Thaksin: Extend rice policy

The government's rice purchase programme should be extended for several more years, former prime minister Thaksin Shinawatra said on Monday, rejecting criticism that it has increased public debt and encouraged corruption.

Published: 24/09/2012 at 03:40 PM

Prime Minister Yingluck Shinawatra, Thaksin's younger sister, implemented the price- support policy with the stated aim of boosting incomes of farming families, whose support helped her Pheu Thai Party win the general election last year.

The programme, under which the government buys rice from farmers at above-market rates, reaps economic gains that are about three times the programme's cost, Thaksin said in an interview with Bloomberg news agency.

"If we manipulate the mechanism for two years, three years, then things will be moving naturally," Thaksin, who was ousted in a 2006 coup and has lived overseas since fleeing a 2008 jail sentence, said in Singapore on Monday. "The rice price in the world market is increasing."

Ms Yingluck’s opponents have attacked the policy as her party pushes for constitutional changes that would allow Thaksin to return and investigators weigh charges for the deaths of his supporters during protests in 2010. Parties linked to Thaksin have won the past five elections on support from rice-growing areas that are poorer and more populous than the rest of Thailand.

The government has spent 282.5 billion baht (US$9.13 billion) since last October buying about 18 million metric tonnes of unmilled rice from 2.45 million farmers at above-market rates, according to the Ministry of Commerce. Spending may increase by a further 405 billion baht in the fiscal year starting Oct 1, as the government seeks to buy as much as 34 million tonnes, Commerce Minister Boonsong Teriyapirom said on Sept 21.

'Add Momentum'

"This may help consumer spending to remain well-supported and expansionary fiscal policy may add momentum to growth," said Enrico Tanuwidjaja, an economist at Royal Bank of Scotland Group Plc in Singapore. Thailand's fiscal deficit may expand to more than 2% of gross domestic product next fiscal year, from 1%, because of the rice programme, he said.

"We do not just throw away the money," Thaksin said. The programme will lead to higher government revenue through the sale of stockpiled grain, increased local consumption and will help cushion Thailand from the effects of the European debt crisis, he said.

"The domestic economy in Thailand accounts for only 30% of GDP growth but now is increasing because people have the purchasing power."

Southeast Asia's second-biggest economy expanded 4.2% in the three months through June from a year earlier, exceeding all 16 forecasts in a Bloomberg News survey that had a median prediction of a 3.1% rise. The rice policy "helped boost the economy in the first and second quarter," Arkhom Termpittayapaisith, secretary-general of the National Economic and Social Development Board, said on Aug 20.

Record Stockpiles

Government purchases will boost stockpiles of milled rice from the annual harvest that starts next month to a record of 12.1 million tonnes and may reduce Thailand's exports this year by 39% to 6.5 million tonnes, less than India and Vietnam, according to the United States Department of Agriculture.

Thaksin said the government has about 17 million tonnes of paddy on hand, and stockpiles of milled rice are estimated at about four million tonnes. Sales to Indonesia, Iraq and Ivory Coast, as well as other countries in the Middle East and Africa, will keep reserves down, he said.

"I don't think we have much because we keep selling," he said, referring to the rice stockpile next year.

Thailand's October harvest accounts for about 70% of total output, and a secondary crop is harvested through to July. The United Nations' Food & Agriculture Organisation said in August that Thailand should be able to retain its position as the world's top exporter, shipping seven million tonnes this year.

'Still Number One'

Shipments at that level would mean that Thailand "is still number one, but with a better price," Thaksin said. "If we were to push to sell to compete with India when they started dumping the rice at that time we probably end up with $400 per tonne. Now it's $602. We will be doing okay."

The government is targeting exports of 8.5 million tonnes this year, boosted by sales to Bangladesh, China and Indonesia. Sales tumbled 45% to 4.75 million tonnes for the year through Sept 18, according to the Thai Rice Exporters Association.

Thaksin said the previous government "spoiled" exporters by selling them cheap rice and called on them to become better at marketing. About 40% of Thailand's 67 million people who depend on rice farming are satisfied with the policy, he said.

Higher Prices

Under the program, the government pays as much as 15,000 baht a tonne for unmilled white rice, which accounts for more than 70% of all exports, and 20,000 baht a tonne for a higher- quality variety. Purchases for the crop year ending this month may increase by a further 5.5 million tonnes because farmers planted additional grain after floods receded at the end of last year, Boonsong said last week.

The programme helped boost prices of unmilled white rice as much as 24% to 10,800 baht a ton in local markets from a year ago, and lifted prices of jasmine paddy by 18% to 16,000 baht a ton, the Commerce Ministry said on Sept 12.

