After years as the world's top rice exporter, Thai PM Yingluck Shinawatra's populist policies are causing serious problems.
As the elected senator of northeastern Nakhom Phanom province, Dr. Vitthaya Inala is in a difficult position.
The majority of his roughly 750,000 constituents, many of them poor paddy farmers, are in full support of a year-old government scheme that promises them 15,000 baht ($488) per ton of white rice, he says, far more than they earned in the past.
“If this is a success, and poor farmers get the benefits, it will be very good for the Thai people,” says Dr. Vitthaya. Except the government’s rice-pledging policy is already proving to be a monumental failure, he adds.
Last week, the Senate Committee on Economics, Commerce and Industry, of which Dr. Vitthaya is vice-chairman, filed a damning report blaming the scheme over rampant corruption and a rising mountain of debt as big as the piles of unsold rice fill warehouses across Thailand. A populist policy that was part of the platform propelling the relative unknown Yingluck Shinawatra to power last May, the scheme now threatens to severely damage the government. Some say it could even bring the Prime Minister’s coalition down.
The chairman of the central bank has already criticized the scheme – so too have academics, economists and even the U.S. Department of Agriculture, the latter of whom warned of the policy’s effects on international rice prices – and at the end of this month Prime Minister Yingluck Shinawatra’s Pheu Thai party faces a two-day grilling from the opposition and the Senate all asking the same question: How did it go so wrong?
In theory, the policy makes perfect sense. If you pay farmers above the market rate for paddy they will earn more, Thai rice – already known for its quality – will rise in price and in turn force up prices on world markets.
But at 15,000 baht a ton, and 20,000 baht for high-quality Hom Mali jasmine, critics argue that Thai rice has simply become too expensive. As the government has struggled to sell rice to foreign governments at cost price, an increasing stockpile has accumulated costing the taxpayer a spiraling bill.
A recent Senate report said public debt, which was 42.4% of GDP at the end of April, would rise by an average of 4% per year if the scheme continues, and the Prime Minister has already admitted as much. Having spent 300 billion baht on its rice-pledging scheme this year, the government has earmarked an additional 405 billion baht for 2013, a combined roughly U.S. $33 billion.
Meanwhile, the rice needed to fund this policy remains holed up in storage slowly going bad, according to rice millers. With Thailand in the middle of its second harvest, the government is under pressure to either sell off as much as possible or risk running out of warehouse space. An estimated 14 million tons of rice are currently in storage across Thailand, a new record, and more than the country can sell in a year, even by the government own ambitious goal to export 8.5 million tons of rice in 2013.
Last month, Thai press reports said the Ministry of Commerce had made a deal “in principle” to store rice in an aircraft hangar at Bangkok’s Dong Muang Airport in a bid to find somewhere to put the incoming harvest.
“We are looking for warehouses anywhere,” says Amraporn Suntivong, vice president of the government’s Public Warehouse Association. “We are inviting warehouse owners to come forward.”
When the Democrat Party quizzes the government on the scheme at the end of this month, it is widely expected to point to mounting evidence that warehouse owners are benefiting from the scheme with storage rents having risen sharply in recent months.
Photo Credit: Flickr (♥siebe ©)
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laurel
Now that we know that Thai rice has some of the lowest levels of inorganic arsenic, maybe someone in Thailand can figure out how to market that and export to the US where consumers pay more for healthier products.
Lonie
Why are you guys ( butting heads ) ? None of you have a Thai name and probably don't have a vested interest and could give a crap less what the price of rice is and on top of that it is probably none of your damned business what the Thai government does !!.
Andrew Spooner
David,
You wrote "Is it too late to build a nice big climate controlled high tech rice storage warehouse and get my piece of the government pie?"
I think I am right in saying the biggest river of money flowing from government coffers to private companies in world history is that paid by US taxpayers for military hardware to privately owned arms manufacturers.
My advice? If you really want to get rich at taxpayers' expense make weapons in the USA.
Andrew Spooner
David Chasm
There is no debate to be had with someone who is so incoherent that they attempt to equate criticisms of a misguided article about Thailand's rice growing subsidy programme with those responsible for the slaughter of 2million people.
davidchasm@yahoo.co.uk
The point is that you can't tweak an agricultural policy that is completely broken. Your apparent offense at the KR thing is as superficial as your arguments.
