TDRI head calls for rice plan review

The head of the Thailand Development Research Institute (TDRI) is backing a group of academics in petitioning the charter court to halt the government's controversial rice pledging scheme.

The impending lawsuit could at least prod the government into reconsidering its capital-intensive scheme, said Nipon Poapongsakorn, president of the TDRI.

Mr Nipon made his comments after a group of lecturers from the National Institute of Development Administration (Nida) and Thammasat University petitioned the court yesterday to suspend or terminate the scheme, reasoning that it violated the constitution and has cost the state at least 98 billion baht.

The real purpose of the petition was to push for a review of the scheme to prevent further losses which would be caused from the next round of rice pledging, said Adis Israngkura, Nida's dean of the School of Development Economics.

Signing in support of the petition were more than 50 Nida lecturers, 27 Thammasat University academics, and 42 other people who were either students or members of the public who disagreed with the scheme.

Mr Adis claimed the implementation of the pledging scheme was a breach of Section 84 of the constitution which promotes a free and fair economic system and prohibits the government from competing in business with private operators without a sound reason.

The rice pledging has also caused rice quality to deteriorate, he said.

By agreeing to accept rice of mixed quality for pledging, the scheme has undermined the market mechanism in controlling standards. Farmers would focus more on boosting the volume of their rice to raise their income and would no longer have any incentive to improve quality, said Mr Adis.

Another factor leading rice quality to decline was that it was stored for longer periods, he said.

The rice pledging scheme has also affected the country's rice industry. The scheme has pushed up rice prices, undermining Thailand's ability to compete with other rice exporters globally.

Mr Adis said Thai rice exports have so far tumbled by 46% because of the scheme.

The government-to-government sale of pledged rice products at considerably lower prices was tantamount to wasting taxpayers' money to subsidise the sale of cheaper rice to consumers in other countries, he said.

"We're not aiming to terminate the scheme but to seek an adjustment to the ceiling of rice pledging prices that should not exceed a range of 9,000 to 10,000 baht per tonne," said Mr Adis.

"And the the maximum volume of rice to be pledged per household should be limited to only 25 tonnes."

Mr Nipon said the TDRI agreed with any schemes that would help raise farmers' incomes.

"There is nothing wrong with the rice pledging scheme in general but the way the government pledges 'every single grain of paddy' and offers hefty guaranteed prices 35-40% higher than the market price is truly wrong," Mr Nipon said.

The academic said he would not mind if the government went ahead with pledging but farmers should benefit more from the money allocated from the scheme.

According to the TDRI, 63% of funds spent on the pledging programme went to merchants and millers, with the rest going to farmers. Only 5% of funds spent went to poor farmers, most of them in the Northeast.

The government's pledging scheme offers farmers up to 15,000 baht per tonne for white rice paddy and 20,000 baht per tonne for jasmine Hom Mali.

The TDRI estimated that losses for the first year of the programme could reach more than 100 billion baht, based on current global prices and including storage and maintenance costs.

About 2 million farmers out of a total of 3.8 million farm households have applied for the mortgages, most of whom own large plots and enjoy substantial production scale.

Small-scale or subsistence rice farmers hardly benefit from the scheme, according to the research.

"We don't mind if the government tweaks the scheme by offering the pledging price at just 10% above the market price and creates a mechanism allowing small-scale farmers who have to keep their produce in barns gain access to money in the scheme."

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said the association is gathering information on whether it would be able to file a petition about the effects of the scheme.

He said that exporters may have to wait to see the performance of rice exports for the entire year before taking any action.

However, he pointed out that there is little evidence to support the claim that the pledging scheme has reduced the country's competitiveness in rice exports.

Korbsook Iamsuri said yesterday that Thailand's rice exports by the private sector may stand at 6 million to 6.5 million tonnes, compared with 10.65 million tonnes shipped in 2011.

The figures exclude government-to-government sales. The Commerce Ministry said earlier it has sold more than 7.3 million tonnes to six countries.

But Mr Chookiat was sceptical about the figures especially as he claimed there has been no shipment activity at ports.

"We're talking about shipments of millions of tonnes of rice to be exported. There should be some movement. But many ports are deadly quiet. This is impossible,"he said.

