WHO actually enjoys the “rice money”
photo from Nation :
Caption : Farmers sleeping on a pedestrian flyover during
their protest in front of the Commerce Ministry in Bangkok
We have already tried just a little bit to look into the rice trade matter and how actually farmers are the losers in this game.
see the evidence of that in the article today : “Rice money could be better spent”
“Government’s price guarantee benefits middlemen not farmers; the focus should be on improved and sustainable productivity…
Several parties agree the pledging programme is not an ideal answer to help the farming sector. The government has spent more than Bt150 billion on price pledging but the programmes have done little to shore up agricultural prices in the long run. In fact, as it turns out, the middlemen and the rice millers have become the biggest beneficiaries of the programme, not the farmers.
Not many rice farmers are able to offer rice according to the requirements of the Commerce Ministry, which requires a certain moisture level in the rice, among other factors. In addition, only those farmers or rice millers with huge storage facilities or rice drying facilities are able to pledge their rice with the government. Very few ordinary farmers are able to meet these criteria.
The rice-pledging programme can have a psychological impact on the market by lifting the overall rice price, but only temporarily. The farmers themselves receive few benefits. Taxpayers’ money is thus not wisely spent on this scheme…
Even Commerce Minister Porntiva Nakasai has admitted that there are loopholes in the pledging programme. For instance, the scheme has led to the smuggling of rice from neighbouring countries such as Cambodia because rice prices there are much lower than in Thailand. Some traders know they can benefit from the differential between prices paid there and those guaranteed by the government here…
But Porntiva noted it was unlikely the government would be able to end the programme, especially as it is under greater political pressure from rice farmers due to the economic crisis. Some who have lost benefits have encouraged farmers to protest and to block the roads. [read also related articles here and here]
In spite of its short-term benefit, the rice-pledging programme often distorts the market. The distortion of local prices affects the competitiveness of Thai rice on the international market because exporters are forced to sell Thai rice at a much higher price as compared to our competitors from, for instance, Vietnam.
Even Prasit Boonchauy, chief of the Thai farmers’ association, said that what farmers really need are measures to help them in the longer term. The association would agree to the suspension of the rice-pledging programme if the government was able to offer supplementary measures to help farmers.
He added that, whatever measures the government may announce, any proposals should come from the mobilisation of ideas from all concerned parties. Otherwise,
the benefits from the pledging programme would continue to fall into the hands of the middlemen.
Future assistance measures should help farmers develop their productivity in a comprehensive manner, including the selection of rice strains, the increase of yields per rai, fertiliser supplies and, most importantly, irrigation systems. Vietnam has set a good example for developing rice production in a sustainable manner, and its yields per unit of land are now much better than Thailand’s.
Instead of focusing on price levels, the government should concentrate on how to help farmers reduce the cost of production.
The government has lost more than Bt20 billion from the rice-pledging programme. This sum of money should have been spent in other more sensible ways – to produce sustainable results that directly benefit farmers.
The agricultural sector is the backbone of the country and it should be preserved and nurtured. The best way to show gratitude to farmers is by helping them to flourish and to stand on their own feet. “
Related news reports, first one back in Dec 19th 2008, when Abhisit’s gov. was just formed (or in the process to be formed):
Thai Farmers Association’s Chairman Mr. Prasit Bunchoei (ประสิทธิ์ บุญเฉย) said on Wednesday (December 18) farmers wanted new Cabinet members with knowledge to solve the country’s problems, especially the new Minister of Agriculture and Cooperatives, who should understand Thai farming products’ production and commercial procedures.
Mr. Prasit suggested that the new Minister of Agriculture and Cooperatives should also support both research and development of farming goods, while promoting a participation of farmers to implement policy of farming affairs…
another article 5 months later :
BANGKOK, 13 May 2009 (NNT) – Chairman of the Thai Farmers Association Prasit Bunchoei agreed with the government’s introduction of agricultural product price guarantee instead of price pledging program. He said there should be no problems if it yielded benefits to farmers.