Total losses from the program are estimated at about 60 billion baht a year, based on a purchase cost of about $660 a tonne, Thaksin said. "We don't lose that much," he said.

The cost could rise to 200 billion baht after accounting for losses and storage fees for the grain, Kiat Sittheeamorn, an opposition parliamentarian, said last month.

An income-support program implemented by the previous government, headed by now-opposition leader Abhisit Vejjajiva, provided about 67 billion baht in direct payments to four million rice farmers in the 2010-2011 production year, according to the state-run Bank for Agriculture and Agricultural Cooperatives.

Election Pledge

While Ms Yingluck's administration does not disclose prices in sales to other governments, Mr Boonsong said the average price of all rice sold overseas this year is more than $600 per ton -- below the break-even price of about $750 per tonne for white rice and up as much as 20% from last year.

The proposal of guaranteed prices for rice farmers was among policies directed at lower-income voters that helped Ms Yingluck's Pheu Thai Party win a majority in elections last year to fill Thailand’s 500-member parliament. The party took 149 of 189 constituency seats in the north and northeast, while the Democrat party won 16 seats in those regions, where incomes average about a third of those in Bangkok.

Happy Farmers

About 86.5% of the 1,200 farmers said price-support measures were needed because of high production costs and low prices, according to a July survey by the University of the Thai Chamber of Commerce.

About 35% of respondents were more satisfied with the current government's rice-buying program, compared with about 28% who favored the subsidy measures offered by the previous administration. The remainder were equally satisfied by both programs, the surveyed showed.

In 1981, Thailand introduced a policy to allow rice farmers to pledge grain as collateral for loans if they wanted to delay selling their crops to get better prices. After taking power in 2001, Thaksin started raising the pledging price above market rates to boost farmer incomes, according to the FAO.

"Please sympathise with them," Thaksin said of the farmers. "They are poor. Let them have a chance to survive in this world, to live a better life."

