The decision is made. Minister Boonsong Teriyapirom (Trade) has finally said what everyone already knew he had to say. The government, he said Friday, will sell millions of tons of rice from the country's overcrowded warehouses.
She will try to sell the rice to foreign governments and auction it domestically. What he didn't say, but everyone also knows: the population pays the bill.
The time could not have been more unfavorable, because the price on the world market is constantly falling. Two years ago, a ton of rice sold for $371, compared to $315 last week, or 15 percent less. And that's still an average price; not what Thailand receives. In some cases it gets more. Khao hom mali, the famous Thai jasmine rice, catches considerably more and is by far the best-selling imported rice in North America. But ordinary rice will have to be sold below the world average.
An economist from the International Rice Research Institute in the Philippines says two things openly that should also be said in Thailand. First, the government will have to subsidize its foreign sales. If she doesn't, nothing will be sold. Second, Thai sales will further weaken world prices. All major rice-producing countries already have surpluses, so Thai sales will further depress prices.
The government has maneuvered itself into an impossible position with the mortgage system. When she changes the system [read: farmers pay less than 15.000 baht for a ton of white rice and 20.000 baht for Hom Mali; prices 40 percent above market prices], the peasants who helped put the current government in power will revolt. If it subsidizes exports, it will face lawsuits from other rice exporting countries and the World Trade Organization. And in the end, the Thai taxpayer is screwed.
(The text above is a summary of the editorial of bangkok mail, April 8, 2013)
According to some insiders, the following scenario is also conceivable:
The Thai government donates rice to poor(er) countries in Asia as part of development aid. The regular rice price (whatever it may be) is taken as revenue and deducted from the budget for development aid.
A win-win situation for the Thais because the rice mountain is less so and the yield is still acceptable.
But the downside is that developing countries receive less on balance.
This resembles what we have been doing in Europe since the beginning of the EEC, subsidizing agriculture,
Who doesn't know the butter mountains, the milk lakes and so on (and the cold store butter that was sold at ramsj prices at Christmas in the 60s).
The largest part of the EU budget still goes to agricultural subsidies.
So, nothing new under the sun.
Greetings
anton
@ Anton The mortgage system for rice has become a subsidy system under the current government, but that is not the intention of the system. In my article 'The mortgage system for rice in Q&A' on my website I write the following about it:
Is the mortgage system a bad system?
No, not in itself. At the beginning of the harvest season, the price of rice goes down because farmers want to sell their rice as soon as possible in order to pay off their debts and have money for festivities during Buddhist Lent. It makes sense that with a large supply and constant demand, the price offered by traders drops.
For this reason, previous governments (with the exception of Thaksin in 2004) have set the mortgage price slightly above the market price. After the middle of the harvest season or towards the end, the price goes up and then farmers can buy back the mortgaged rice with a small interest and sell it on the market for a nice profit.
The current Pheu Thai government has overturned the original intent of the system by offering prices 40 percent above market prices. There is no chance of the market price exceeding the mortgage price and no farmer is stupid enough to buy back his rice and sell it on the open market at a loss. (Bangkok Post, October 13, 2012)