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Rice policy: Lucky so far

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Govt rice policy has improved livelihoods this year but prices far above market & losses likely if bet on rising prices lost, warehouses full plus rice quality issues. 



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Economics
ONE YEAR ON

Rice pledging scheme grilled

But government stands firm despite criticism
20/08/2012
Phusadee Arunmas

Rice, long the crown jewel of Thai exports, is fast slipping in world rankings where it led for three decades, and few blame it on floods or climate change.

All fingers seems to be pointing to the rice pledging programme, which offers farmers up to 15,000 baht a tonne for white rice paddy and 20,000 baht for Hom Mali, well above world market prices.

Critics of the programme point to the huge budget used by the programme, only to distort market mechanisms and put the country's rice exports in peril.

But the government declared the programme a success in improving the livelihoods of farmers and shoring up the grain's prices. It goes without saying that throughout the years that Thailand had led world rice exports, few of the benefits had trickled down to farmers.

Pheu Thai Party brought back the populist pledging scheme after it had been replaced by the income guarantee programme during the Abhisit Vejjajiva government. But this time, the bet is a lot larger than its predecessors ever placed.

The pledging prices are far higher than the market prices and no limit is set on the amount of grain the programme accepts. In other words, every single grain grown on Thai soil can be pledged with the government.

Commerce Minister Boonsong Teriyapirom believes that if it weren't for the programme, the average domestic market price of paddy would never have reached 11,000 baht a tonne this month, up 2,000 baht from a year earlier, helping pull millions of farmers out of poverty. The average export price of Thai rice from January to August this year also rose to US$678 a tonne from last year's $500 range.

But the big question mark now is how far it can go in this manner. With limited resources, how can the government keep intervening [in] farm prices at a time when commodity prices are hard hit by the anaemic global economy that has yet to show any sign of recovering? Critics also argue that once farmers are "spoiled", the only way pledging prices can go is up if a government wishes to maintain its popularity.

They also point out by accepting every grain regardless of quality, the government has created a moral hazard where farmers see no need to improve product quality and productivity, the key element to boosting competitiveness.

The government implemented the pledging scheme for main crop paddy of 2011/2012 on Oct 7 last year, taking in 6.97 million tonnes of unmilled rice in its stock. The programme for the second crop seamlessly took over from March 1 to Sept 15 this year. As of Aug 15, the scheme accepted 10.26 million tonnes of paddy.

Altogether, the government is now sitting on a total of 11.37 million tonnes of rice it cannot, or is unwilling to, sell because world prices are not high enough. Lacking the facilities or silos to keep the stock of this magnitude, the grain is kept by millers participating in the programme on behalf of the government, who in turns pays them for the service.

For the upcoming harvest season of the 2012/2013 main crop, the government has already prepared to continue the pledging scheme starting from October, with a plan to spend at least 260 billion baht, the same budget it used for the 2011/2012 crop year. However, it is possible that the required budget will be higher as production next year may be as high as 31 million tonnes.

The scheme is also tainted by loopholes for corruption and malpractice. Some participating millers, who are supposed to keep the rice until the government decides what to do with it, have reportedly sold the rice on the market or replaced the stock with grain of poorer quality. There is also the question of paddy smuggled from neighbouring countries to take advantage of the high pledging prices here.

With almost 100% of rice going to the government's stockpile at prices much higher than the global prices, Thai rice exporters barely have anything to sell. Their businesses have plummeted, having shipped only 3.45 million tonnes of rice in the first half of this year, down 45% year-on-year. Export value also dropped by 35% to $2.3 billion.

Even so, the Commerce Ministry is convinced of its ability to export 9 million tonnes of rice this year.

Academics are complaining that the price-intervention programme has been implemented without consideration for the consequences. They estimated that the government may face up to 100 billion baht in losses. They also reckon the stock will sooner or later have to be sold at a loss because the cost is roughly around $750 a tonne for white rice, while the world price of Thai 5% white rice stood at $585 a tonne on July 25 this year, up slightly from $527 year-on-year.

But from its perspective, the government believes the loss would be only 20 billion baht, lower than the 50-billion-baht deficit incurred by the income guarantee programme of its predecessor. It also stresses the programme has helped improve quality of life of 2 million households.

Commerce permanent secretary Yanyong Phuangrach defended the scheme, saying it benefited farmers and shored up the prices of Thai rice both at home and abroad.