Share your thoughts

Discussion 1 : 29/09/2012 at 09:23 PM
Dis#42 Ouch , is that android or super hamaroid , either way it must really hurt being you , right ?
Discussion 2 : 29/09/2012 at 11:42 AM
These so called elite academics bought their rice packs in nicely air-conditioned BigC or Lotus supermarkets. They never learn nor experience the hardship of the farmers working in rice fields under the 40 degree celsius sunlight. These academics are well educated high class people but their arrogance is a great disappointment to the society and their parents who probably were rice farmers as well.
Discussion 3 : 29/09/2012 at 02:01 AM
D33 is spot on. I don't know where people get the idea from,that rice-farming is hard work ? Part of my family are rice-farmers. They/we plant the rice and that takes about 3-5 days. Then they sit around and watch it grow for the next 3-4 months. Finally they/we spend a day or two harvesting and that's it ! I write "they/we" because I usually participate when I do not have real work to do. Besides,this rice-subsidy benefits almost exclusively the middlemen,who coincidently are mostly politicians,officials or their relatives. Ordinary farmers are still paid less than the pledged price. D39 : Great comment. I fully agree.
Discussion 4 : 28/09/2012 at 05:10 PM
To those people (STILL!) defending this train-wreck of a policy... 1) Putting academics to work in the paddy fields won't change market conditions, or change the basic rule of not buying high and selling low. 2) Farmers, Peua Thai MPs and millers are the only people singing the policy's praises - in fact, only people with a vested interest or financial stake. 3) Subsidising rice farmers (and not farmers of grain, tapioca, rubber, fruit, chicken or prawns) smacks of rewarding a voting bloc. 4) Paying Thai rice farmers more than Cambodians (who grow rice a few kilometres to the East) is nonsensical - the jobs are identical. 5) Long term (and maybe as soon as next year), this policy will backfire. The warehouses are brimming already, there's another harvest to come and insufficient buyers of Thai rice. What will happen to the rice that's grown next year? Where will it be stored? Will we see the ludicrous policy of paying rice farmers NOT to grow rice?
Discussion 5 : 28/09/2012 at 04:11 PM
Here in North America I'm seeing the price of Thai Hom Mali rice go up substantially, immigrants , restaurants are now buying cheaper rice from Vietnam and India.The rice pledging scheme becomes even more expensive when you price yourself out of the market . Might be a better solution to subsidize fertilizers and pesticides. People here aren't trusting the labels on the bags that say new crop since they know there is such a stockpiling in Thailand. Subsidizing fuel, fertilizers,transport and secondary costs to the farmers is a better approach and benefits more people then a system that creates hording and the selling of old product.
Discussion 6 : 28/09/2012 at 03:12 PM
buladust Dis#25 "Those stucked in the mud doing the same old ways again and again in rapidly changing world. The important thing to watch is how a government handle problems and challenges". Too radid for most and why must we wait and watch when yingluck was voted in because she promised to do things better and address corruption ! Why would "those people stucked in the mud doing the same old ways again and again" want to change anything , as they supposedly under taxsin/yinglucks selfserving policy , just got a 30-40% payrise for doing the exact same old thing , bula you and your fuzzy red logic never seace to amaze me ? And we all thought you and the taxsin/yingluck and ptp red sympathisers were all for the poor old rural Thai farmer ?
Discussion 7 : 28/09/2012 at 02:26 PM
eric Dis#9 "And I am firm believer that rice price will go up, influence by the pledging and the scheme will be a success in the mid-term". Besides Thailand not being able to afford it , how does the price of rice rising help the poor exactly ? Fuzzy Red logic or what ? Where are the Thai peoples missing millions yingluck ?
Discussion 8 : 28/09/2012 at 12:42 PM
To me it sums the whole thing up well.The problem is how do you change the system when you know who is behind it and the government follow like sheep.What cannot speak can not lie the figures for export must be correct, unless some one is steeling the stuff.Or Scotty is beaming it up.
Discussion 9 : 28/09/2012 at 12:40 PM
ringmaster # 30, " Debate the issue." are you for real? Yingluck does nor even want (dare) to be with Abhisit in one TV program debating policies. The majority of clan supporters here say they won the election so they do not need to listen to the opposition at all.
Discussion 10 : 28/09/2012 at 12:07 PM
Bula:Do you ever read the criticisms and don,t you learn anything from them?
Discussion 11 : 28/09/2012 at 12:02 PM
Disc 15:Quite clear you didn,t.I did and nicer than working in an industry.Working in a ricefield no more than 6 weeks a year!So what is your point?
Discussion 12 : 28/09/2012 at 11:58 AM
Disc 20:Exactly.But all supporters will not comment on your points as they support T. blindly.