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Discussion 1 : 25/09/2012 at 09:40 AM: Translation of that nonsense is .I dont care if I waste taxpayer money paying out farmers because they will love me if I keep this destructive program up .What do you think the farmers will do when the price drops back down ? Do you think the farmers are going to save the extra money .LOL They are in debt already .If they werent the money would be quickly spent on a truck payment putting them further in debt .This scam is loyalty payment plan on a massive scale by a fugitive who has to buy time because he hasnt figured out how to weasel his way back in the country .
Discussion 2 : 25/09/2012 at 02:44 AM: ringmaster - "Because the arrest warrant is based upon a Thai court decision and because the political party he is associated with has won every national election since 2001." Therein lies the problem. You find it acceptable for the government to override and/or ignore and/or control the judiciary.
Discussion 3 : 25/09/2012 at 02:33 AM: D27: won or bought elections since 2001? Please take those rose tinted spectacles off! from iPhone application.
Discussion 4 : 25/09/2012 at 12:44 AM: A question ... how many millions of rai of ricefields does Thaksin own? How much does he stand to profit from this government price manipulation scheme? Millions perhaps billions of baht?
Discussion 5 : 24/09/2012 at 11:14 PM: Why are we still listening to him, his proven track record is clear, not to be trusted, he will say anything without any shame and back track regularly.
Discussion 6 : 24/09/2012 at 10:50 PM: Disc15KhunBJ I answered once, but it wasn't published. Agricultural subsidies are given under the Common Agricultural Policy for many reasons. They are controversial and I disagree with their use... However, what does that have to do with this subject? Nothing. It's a way for you to pretend that Thaksin's rice plan is something other than a vote-bribe using other people's money. Pointing out other people's wrongdoings does not negate Peua Thai's wrongdoings. Pointing out other people are corrupt doesn't mean Thaksin should remain unpunished. This policy is a hugely expensive, unmitigated disaster. But it's also a way for PT MPs in Isaan to indulge in massive graft.
Discussion 7 : 24/09/2012 at 10:37 PM: I'm sorry, *who* says the scheme should be extended? A criminal fugitive who is hiding abroad has some 'opinion' on government policy? Why is this important? A more appropriate article would be one which clarified his opinions on prison food and cellmates.
Discussion 8 : 24/09/2012 at 10:29 PM: D25 - To answer your question, "how a man with an arrest warrant out on him can be allowed to publically dictate his opinions to the current government and NOBODY involved in administering the Law makes a single move to stop his blatant interferring in the control of the country?"... Because the arrest warrant is based upon a Thai court decision and because the political party he is associated with has won every national election since 2001.
Discussion 9 : 24/09/2012 at 10:13 PM: Thaksin is the ultimate Opportunits in all his business affairs and political manoevering. Then again, this is very much the Thai way of life in general.
Discussion 10 : 24/09/2012 at 09:59 PM: Can anyone tell me how a man with an arrest warrant out on him can be allowed to publically dictate his opinions to the current government and NOBODY involved in administering the Law makes a single move to stop his blatant interferring in the control of the country? Stop this nonsense.
Discussion 11 : 24/09/2012 at 09:29 PM: "Please sympathise with them," the fugitive said of the farmers. "They are poor and uneducated. Let's keep them that way, pay them 500 baht now and then so our dictatorship can remain and prosper".
Discussion 12 : 24/09/2012 at 08:56 PM: I guess it was decisions like this that caused Thaskin to have multiple failed businesses before he got a no bid, no competition contract from his police buddies and started what became AIS. He was a miserable failure when he tried to run companies that actually had to compete in the market place and it is reflected here.
Discussion 13 : 24/09/2012 at 08:31 PM: Did he actually use the word ‘manipulate’ in serious statement?
Discussion 14 : 24/09/2012 at 08:15 PM: Thaksin :'If we manipulate the mechanism....' Does he really believe that making Thai rice more expensive is manipulating supply and demand and therefore the price ? Rice enjoyed a boost a few years ago thanks to a massive wheat crop failure in India. Is he hoping for more of the same ? Why is there secrecy about how much it sold for in gov to gov deals. Could it be the huge lose incurred. Surely it is better to invest in teaching and technology to improve yields, Thailand is ranked 22nd in the world with no sign it is going to improve.
Discussion 15 : 24/09/2012 at 07:56 PM: When are the people of the north east going to wake up to the faxed that T.S. IS DOING TO THEM AS POL POT; keeping them broke, no payment for rice for last year,with this programme; sorry he is still the boss of thailand, sister still little sister and do as i say?
Discussion 16 : 24/09/2012 at 07:50 PM: Why he talk for the PM?
Discussion 17 : 24/09/2012 at 07:48 PM: khunbj Dis #12 "Generally I am against all kind of price support in the market, but the alternative to this program would be to give the farmers money for nothing and how much would that then cost" ?. That`s totaly Red`iculous generally ?
Discussion 18 : 24/09/2012 at 07:43 PM: "We do not just throw away the money," Thaksin said. Of course not , he`s obviously "Ample Rich" because of it right ?
Discussion 19 : 24/09/2012 at 07:35 PM: So Thaksin is admitting now that he really does control the government.
Discussion 20 : 24/09/2012 at 07:07 PM: Englishbob : Why don't you explain to me why british farmers receive money from EU to support the agriculture/farming there instead of letting it go bankrupt or the french farmers or the italian or the spanish or ......explain that and then I know you understand. I trust you will be able to do just that.
Discussion 21 : 24/09/2012 at 07:06 PM: Discussion2. EnglishJon. very true words. The feudal system still keeps flourish here. The sad thing is that the rural poor are all being used by the man who claims to be for them.