The government has adopted the price pledging program to temporarily solve agricultural product price problem. Mr. Prasit gave his full support to the initiative, while urging the government to take the introduction of agricultural product price guarantee into account and implement it without complicated process.
Mr. Prasit also advised the government to discuss the matter with all side prior to the introduction in order to effectively implement it. He admitted that the government’s current price pledging program still had loopholes as ill-intentioned people could take advantages from it.
Millers and traders though are asking gov. to lend more money :
Rice associations promise to buy rice from farmers, need borrowings
BANGKOK, May 8 (TNA) — Two powerful rice associations Wednesday pledged to buy rice from farmers and want the Thai government to ask banks to provide more lending, according to a senior Commerce Ministry official.
Yanyong Phuangrach, director-general of Internal Trade Department, said after a meeting with senior officials of the Thai Rice Millers Association (TRMA) and the Thai Farmers Association (TFA) that the two associations had promised to urge their members to purchase rice from growers.
The meeting was held following reports that rice millers had either refused to buy paddy rice or offered much lower buying price than the market price to the farmers. Representatives of TRMA said at the meeting that most millers now have large stocks of rice on hand and millers might face a problem of cash-flow in buying more rice from farmers. They said they needed the government help in asking financial institutions to provide additional loans to rice millers so that they would have enough money to buy rice.
TRMA representatives said it would be no problem for millers to buy paddy from farmers at around
Bt13,000 -14,000 per tonne if they have a sufficient cash-flow...
So, middle-men and millers are those who are the main players. government keeps the status quo of all its allies and patrons (middlemen/ brokers/ millers and conglomerates). the “requirements” are made in such a way that farmers can not meet them.
the solution seems to be quite simple: create a different system which would enable farmers to sell their rice DIRECTLY to government, or even to abroad wholesale buyers !
this would be a win-win situation for both farmers and gov. :
1) farmers will be better-off (since they’ll enjoy higher profits – not being pressed by middlemen to sell their produced by sweat and blood rice for the price of dirt)
2) government woould gain their tremendous support (if Abhisit and Dems care at all about winning the hearts of “majority” 😉 ) !
beside that, the whole country will benefit – because Thailand still IS “a rice bowl of Asia”, and it’s competiteveness now increasingly lost to Vietnam and others will greatly improve because prices would be LOWER than international market price (since the original price farmers sell it for are LOW), and yet farmers would still be able to get BETTER profits.
in the end – it is the WHOLE COUNTRY who benefits ! because Thailand would be able to sell ALL of its rice and even will be not enough – no losses on “double cross” (phrase used in the article), no need for government’s pledges programs, no need for storage (coz it will be sold out too fast !) ….
For that it would be necessary either to change those “requirements” all together (so that both farmers and gov. don’t depend on those middlemen and millers) OR perhaps facilitate farmers with their own means to ensure the sufficient quality of rice to meet those requirements. say, may be even state could build up those techincal facilities (as mills, storages etc – whatever middlemen have and farmers don’t) and provide the service to farmers for MUCH LOWER (ideally FREE) charge than all the blood-sucking middlemen. or may be it should be that Thai Farmers Union (or whatever it is called) which would be the owner of it, and gov. would provide the help (finansial, technical, subsidies etc).
ALL this is very possible and from the point of view of the most basic business understanding – it is THE ONLY logical thing to do !
however as usually there is big “BUT” here …
that is – IF the “middle-men” do not chew up the LARGEST chunk of the profits from this rice trade). and I bet those very “middle-men” are very coincidentally are those who are the local puyais, lobbists, and even MPs. or they keep all these people in their pocket. of course it is NOT gonna happen in nearest future, if ever. imagine the HUGE protests by PAD (since it IS actually the alliance of all those middle-men / middle-class blood-suckers) ! Abhisit would be finished off in a blink of eye.
here is another idea which might help to benefit farmers:
… Another consideration is the effect of contract farming on other groups in the country. We cannot escape the truth that if Thai farmers become more economically prosperous, some other groups in Thailand may suffer. The most affected group would be the local rice millers in areas where contract farming would occur. Another affected group would be the middlemen in rice industry who would inevitably be “cut out” of the business cycle. The last group affected would be the consumers who must pay higher prices for rice. Thus, contract farming must be limited to balance the needs of these interest groups with those of the farmers.