"If you want to see how much such increases are, you have to multiply the export volume with the price gain from last year. This is different from the income guarantee scheme that did nothing to push up the global prices of Thai rice," he said.

In recent weeks, luck seems to be on the government's side. Global rice prices are back on the upward trend due to the drought in the US and India but the government is unlikely to unload its stock, waiting for the prices to go higher.

Nipon Puapongsakorn, president of the Thailand Development Research Institute, suggested the government release the stock gradually and transparently and stop selling it when domestic paddy prices drop.

He urged the government to let the private sector do the trading. More importantly, he warned of the danger stemming from market timing and price speculation because even though the prices may increase, expenses and losses incurred by deteriorated quality may fail to offset the gain.

He suggested the government focus instead on improving the rice quality in the long term as the country cannot count on quantity when the prices are not competitive.

Besides paddy, the government has also intervened the prices of other farm crops such as tapioca, shrimp, rubber, pineapple, maize, red shallot and some fruits.

(Source: Bangkok Post, Economics, ONE YEAR ON, Rice pledging scheme grilled, But govenment stands firm despite criticism, 20/08/2012, Phusadee Arunmas, link


Rice Policy Vocabulary

scheme - a plan that is developed by a government or large organisation in order to provide a particular service for people แผนการ โครงการ
rice pledging scheme - the governent program to buy rice from farmers (and protect them from price and  income changes)
rice pledging programme


lucky so far - up to now lucky, but in the future not sure

grilled - 1. to ask a lot of difficult questions about something (example: grill the job candidate with difficult questions); 2. cook with very strong heat underneath, with a flame underneath ย่าง
rice pledging scheme grilled - difficult questions asked about the government rice price support system

stands firm - will not change decision (after it has made a decision) ; will not change mind about something (even when people try to change your mind)
criticism - finding and showing things that are wrong with something
stands firm despite criticism

but government stands firm despite criticism

crown jewel - 1. something very visible that a country is proud of; 2. a valuable stone such as a diamond, sapphire or ruby that the royal family of a country owns

rankings - a list with the best first and the worst last
slipping in world rankings - fall in world rankings

decades - periods of ten years เป็นสิบๆปี

blame - say that the problem was caused by them ถูกตราหน้า
few blame it on floods

climate - the general weather conditions usually found in a particular place สภาพอากาศ
climate change - more extremes in rain, flooding, lack of rain and drought around the world; global warming due to chemicals put into the atmosphere by humans

Rice, long the crown jewel of Thai exports, is fast slipping in world rankings where it led for three decades, and few blame it on floods or climate change.

fingers pointing to .. - people are blaming .... ; blame has been assigned to ....
all fingers seem to be pointing to

rice paddy
- rice after it has been harvested from the field ข้าวเปลือก

well above - far above
well above world market prices

All fingers seem to be pointing to the rice pledging programme, which offers farmers up to 15,000 baht a tonne for white rice paddy and 20,000 baht for Hom Mali, well above world market prices.

critics - people who find faults and problems with something
critics of the programme point to

budget
- the plan for spending during a period of time within a company or organization งบประมาณ (See Wikipedia)
the huge budget used by the programme,

distort - describe in a false and untrue way, not the way it should be
distort market mechanisms

in peril - in great danger ภัยอันตราย
put the country's rice exports in peril

Critics of the programme point to the huge budget used by the programme, only to distort market mechanisms and put the country's rice exports in peril.

livelihoods - ways to earn money to support a family (See glossary)
improving the livelihoods of farmers

shoring up the grain's prices
- keeping prices at current level or higher (preventing them from falling)

It goes without saying that ... - it is obvious and does not have to be explained ...

trickle down - when some benefit received by rich people or companies, in the end is a benefit to the poor too

benefits - goods things that can happen from anm activity ผลประโยชน์
few of the benefits had trickled down to farmers.

But the government declared the programme a success in improving the livelihoods of farmers and shoring up the grain's prices. It goes without saying that throughout the years that Thailand had led world rice exports, few of the benefits had trickled down to farmers.

populist - a politician who claims to care about the interests and opinion of ordinary people
the populist pledging scheme

income - money that people receive from work or some other source, used for household consumption and savings
guarantee - a promise that something will be done or will happen for sure คำรับรอง, การประกัน (See glossary)
income guarantee programme

predecessors - people who came before you in the same position

place a bet
- make a bet, gamble money on the outcome of some future event
the bet is a lot larger than its predecessors ever placed

Pheu Thai Party brought back the populist pledging scheme after it had been replaced by the income guarantee programme during the Abhisit Vejjajiva government. But this time, the bet is a lot larger than its predecessors ever placed.

limit - a highest or lowest amount
no limit is set on the amount of grain the programme accepts

grain - the seed from cereal crops such as rice, wheat, or corn เมล็ดพืช
pledged - 1. bought by the government in the rice pledging program; 2. seriously promised to do something สาบาน
every single grain grown on Thai soil can be pledged with the government.