Discussion 22 : 24/09/2012 at 06:47 PM: KhunBJ - " but the alternative to this program would be to give the farmers money for nothing and how much would that then cost" Excuse me? What? Why is that the alternative? Why not simply buy and sell rice at the market price? Profitable farms will prosper, unprofitable ones won't. Why are Thai rice farmers paid more for their product than Cambodian rice farmers? Is it easier to grow rice in Cambodia? Why not pay pineapple farmers over the odds too? Or farmers of rubber, prawns, chickens, tapioca and grain? I don't know why I bother to ask... No PT supporter ever mans up and attempts to answer.
Discussion 23 : 24/09/2012 at 06:09 PM: First a few facts, according to TREA (Thai Rice Exporter Association) Thailand exported 4.47 Mill ton to an average price of 676 USD / 20,800 THB/ton, TREA expect to export further 500,000t/m for the rest of the year. This does not include direct Government to Government sales. At the latest weekly rice bid for the local market, the achieved price for 550,000ton was around 29.800 THB/ton. Generally I am against all kind of price support in the market, but the alternative to this program would be to give the farmers money for nothing and how much would that then cost ?. If continuing with the program it is important to set up a system that will keep the graft at a minimum, 100% fraud free is not realistic, social security systems in western countries prove that on a daily basis. However it is at the same time important through industrialization and education in typical farm areas to improve farming efficiency and make alternative job possibilities so that they will have an alternative to "wait for rice". One of the cornerstones of EU and a very big part of the budget is support of agriculture in member states but it does not mean that it is also the way forward here.
Discussion 24 : 24/09/2012 at 06:07 PM: If Thaksin really believes that this policy is not just a vote buying measure, but actually benefits both the farmers and the Thai economy, then why does he not extend it to cover all other farm products as well? And why stop at farm products? He might as well extend the policy to cover all the industrial products that Thailand exports too.
Discussion 25 : 24/09/2012 at 05:52 PM: Is that the same Thaksin who promised about a thousand times to stay out of politics? But I guess that was just another honest mistake.
Discussion 26 : 24/09/2012 at 05:49 PM: "While Ms Yingluck's administration does not disclose prices in sales to other governments, Mr Boonsong said the average price of all rice sold overseas this year is more than $600 per ton -- below the break-even price of about $750" To most business men that would mean to loose money. If they could sell it at benefit prices they would proudly present the numbers, but they are loosing money, so they keep it secret - which is unacceptable, the people have the right to know what they do.
Discussion 27 : 24/09/2012 at 05:42 PM: "About 40% of Thailand's 67 million people who depend on rice farming are satisfied with the policy, he said." And the other 60%? The majority? who depends on rice farming are not satisfied? And he insists to continue. Interesting.
Discussion 28 : 24/09/2012 at 05:07 PM: "We do not just throw away the money," Thaksin said. Really sounds laughable when stated that way. So, you buy the rice from the farmer at 15,000 baht, add miller’s fees, bagging, transport and whatever then sell it for around 13,000 baht and presto! Thaksin’s right – you don’t throw it away, you give it away. The result? “Thailand's fiscal deficit may expand to more than 2% of gross domestic product next fiscal year, from 1%, because of the rice programme”. Runs in the family, doesn’t it!
Discussion 29 : 24/09/2012 at 04:48 PM: Just by this statement it just shows that he has no respected to Thailand or his own Sister the PM No wonder he is not liked by so many
Discussion 30 : 24/09/2012 at 04:38 PM: Thaksin says "the rice price in the world market is increasing." The price of Thai rice in the world market has increased by roughly 9%, according to FAO. But the price for rice from India, Viet Nam and other exporting nations has gone down or remained about steady. Anyone can look at the FAO website and see that. And Thailand's prices are why Thailand's rice exports have fallen 45% so far this year. When the government introduced this program, it said the world would follow Thailand and raise rice prices, and so the program would not lose money. Well, the world did not follow, and Thailand is losing money. It is a payoff to farmers, instead of a program to help them become more productive so they don't need payoffs. It keeps them beholden to the government and Thaksin instead of becoming self-sufficient.
Discussion 31 : 24/09/2012 at 04:36 PM: Going by what the Thai Rice Exporters Association is saying, there won't be a Thai rice industry in a year or so. I am wondering if Thaksin has lost the plot and is making serious errors of judgement. Of course, nobody in the Cabinet will want to say it out loud as they would lose their Gravy Train seat.
Discussion 32 : 24/09/2012 at 04:34 PM: A well balance article with both sides of the argument well articulated. To me it is the big macro economic data that matters. IMF and ADB have both spoke of confidence in Thailand economic. There are no agencies rating downgrade. The policy will help to bring the marginalized population upwards and bridge the poverty divide. The opposition has investigated at length and Ahbisit has went down to the grounds to reveal the misgivings but found nothing. At 2% of GDP, the fiscal deficit seemed well managed and below Singapore and Malaysia. There really not much damage done to the economy. Price rice will trend upwards and rice if stock piled efficiently can be kept for more than 5 years, even longer if correct technologies are used. Still this is a big program and the government must ensure that corruption is managed and the benefits will fall to the farmers. With extra money, farmers will be a big contributor to stimulating the economy and contribute to tax revenue from VAT.
Discussion 33 : 24/09/2012 at 04:26 PM: PT need a way to get some money into the hands of the wealthier leaders of the rural communities. This is to make sure they keep all the locals (who think they are great men because they are rich) continually brainwashed with the propoganda of how great Thaksin and PT really are. The rice scheme is wide open to corruption which makes it easy to do this. This is no accident. Its a way to syphon off tax-payers money to buy the support. There must be hundreds or thousands of people skimming this money : let's see how many prosecutions we see. As Thaksin said himself about the rice scheme: "A little loss is acceptable". Roughly translated means "help yourself".
Discussion 34 : 24/09/2012 at 04:26 PM: The master has spoken.

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