand is feeling the pinch,even though they willnever admit it, but once the world'sbiggest rice exporter, now lags and is being taken over by neighbours and new kids on the block (like the USA) - the price is too high already on the international stage, and with the influx of western and convenience foods here in Thailand, is fast losing it's staple position here too. Also the influx has caused garbage issues too (once people ate steamed rice with meat or fruit from rolled banana leaves or bamboo tubes - now it's mostly plastic containers and bags).

It willnot be an easy task to get realinfo for a paper here as it is a closed industry and people at the bottom are too scared to talk and people at the middle/top want the status quo. Governemnt also feeds propaganda about how the world loves Thai rice,howit is superior, and are willing to pay whatever - when it is simply not true (and less so now then ever).

slapphead_otool

Many thanks Wolf.

A lot of googling and reading has uncovered some interesting stuff.

The USA is claiming that the subsidised price is around 40% higher than global markets. The Thai government uses loans from the Bank for Agriculture and Agricultural Cooperatives etc to fund rice purchases, then repays the loans by selling the procured rice. Which would mean they are making a loss.....

The cost was 376 billion baht for the 2011/2012 harvest season, with losses estimated to be 115 billion baht.

The cost for the 2012-13 harvest season is projected to be 432 billion baht, with losses estimated at 132 billion baht.

Apparently Thailand used to tax rice exports until 1986, and by 1990 there was consideration for subsidising rice exports, (which is similar to a tax - someone has to pay the subsidy from somewhere, so its a tax on the nation).

My assumption is that it was a means of spreading wealth into the poorer rice growing areas. But I would take a guess that you are right, the money goes to a small family of middlemen who are getting rich out of the subsidy......

Its an interesting topic.

Shard

I heard that Vietnamese rice was starting to make in roads on Thai rice, and that some unscrupulous Vietnamese rice sellers (never!) were even bagging Vietnamese rice and labelling it Thai. Just my two cents.

Why are you writing a paper on this topic anyway? Surely commodity brokers or the WTO have the topic well analysed?

slapphead_otool

Its an interesting topic, and part on my new years resolutions was to pick a few topics and learn a lot about them. Thai Rice and Indonesian Coal were the two I picked. It beats watching TV.

Commodity brokers and people like the WTO etc tend to report from their own persecutive, which is often politically correct or motivated, and tends to be from an academic perspective.

Shard

It does beat watching TV (well, generally). Good luck with it.

GMTplus7

This program is purely based on political motivation and corruptions are massive at all levels from very top politicians to influential farmers. It is believed that the Prime Minister's brother, Thaksin, the former PM, was behind this idea and ordered the program to go ahead for another few more years so that the current government would win the elections from the grassroots mainly in the NE region.

Corrupt politicians make huge tea money from the mills. The mill owners pay less than what the government offers. Many farmers buy rice from neighboring countries such as Cambodia and Laos and then bag them together and sell to the mills because they make handsome profits from buying cheap. In the world markets the government can't sell procured rice because Thai rice price is now more expensive despite it's world's best quality. Last month there were unconfirmed reports that Thai government sold tonnes of rice to the Chinese government with a massive loss. It is almost impossible to get transparent reports from the government. They claim the transactions are strictly business confidential.

Even government appointed economic advisers do not agree to have this program extended to this year and beyond. They believe if Thai government continues this program for a few more years Thailand would be like Greece and again would trick another IMF crisis.

I read an interesting article somewhere quoting a veteran well known and influential farmer by saying what the government should be doing is to find the way to improve water management, not a rice pledging nor price guarantee programs.

If you are able to read Thai or at least read news from Thailand, you will have a much better, informed idea about the rice industry in Thailand particularly the current situation which involves political and social perspective.

slapphead_otool

I had wondered if this was happening - it seems an obvious loophole especially near the porous borders.... Its one area I would like to investigate further. (not sure how I could though....)

I read something about this. There is concern that Thailand will use the rice to achieve political pressure by dumping or donating as aid. If the stocks get big enough they could use them to wild considerable influence. It was this factor that originally sparked my interest in the topic.

Sadly i cannot, but I do have a few bright Thai friends who have translated bits for me from TDRI etc. But they warn me that a lot of the numbers are faked and should not be trusted.

slapphead_otool

Interesting pice from the Economist echoing a lto of your points:

http://www.economist.com/node/21558633

Lou_Diamond_Phillips

Have a read through this mate:

http://asiapacific.anu.edu.au/newman...rming+thailand

GMTplus7

Rice is a perishable commodity. You can't keep them for long. If you happen to know someone who eats rice, they will tell you that they only buy new crop of rice. So if the government keeps on piling the stock, the quality of rice will get deteriorated over times and then no one would buy rice with the inferior quality unless the price is at the rock bottom.


Like all articles, you cannot believe 100% of what being said. And really it depends on who you ask, the answer will be different every time. If you ask Red-shirt people, they will 110% agree for whatever the government is doing. On the other hand if you ask Yellow-shirt clans, the answer will be negative. This also applies to your interpreters.

It is almost impossible to find neutral well-informed commentators these days in Thai society. It's either 'them' or 'us'.