Allowing foreigners into the rice sector may be not be national betrayal, if the rules and mechanisms are properly set. Contract farming but benefit Thai farmers without endangering the national food supply.
so, finally THAT’S what is all about – millers and middlemen will NEVER allow Thai farmers to become prosperous !
another interesting idea is “Rice Bond” mentioned here (see comments)
this blog post shows the REALITY of the harvest and the prices:
” How much money do you get this time?” I asked. The money gained per one kwian was less than the guaranteed price set by the government. Oh-No! Calculating hours spent, labor cost, other investment, Lek looked quietly satisfied. The day of his harvest, no other expenses aside from the truck rent and the fuel costs. No farmers in the village went to Torkorsor (Bank for Agriculture and Agricultural Cooperatives) in order to get the government rice guaranteed price because its bureaucratic process would take them too long to get the financial assistance on time to pay for the debt and other costs.
This is one of the problems of the Thai farmers that Chai, Lek, Aew and Lek 2 are trying to tackle. I asked Lek of the cooperatives in the community, what they have been doing. He sighed and sighed again… ” I don’t know..“Lek’s story is realistic and realtime.
The profits the middleman made from farmers produce are huge. Otherwise, some of the millers children cannot get education abroad. C’est la vie!
elsewhere (comment #4) added:
lek lives very simple. with only 3000 baht a month, he survives there happily. but the truth is, if you count the investment like the labor cost per day per work, the water pipes, the equipment, diesel cost, milling cost, fertilisers, seeds, unpredictable problem solving cost day to day basis, other expenditures on rice farming… you will understand why most farmers are in huge debt. rice farming needs skill, knowledge and well-organized plan. plus care. lek won’t be able to leave his farm for more than a few days.
here is another article which is a bit more favorable to farmers, but critical of former Somchai’s gov.
this time though Dems gov. lead by Abhisit is not critisized much by media, even though the current government
is continuing the same prices pledging as Somchai and Samak did.
Instead of trying to find a long-term solution to help Thai farmers, the government has treated the rice policy as an immediate issue. It makes promises to farmers, hoping to score political points…
The middlemen are likely to make a profit from this programme because they will be able to buy rice for export at a cheap price.
Thai taxpayers may not mind if they have to subsidise farmers, the backbone of the country. However, the biggest beneficiaries from this scheme are the middlemen…
the government launched the rice-pledging programme, even though the programme has several flaws, and decided to open the bidding to sell rice to the government’s stockpile. Small farms don’t have many alternative products due to the recent flooding. The biggest beneficiaries are thus likely to be big farms or investors who have rice storage facilities.
In the meantime, the government should look at long-term solutions to help Thai farmers increase their capacity and stand on their own, instead of re-launching rice pledging programmes that have proven to be a failure.
The government should place the rice issue on the national agenda and look seriously for ways to boost the competitiveness of Thai farmers in a sustainable manner.
well, this time around critics are either silent or very shy to point this out to Abhisit, who continues doing the same as Somchai.