The pledging prices are far higher than the market prices and no limit is set on the amount of grain the programme accepts. In other words, every single grain grown on Thai soil can be pledged with the government.

domestic - within the country ภายในประเทศ
domestic price
domestic market price
domestic market price of paddy

poverty - the condition of being extremely poor ความจน
pull out of poverty

helping pull millions of farmers out of poverty

range - 1. all the numbers from one number to another (e.g. a price in the range from $1 to $5); 2. all the numbers around one number (e.g. around the $500 range)
rose to US$678 a tonne from last year's $500 range.

Commerce Minister Boonsong Teriyapirom believes that if it weren't for the programme, the average domestic market price of paddy would never have reached 11,000 baht a tonne this month, up 2,000 baht from a year earlier, helping pull millions of farmers out of poverty. The average export price of Thai rice from January to August this year also rose to US$678 a tonne from last year's $500 range.

the big question mark now is ...

manner - way วิธีการ
how far it can go in this manner

resources - things such as money, workers and equipment that can be used to help get work done ทรัพยากร
with limited resources

government intervening in farm prices

anaemic - weak; lacking strength
global - throughout the world ทั่วโลก
anaemic global economy

has yet to show any sign of recovering

spoiled -
when a child is treated too well and then behaves badly

maintain - keep in good condition รักษา
maintain its popularity.

But the big question mark now is how far it can go in this manner. With limited resources, how can the government keep intervening [in] farm prices at a time when commodity prices are hard hit by the anaemic global economy that has yet to show any sign of recovering? Critics also argue that once farmers are "spoiled", the only way pledging prices can go is up if a government wishes to maintain its popularity.

grain - one piece of rice or wheat or other "grain"
accepting every grain regardless of quality

hazard
- something that is dangerous and likely to cause damage สิ่งที่เป็นอันตราย
moral hazard - when people are more likely to take risks and make bad decisions because they are protected against bad outcomes by insurance, for example (See Wikipedia)

improve
- to make better ทำให้ดีขึ้น
productivity - producing more with the same amount of resources and inputs (labour, energy, machines, etc) การผลิตสินค้า
improve productivity

farmers see no need to improve product quality and productivity

key - important คนสำคัญ
boosting - increasing เพิ่ม

competitiveness
- how well a business can do compared to other firms (does it have lower price or higher quality? able to maintain or gain customers in a market?) การแข่งขัน

the key element to boosting competitiveness

They also point out by accepting every grain regardless of quality, the government has created a moral hazard where farmers see no need to improve product quality and productivity, the key element to boosting competitiveness.

implemented - when a plan is put into action, actually doing the things in a plan
implemented the pledging scheme

stock
- an amount of something that you keep so that you can use it when you need it ที่เก็บไว้ในสต๊อก
6.97 million tonnes of unmilled rice in its stock

seamlessly took over
seamless - connected together (without being able to see the connection)

The government implemented the pledging scheme for main crop paddy of 2011/2012 on Oct 7 last year, taking in 6.97 million tonnes of unmilled rice in its stock. The programme for the second crop seamlessly took over from March 1 to Sept 15 this year. As of Aug 15, the scheme accepted 10.26 million tonnes of paddy.

sitting on - currently has or owns; has in its possession; in inventory
the government is now sitting on a total of 11.37 million tonnes of rice

facilities
- the buildings, equipment and services provided for an activity สิ่งอำนวยความสะดวก  สถานที่และสิ่งอำนวยความสะดวก
silos - tall structures for storing large amounts of agricultural products (rice, grain) (See Wikipedia)

magnitude
- size or strength ขนาดหรือ ความรุนแรง size, either great or small ขนาด,ความใหญ่,ความสำคัญ
lacking the facilities or silos to keep the stock of this magnitude

participating millers -
rice millers that are part of the government program
the grain is kept by millers participating in the programme on behalf of the government