Discussion 13 : 28/09/2012 at 11:56 AM
Why give support to a group of academics petitioning the rice pledging scheme when you consider that there's nothing wrong with the scheme in general! In what way can it be considered that the scheme is in breach Section 84 of the constitution! If the basic argument is that rice farmers are being payed to much money for their crops then surely that would have to be supported by substantial economic analysis covering all aspects of rice production.
Discussion 14 : 28/09/2012 at 11:16 AM
This should be a great opportunity for implementing the democratic process. Debate the issue. Have the opposition come forward with an alternate plan for farm subsidies. If the Dem's plan is better and they can convince the voters then a better plan can be implemented and everyone wins. Conflicts and problems should be solved in a democratic way.
Discussion 15 : 28/09/2012 at 10:50 AM
"The Commerce Ministry said earlier it has sold more than 7.3 million tonnes to six countries." and "there has been no shipment activity at ports, many ports are deadly quiet". Well there we have it in black and white. The commerce ministry (minister?)are lying through their collective teeth as is becoming standard for this government. This "clan" is bankrupting Thailand as never seen before. Even the die-hard pro-clan supporters must be brain dead to not see this.
Discussion 16 : 28/09/2012 at 10:39 AM
jck d18 Yes I also experience the same problems especially during the last few weeks, but only the bk not other sites.
Discussion 17 : 28/09/2012 at 10:34 AM
I see a list of charges - which don't seem to be viable charges in the article - there must be more. First - you have to indicate what article/section of the constitution applies to make the law violate the constitutional law. I see nothing in this article that even tries to do this. Second, is the parties bringing the lawsuit - have to have standing.
Discussion 18 : 28/09/2012 at 09:40 AM
Thaskin designed this taxpayer paid for scam to keep farmers loyal to him .He doesnt care if it isnt sustainable or even if it works .Neither do the farmers as long as they get some extra cash now and Thaksin retains his loyalty base .After all it isnt his money being wasted .
Discussion 19 : 28/09/2012 at 09:25 AM
To posters critical of my comment on oppositions' attitude. - you are not looking at the policy in its overall economic well being of all. They are challenges to overcome but that does not mean failure. Greater the policy also mean more challenges. Of course, they will be those who will be negatively affected eg. Those stucked in the mud doing the same old ways again and again in rapidly changing world. The important thing to watch is how a government handle problems and challenges.
Discussion 20 : 28/09/2012 at 09:11 AM
Further to D19@pjt - should not the government to government deals be ratified by Parliament - especially if losses are expected to be incurred, which is highly likely. No overseas government in their right senses would pay over market when commodity is freely available on world markets. The purchasing governments are also governed by their own rules of competitive and transparent procurement - which might work better than what we are used to in Thailand
Discussion 21 : 28/09/2012 at 09:08 AM
If subsidizing rice is deemed unconstitutional, the fuel subsidies will also come into question. The Dems are pro-fuel subsidy but anti-rice subsidy. PTP is pro-rice subsidy but anti-fuel subsidy. The political fallout will get messy . . .
Discussion 22 : 28/09/2012 at 09:05 AM
Under Democracy, PTP-led Govt can do whatever it wants to do, as long as, it has majority support in parliament, and that the Green Shirts are cool with it. My question is how bad things must become before PTP will lose that majority support? So, I guess, Thai people have to go through what people in the Greece, Spain, and the US, are going through right now, in order to realize the kind of damages the populist socialistic public policy like this will eventually inflict.
Discussion 23 : 28/09/2012 at 08:56 AM
@ discussion 19. It's not an improper use of the courts because the higher courts exist to determine if a law or act of government is constitutional or not. Even in our home countries, a law popular with tbe public or passed by a voter proposition will be thrown out by the courts if contrary to our constitution, the anti gay marriage law in California is a good example.
Discussion 24 : 28/09/2012 at 08:44 AM