And, of course, to respond to some of these points would actually require engaging on the issue in a reasoned fashion. I notice you haven't actually attempted to debate a single point I have raised as yet, instead producing the kind of excuse commonly seen in playgrounds when someone doesn't want to play anymore: "I'm going to take my ball home."
Andrew Spooner
David Chasm
I was going to read your longer comment but you lost me completely with your rather misjudged and tasteless attempt to equate my input to the Khmer Rouge.
David Chasm
And back to the issue at hand. Your Spoonerisms are again delving into the murky world of half-truths, non-truths and outright nonsense:
1. You say that the article doesn't quote any rice millers directly when it does:
“In my and many other opinions, the government’s rice-pledging scheme is very extreme and is clearly a vote-buying policy,” says Kreetha (who two paragraphs up is named as a rice miller). “It is the worst political policy in the history of Thailand.”
2. You reference the word "rotted" as if either the article or people's comments have used this word. You say: "As for unsubstantiated stories that a large percentage of the stored rice has "rotted" – they remain that: unsubstianted rumours put out by politicized sources and backed up, as usual blah blah blah…"
This sentence has a number of problems. Firstly, this article is citing rice millers as saying this, as have numerous other articles. Now, the rice millers themselves are among the best people to comment on this because their whole business model is based on determining the quality of rice in storage and then selling it. So this is substantiated and no-one is saying "has rotted" – in the past tense – people are warning that Thailand is getting into a situation in which a perishable good is packed up in full warehouses across the country and it looks like a lot of it could sit there for a very long time. What's in Thailand's warehouses right now will take more than two years to sell which means some of this rice is going to be there for this amount of time. This is the best-case-scenario as far as I'm aware. I think someone made a similar point earlier but you brazenly dismissed him or her as a Democrat supporter, most likely.
3. Even if the journalist in question did get pictures you will notice from all the picture by-lines on this website that they are not supplied by the journalists themselves, they are usually public-domain so for all you know this guy could have 65 million photos of rice warehouses, rice farmers, rice paddies, rice, etc and you would have no idea, not the slightest clue, but yet you've made this assumption based on not actually checking how photos work on The Diplomat and then making an unsubstantiated criticism. Something the paragraph before you accuse other people of.
4. You've totally missed the boat on the fiscal deficit vs. GDP point. If you are losing $33 billion on a rice scheme every year and you're going further into the red all the time but the guy next to you has an overdraft double the amount who cares about the other guy? Certainly not Thailand, they need to worry about themselves. The point is that this rice policy is causing Thailand's fiscal deficit to rise fairly sharply and actually Thailand itself has a cap on fiscal deficit vs GDP ratios which I believe is either 50% or 60%. Therefore the Thai government is moving towards a position in which it would essentially be violating its own rules (which, of course, Thai governments have in general been very good at in recent years, both Shinawatras and Democrats). The point is therefore to track the deficit in the Thai context and establish what impact this rice-pledging scheme is having on it, which has already been done by the Senate and numerous other people and groups. Hence why the Senate is going to grill Pheu Thai at the end of the month – on this and numerous other things, particularly related to the rice-pledging scheme.
5. I dare you to say something not very nice about Thaksin…
David Chasm
Apologies Andrew, that should read Andrew Spooner. Everyone seems to be called David on this comments page…
David Chasm
A possible conversation between Pol Pot and Nuon Chea in late 1978
Nuon Chea: Hey, so this agricultural policy we've got going on isn't doing so well, there's a few people out there starving to death.
Pol Pot: No, I think it'll be fine. The system can work – I just spoke to David Spooner on the phone and he says it just needs a few tweaks.
Nuon Chea: Er, but the whole system is screwed to be honest. Wouldn't we better off investing in the rice industry, creating a way to actually incentivize while calibrating market forces to work for the farmers rather than throwing the capitalist baby out with the bath water?
Pol Pot: Sorry, do you want to say that again a bit louder?
Nuon Chea: I said… Oh forget it.
Phone rings: beep beep…
Pol Pot: Can you get that…
Nuon Chea goes to pick up the phone
Pol Pot: Is that Yingluck?
Nuon Chea: No, it's David Spooner.
Andrew Spooner
David Chasm.
I spent a few minutes reading your comment but found nothing in it substantive enough to make it worth replying to. Thanks for taking the effort to write it though.