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    Thai rice trade faces peril, tell the RED shirts please!!!!

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    Pat Angko

    Posts : 34
    Join date : 2012-03-29

    Thai rice trade faces peril, tell the RED shirts please!!!!

    Post by Pat Angko on 23rd April 2012, 9:52 am

    SPECIAL REPORT: Mortgage programme could endanger economy but Thaksin thinks not

    Published: 23/04/2012 at 02:22 AMNewspaper section:
    Experts are sounding warnings again about the government's rice mortgage policy, saying the scheme is ruining the local and overseas markets for Thai rice while creating a huge and unnecessary debt burden for the state.

    But former prime minister Thaksin Shinawatra, de facto leader of the ruling Pheu Thai Party, insists the policy benefits farmers and will not be scrapped.

    The rice mortgage scheme was a Pheu Thai campaign platform that helped push the party to victory in last year's general election.

    The Commerce Ministry set a historical high budget of 435.5 billion baht for the mortgage of the first crop of rice which went to market between Oct 7 last year to Feb 29. The sum, a quarter of the government's annual budget, was to pay for 25 million tonnes of rice that farmers were expected to pledge during the period.

    However, according to the Commerce Ministry, farmers actually pledged only 6.8 million tonnes of rice then.

    Nipon Puapongsakorn, chairman of the Thailand Development Research Institute (TDRI), told the Bangkok Post that the rice mortgage scheme would ruin the national economy.

    "The policy will cause several rounds of losses to the government because Thai rice is too expensive to compete. Now no one knows how the government can sell the rice or if the government will monopolise the rice trade and if this will ruin the rice trading system completely," he said.

    He warned that the government had set the mortgage price high, which would force it to borrow 112 billion baht to fund the mortgage of first-crop rice and 30 billion baht for second-crop rice.

    In March and April this year, the government borrowed 90 billion baht from the Bank for Agriculture and Agricultural Cooperatives, 30 billion baht from the Government Savings Bank and an undisclosed sum from Krung Thai Bank for the mortgage policy.

    Mr Nipon said the government was unnecessarily incurring debt.

    "Why should the government bear the loss instead of letting rice trade mechanisms function normally?" Mr Nipon said. "We would not be losing market share to Vietnam and India, and possibly to Myanmar in the future [if it weren't for the scheme].

    "We are destroying what our ancestors created in the past century: our championship over rice sales and the world's best-quality rice."

    He warned that the scheme would cause the price of milled rice to increase in a few months and there would be no rice available in local markets. Then the government would be forced to sell rice from its stocks, leading to a plunge in local rice prices.

    Apart from shaking Thai rice markets locally and overseas, Mr Nipon warned that the mortgage policy would force the government to serve as a rice trader engaged in government-to-government sales. That may put the government in violation of the constitution as the state would become a player in a private sector business.

    He also pointed out that government-to-government sales were prone to corruption and bribery and few such approaches remained in the world except in the Philippines and Indonesia.

    "As the government has no clear policy on rice sales, control of the trade rests with a few companies that do business with politicians in power and I believe that many exporters will be wiped out," Mr Nipon said.

    However, Thaksin insisted during an interview with the Bangkok Post that the rice mortgage policy with the set mortgage price of 15,000 baht a tonne for normal white rice and 20,000 baht for fragrant rice was the best solution for Thai farmers.

    "This policy cannot end. We want farmers who grow the rice we eat to survive. They should have their minimum income guaranteed so that they continue to grow rice for us," Thaksin said.

    He insisted the rice mortgage policy was better than the rice price insurance policy of the past Democrat-led government. He said that policy had benefited middlemen and the state had to pay compensation even to the farmers who grew rice for their own consumption.

    He admitted that the mortgage policy's high prices made Thai rice uncompetitive with rice from Vietnam and India but he said he had a way out.

    "There will not be any problem if exporters do not want to sell. The government can sell by itself. Many people want our rice," Thaksin said.

    A major rice exporter told the Bangkok Post on condition of anonymity that the government lacked efficient trade agencies as both the Public Warehouse Organisation and the Marketing Organisation for Farmers were failure-plagued state enterprises.

    Without efficient agencies for government-to-government exports, the government would hand its rice orders to exporters who paid bribes for the privilege, said the source.

    The exporter said that sales by the government amounted to only 260,870 tonnes out of total rice exports of 10.7 million tonnes last year.

    This year the Commerce Ministry predicts the government will receive orders for at least 2.5 million tonnes of rice from the Philippines and Indonesia. However, the exporter said both countries had ordered only some 700,000 tonnes during the 2008 food crisis.

    The rice mortgage scheme has raised rice prices by 40-50%. Consequently, exporters predict that the price of Thai fragrant rice in the world market will be at least US$755 (24,000 baht) a tonne.

    Although the rice mortgage policy has been in effect for six months, the actual price of rice in local markets stands at 9,900 baht a tonne for rice with 15% moisture content.

    In the previous first crop, the market price of fragrant rice remained at 13,000-13,500 baht a tonne compared with its mortgage price of 20,000 baht a tonne and the market price of ordinary rice ranged from 8,700 to 9,000 baht a tonne compared with its mortgage price of 15,000 baht per tonne.

    In the world rice market, Thailand must compete with a number of countries that produce rice of similar quality. Vietnam is also growing fragrant rice and India is selling its good basmati rice at a lower price.

    Thailand sells white rice 5% broken for $550 a tonne, Vietnam quotes it at $440, India at $445 and Pakistan at $470.

    Thai rice exports dropped 45% to 1.8 million tonnes between Jan 1 and April 18 from the same period last year.

    ====================================

    "but he said he had a way out." Yeah, like the BKK traffic jams hahaha Chinook helicopters to lift double parked cars of the streets. This man will say absolutely anything and no body contradicts him in his presence. He is surrounded by yes men and all he says or dictates is the holy gospel. I know from experience, I have been there and that was even before he entered politics. Embarassed Embarassed

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