I would like to share the 7 key concerns cited in the petition (as reported by The Nation). Basic economics sense simply does not warrant support of the whole scheme. "First, the scheme fails to develop good-quality rice because its focus is not on quality but on quantity, allowing all rice grains to be pledged at the high prices. Second, farmers lack incentives to concentrate on the lengthy development of high-quality rice. They are occupied with rapid rice cultivation to catch up with the scheme's time frame. Third, Thailand will face falling rice quality, as the government has to manage a huge rice stockpile for a long time without a way to release the inventory to the market. Fourth, the higher-than-market price subsidy has sent the wrong signal, as farmers will rapidly expand paddy fields beyond their capacity. It will also distort the planting of other crops. Fifth, the policy has destroyed Thailand's rice growing and trading system, which has been gradually developed for centuries. Sixth, the high subsidy prices have undermined Thailand's export competitiveness. Rice exports have dropped 46 per cent from 7.4 million tonnes in the same period last year to 3.9 million tonnes now. Seventh, the government's policy to release its huge rice stocks is set for only government-to-government contracts, which means Thailand will lose money from any export lot as the price will be quoted lower than the subsidy prices. In this way, the government is spending Thai taxpayers' money to subsidise consumers overseas who can buy cheap rice."
Discussion 25 : 28/09/2012 at 08:36 AM
This is the wrong use of the courts and will just bring charges of political motivation. In the end the voters voted PT in and will have to take the consequences - economics has a horrible habit of working despite all efforts at manipulation. The right use of the courts - which is where the effort should focus - is on forcing clear transparent disclosure so the costs to day and movement in what are public assets are made clear to all. Lets start with these government to government deals - what are the real prices, to whom, how much did we really sell and when will we deliver?
Discussion 26 : 28/09/2012 at 08:35 AM
This is not a comment on this article but a question for posters. Does anyone have problems with the Post’s website? I access news sites for BBC, CNN, The Nation and my local Canadian paper. Of these the Post’s site is the slowest to open and regularly freezes during navigation between sections requiring me to close it then reopen it. None of the other sites ever give me this problem. I have twice advised the Post’s webmaster but have not had a reply. Comments or advice from users would be welcome.
Discussion 27 : 28/09/2012 at 08:30 AM
@bula Disc4: "The electorate will be the best judges ..." Agree. I will sign up the petition anytime. Can someone from Nida or TDRI inform us - the people - how we can join and affix our signature? Cost and benefit analysis of the scheme points to a negative end-result to the majority of Thai people. Contrary to the government's objective of helping the small farmers, it is the middlemen and the 'big farmers' that reap the profits.
Discussion 28 : 28/09/2012 at 08:25 AM
Too many people on the take for any scheme like this too work fairly and productively.
Discussion 29 : 28/09/2012 at 08:20 AM
The scheme is Thaksin's baby. He has never admitted making a mistake and can never back down from anything he's proposed. No matter that it's a failed scheme. His sister knows nothing but blind allegance to Him. Sorry folks, the program will continue, regardless of it's glaring flaws
Discussion 30 : 28/09/2012 at 08:15 AM
I wish I could send these so called academics to work in rice fields for a while, they may learn something.
Discussion 31 : 28/09/2012 at 08:10 AM
Eric D9: of course future will prove you right - because prices of everything go always up. For now, the government cannot even sell the rice at a break even price, hence loosing money paid by the taxpayer. If that money really went to the poor farmers, maybe the taxpayer could accept, but it goes into the pockets of some rich middleman and politicians and that is not acceptable. While tax payers and this group of academics support the idea of helping the poor farmers, PT governement supports middlemen and politicos - continue to applaud this if you like.
Discussion 32 : 28/09/2012 at 08:06 AM
@dickmery #10: That is one of the problems with Thaksin. He behaves like Thailand is his personal fiefdom and obviously he thinks he is entitled to gamble with Thailand’s money and its future. If his gamble works out then he personally will get the spoils, and if the gamble does not work then he obviously just made another honest mistake. The red voters don’t care and they will vote for him again. TiT
Discussion 33 : 28/09/2012 at 07:56 AM
Maybe the PT can explain to us taxpayers why we have to pay taxes so that many billions of baht is paid to the rice merchants and millers. Are they the poorest of the poor so they just deserve it or are they an endangered species or why? I guess also the poor farmers would be interested why the rice merchants and millers receive more than 12 times more money than the farmers who actually produced the rice. Maybe the BP and other media can start a campaign to report and photograph all these millers and merchants who obviously need our support so desperately.
Discussion 34 : 28/09/2012 at 07:50 AM
