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Rice Scheme Debate: Populist demagoguery or Helping the poorest?

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Rice bags Import

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.

Rice has always been the staple food of the Thai people, and it plays a crucial role as the essence of Thai life. Farmers transfer the knowledge of rice cultivation from one generation to the next. They enjoy a rich culture with centuries-old traditions linked with rice farming.

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.

Rice bags Import

Largely driven by lower expectations in China, FAO has cut its April forecast of global paddy production in 2011 by 1.5 million tonnes to 718.3 million tonnes (478.9 million tonnes, milled basis).

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.

8pm, Wednesday September 21, 2011
Foreign Correspondents’ Club of Thailand
Penthouse, Maneeya Center Building
518/5 Ploenchit Road (connected to the BTS Skytrain Chitlom station)
Patumwan, Bangkok 10330
Tel.: 02-652-0580-1
Fax: 02-652-0582
E-mail:  info@fccthai.com
Web Site:  http://www.fccthai.com

Economists examining the government’s rice policy have big questions on its chances of success.

Though there is no clear implementation plan, Commerce Minister Kittiratt Na-Ranong is betting that the pledging measure will manipulate rice prices in the global market.

The Commerce Ministry is set to start the rice-pledging scheme next month amid strong criticism by economists and rice exporters.

The government wants to raise the minimum price of white rice to Bt15,000 per tonne, so it has to build large stockpiles of rice from the 2011-12 crop and in later years.

Olarn Chaipravat, chief economic adviser of the Pheu Thai Party, was one of the key players behind the policy to revive the rice-pledging scheme. Olarn and Pheu Thai politicians believe that they can take advantage of the volatility of food prices in the global market by limiting supplies to boost rice prices.

The idea is to time releases of rice stocks into the market when it will bear the higher prices, similar to how investors speculate on the rise and fall of shares in the stock markets.

But some are pessimistic about the likelihood of success.

Pheu Thai, which leads the new coalition government, has often claimed that it is possible to manipulate rice prices just as the oil-exporting countries do with their product. But oil is not perishable: it can be held in reserve without deteriorating, while the quality of stockpiled rice declines over time.

The former government of Thaksin Shinawatra tried to form a rice cartel with Vietnam and other rice producers but failed, as Vietnam still offered rice at a much cheaper price than Thai products.

Largely driven by lower expectations in China, FAO has cut its April forecast of global paddy production in 2011 by 1.5 million tonnes to 718.3 million tonnes (478.9 million tonnes, milled basis).

The outlooks for Colombia, Nigeria and the United States also worsened, while they improved in Bangladesh, Egypt, Indonesia, Sierra Leone, Sri Lanka, Thailand and Viet Nam. At the revised forecast, world paddy production would be 17 million tonnes, or 2.5 percent, above the good 2010 outcome, striking a new record. The increase would arise from a 1.5 percent expansion of plantings to 164.7 million hectares and a 0.9 percent gain of yields to 4.37 tonnes per hectare.

Rice Market Monitor: FAO’s outlook for Asia remains favourable

 

Thai rice exports by country during 2551-2554.
Country
2551.
2552.
2553.
Jan-Jun 2553.
Jan-Jun 2554.
% Change
Asia
2,473,681.
1,763,635.
2,198,888.
1,222,566.
2,242,686.
83.4.
ASEAN
1,576,254.
828 142.
1,203,186.
750 352.
1,016,633.
35.5.
Cambodia
34,725.
42,667.
22 145.
13 194.
8216.
-37.7.
South Korea
67,343.
32,509.
51,784.
41,659.
63,210.
51.7.
North Korea
5613.
17.
676.
298.
809.
171.5.
Kazakhstan.
125.
40.
80.
China
249 483.
328 238.
264 207.
97,734.
157 668.
61.3.
Japan
213 291.
264 084.
283 675.
183 995.
191 696.
4.2.
Timor.
2896.
274.
528.
67.
240.
258.0.
Taiwan
31 412.
33,643.
25 761.
14 120.
16 894.
19.6.

 

Total
10,011,035.
8,592,830.
9,047,386.
4,026,406.
6,339,374.
57.4.
Of rice (Bt).
200 892.
171 719.
168 634.
78,536.
107 800.
37.3.
Of rice (M. US $).
6112.
5027.
5345.
2414.
3563.
47.6.
Private rice.
9,937,635.
8,592,830.
9,047,386.
4,026,406.
6,081,154.
51.0.
Government rice.
73,400.
258 220.
Unit: ton.
Source: The Thai Chamber of Commerce and the Bureau of Import Export.
Compiled by: Office of Trade grain and stock deal. Department of Foreign Trade

 

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