Interestingly, it is farmers who are blamed by Nation (March 4, 2009) :
The latest series of protests shows that Thai farmers cannot stand on their own two feet. They have been slow in developing and improving yields per rai and the quality of their products. As a result, most Thai farmers have failed to improve their competitiveness while our competitors are progressing…
Thai rice is sold at an unrealistically high price due to price distortion at home…
Over the past few years, Thai farmers have not only been complacent and failed to improve their yields, they have not developed new strains of Thai rice…
Instead of focusing on how to improve production in a sustainable manner, Thai farmers tend to ask for short-term price support measures from the government whenever they face sluggish rice prices at home. Politicians see this as an opportunity to spend quick money to increase their popularity, even though some price support measures are bad decisions…
so far, governments have tended to introduce short-term measures, which at times hurt farmers because they distort the market prices. An example is the domestic rice price support programme, which caused Thai rice export prices to escalate and thus made Thai rice non-competitive overseas…
Note that in this article there is no any critisism or even mentioning of the role middle-men are playing in this “price distortion” ! the author presents it in such a way that it is all farmers’ fault, and to some extent government’s. while government is actually elected and made of those very people who control this rice business (and other agri biz). of course government will continue to play along the interests of those people. and meanwhile farmers are actually those who are being blamed – cool, huh ? farmers, who must pay ever increasing prices for fertilizers, for fuel, borrow money for all that and for seeds, and being paid peanuts (current prices are what – around 12’000 Baht per 1 tonn? that means 12 Baht per 1kg). while middlemen prosper, get all the gov. loans, other benefits etc and ultimately rip the revenues for reselling rice to foreign bidders. and it is not gonna change in near future, if ever at all.
another related material. here is the website of “Thai Rice Exporters Association”
note that among its stated objectives (scroll down) there are non mentioned which are to benefit farmers – only traders themselves.
so, who are actually guys who rip the revenues of rice trade, while farmers get peanuts ?
here is the Board of Directors list of “Thai Rice Exporters Association” – 35 persons from biggest rice trading companies.
I think it is fair to say that these are the people who play the large role in Thai politics and “order the music” so to say.
one article published by Bkk Post 4 years ago back in 2005 (interesting article worth reading whole):
Suntorn Sihanern’s reward for discovering the world-famous strain of rice we call khao hom mali came to the princely sum of 500 baht… More than half a century has passed since he discovered jasmine rice and today Suntorn is living on a monthly pension of around 10,000 baht. Not a huge sum by any means but, being a frugal sort, the octogenarian says it’s enough to get by. He even has some funny anecdotes about his life since retirement. One day, a former American Peace Corps volunteer dropped by; he once worked with Suntorn during a posting in Chiang Mai. “He usually addresses me as Khun Por [Father]. And during his visit, he said to me: ‘Father, if you were in the US, you’d be enjoying a luxurious life now, just living off the bonus [royalties] with no need to work at all.’ “I replied that my country had already given me 500 baht. And that that was good enough. It’s a lot better than nothing.” At which point the old man gave a loud, hearty laughSuntorn Sihanern’s reward for discovering the world-famous strain of rice we call khao hom mali came to the princely sum of 500 baht… More than half a century has passed since he discovered jasmine rice and today Suntorn is living on a monthly pension of around 10,000 baht. Not a huge sum by any means but, being a frugal sort, the octogenarian says it’s enough to get by. He even has some funny anecdotes about his life since retirement. One day, a former American Peace Corps volunteer dropped by; he once worked with Suntorn during a posting in Chiang Mai. “He usually addresses me as Khun Por [Father]. And during his visit, he said to me: ‘Father, if you were in the US, you’d be enjoying a luxurious life now, just living off the bonus [royalties] with no need to work at all.’ “I replied that my country had already given me 500 baht. And that that was good enough. It’s a lot better than nothing.” At which point the old man gave a loud, hearty laugh.
well, what to speak about farmers, the actual producers of Thai rice.
read just a few other related blogs and posts (comments too) :
Thailand’s True Heroes (comm. 18, 21 are interesting)
Thailands rice (comm. 9, 10, 19, )
well, there are a lot of other opinions, ideas, discussion. but somehow most of them (if not all) are on blogs and forums, rarely reflected fully in Thai MSM.