and the fugitive who is on the run boasted in BP it was his idea for rice nortgage,to manipulate the prices so we can make bigger profit,well to begin with you dont own the rice it doe\ belong to you ,if you want to gamble then use your own rice and you take the losses not the tax payers and as the acedemic petition it effect a free market and private rice broker, besides the millions dying of starvation.no indeed taxsin has a cold heart
Discussion 35 : 28/09/2012 at 07:45 AM
You can call this price pledging but it's still agricultural subsidy whereby government subsidy paid to formers to supplement their income is as common around the world as taxation. EU spend 39 Euro on direct subsidies and USA spend 20B per year as farm stabilization income. Corn is he biggest beneficiary as well as rice. Why must Thailand continue to subsidy the world on cheap rice while our farmers are trapped in poverty. I applaud the government for correcting a social injustice. And I am firm believer that rice price will go up, influence by the pledging and the scheme will be a success in the mid-term.
Discussion 36 : 28/09/2012 at 07:10 AM
D4 Bula; If you think a 100 billion baht loss is a 'success of the PTP' and that the taxpayer should put up with this because they people voted and the CC is politically motivated, then good luck with your country. I can see where all this is going; it will go before the courts, it will be described as politically motivated, painted by the reds of just another example of the elite trying to keep the poor hungry, when PTP are forced to finally climb down on this one, they will cite independent agencies once again interfering in the govt's power. If only someone could use the network of red villages to explain just how little of this money is ending up in the pockets of the poorest farmers.
Discussion 37 : 28/09/2012 at 07:09 AM
bula - "The oppositions are afraid of the successes of ptp led government. " By all accounts, this is a total failure. When 5% gets to it's intended target and 100 billion baht are lost, it is not a success, except in PTP's book and their fanboys.
Discussion 38 : 28/09/2012 at 06:58 AM
Another interesting piece but again it is presented without sufficient facts and sources to back it up, too many arguments presented are based on opinions and hearsay instead of cool facts, so back up the views. If they are correct and makes sense then then it will have an impact else it will just be archived with all the other ones of the same caliber. What I would like to know is exactly how much does this rice scheme cost, who benefits and what is the effect at the rest of the economy furthermore I would like to know what is the price to pay when not having a rice pledging scheme...and I am not interested in opinions but in cool numbers and tables and everything properly documented with sources etc ,that show exactly what happen, and until now I have seen neither.
Discussion 39 : 28/09/2012 at 06:53 AM
bula D4: the math is quite simple. If you spend more than you make, you loose. On an individual scale it results in headache, debts, loans you can't repay, hence more headache and more depts. On a national scale it results in bankruptcy like for example Greece. Aside that, if you read the article carefully, those academics have no objection to support the farmers, but they don't agree that only 5% goes really to the poor while the big junk is goind to the millers. I wonder how you can disagree with an effort that wants more of the cash to benefit those who really need it.
Discussion 40 : 28/09/2012 at 06:13 AM
The oppositions are afraid of the successes of ptp led government. The CC has been the adopted father of oppositions. Using managable challenges as excuses. The oppositions do not look at the full perspective of economy and the efforts to raise the quality of life of the currently 'poor'. The electorate will be the best judges on this not the 'appointed' judges of CC.
Discussion 41 : 28/09/2012 at 05:28 AM
5% to poor farmers. The poorer the individual, the more needy, the easier to be bought. Like everything else this mob is doing, shameful manipulation of the electorate to keep them in power to strip the countries coffers. The barbarians are through the gates.
Discussion 42 : 28/09/2012 at 04:47 AM
Great to hear that someone is finally seeking a Court injunction to stop this costly nonsense. The PTP has already clearly stated its intentions to undermine the power of the Courts, something that would be unthinkable in the West, so an ugly showdown is inevitable anyway. Considering the debt that is being incurred and the damage done, the sooner that comes, the better.
Discussion 43 : 28/09/2012 at 04:04 AM
The excuse from PTP/UDD fans will be that all of these academics are PAD members so it doesn't matter what they say. "The TDRI estimated that losses for the first year of the programme could reach more than 100 billion baht, based on current global prices and including storage and maintenance costs." "Only 5% of funds spent went to poor farmers, most of them in the Northeast." The bottom line is this scheme is a miserable failure in it's goal to help poor farmers, but a huge success in lining people's pockets. 100 billion baht. Wow.

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