Altogether, the government is now sitting on a total of 11.37 million tonnes of rice it cannot, or is unwillng to, sell because world prices are not high enough. Lacking the facilities or silos to keep the stock of this magnitude, the grain is kept by millers participating in the programme on behalf of the government, who in turns pays them for the service.

upcoming - will happen soon ที่กำลังจะมาถึง
harvest - gathering fully grown crops from the field เก็บเกี่ยว การเก็บเกี่ยวผลผลิต
upcoming harvest

For the upcoming harvest season of the 2012/2013 main crop, the government has already prepared to continue the pledging scheme starting from October, with a plan to spend at least 260 billion baht, the same budget it used for the 2011/2012 crop year. However, it is possible that the required budget will be higher as production next year may be as high as 31 million tonnes.

tainted - spoiled by an unpleasant quality or feature มัวหมอง มีมลทิน แปดเปื้อน
loopholes - ways to get around a law, while still following the law; legal ways to avoid or go around a law; imperfections in a law that allow people to avoid the law
tainted by loopholes

corruption
- (See Wikipedia on bribery, corporate corruption, and political corruption)
malpractice - making mistakes, not doing things the right way (out of negligence, not being careful enough)

smuggled
- bring goods into a country secretly and illegally
paddy smuggled from neighbouring countries

advantage
- a condition giving a greater chance of success ความได้เปรียบ
take advantage of

The scheme is also tainted by loopholes for corruption and malpractice. Some participating millers, who are supposed to keep the rice until the government decides what to do with it, have reportedly sold the rice on the market or replaced the stock with grain of poorer quality. There is also the question of paddy smuggled from neighbouring countries to take advantage of the high pledging prices here.

stockpile - large quantities of goods stored for future use คลังสินค้า จำนวนสินค้าที่เก็บตุนไว้เป็นจำนวนมาก
rice stockpile
the government's rice stockpile

barely
- almost not happening แทบไม่เคยเกิดขึ้น
barely have anything to sell

plummeted - fall by a large amount suddenly (ราคา) ที่ร่วง หรือลดลงมากอย่างรวดเร็ว
business has plummeted

convinced of - certain; sure about ...  แน่ใจ, มั่นใจ

With almost 100% of rice going to the government's stockpile at prices much higher than the global prices, Thai rice exporters barely have anything to sell. Their businesses have plummeted, having shipped only 3.45 million tonnes of rice in the first half of this year, down 45% year-on-year. Export value also dropped by 35% to $2.3 billion. Even so, the Commerce Ministry is convinced of its ability to export 9 million tonnes of rice this year.

intervention - becoming involved in a situation and trying to change it การแทรกแซง
price-intervention programme - when the government buys and sells in a market (trying to change prices)

consideration - giving careful thought to something before making a decision
consequences - the things that happen as a result of a decision or event

implemented without consideration
for the consequences.

reckon ... -
believe ... (based on a calculation or skilled analysis)

Academics are complaining that the price-intervention programme has been implemented without consideration for the consequences. They estimated that the government may face up to 100 billion baht in losses. They also reckon the stock will sooner or later have to be sold at a loss because the cost is roughly around $750 a tonne for white rice, while the world price of Thai 5% white rice stood at $585 a tonne on July 25 this year, up slightly from $527 year-on-year.

perspective - an opinion or view on an issue; a way of thinking about things influenced by personal experience and beliefs มุมมอง ทัศนะ ทัศนคติ
But from its perspective, ...

deficit - when money spent (going out) is greater than revenues (taxes coming in); when you spend more than you receive (has to be financed or funded by borrowing); not enough income to cover expenses (have to borrow to cover deficit)
incur - meaning: a negative loss of money for a company (examples: incur a debt, incur a loss, etc)

the 50-billion-baht deficit incurred by the income guarantee programme

predecessor
- the person who had a job or official position before someone else ผู้ที่ดำรงตำแหน่งก่อนหน้านี้

households
- families or groups of people living together (economics treats this as a unit that makes decisions)
helped improve quality of life of 2 million households.

volume - the quantity or amount of something
export volume

multiply - to increase เพิ่มจำนวน
multiply the export volume with the price gain from last year

But from its perspective, the government believes the loss would be only 20 billion baht, lower than the 50-billion-baht deficit incurred by the income guarantee programme of its predecessor. It also stresses the programme has helped improve quality of life of 2 million households. Commerce permanent secretary Yanyong Phuangrach defended the scheme, saying it benefited farmers and shored up the prices of Thai rice both at home and abroad. "If you want to see how much such increases are, you have to multiply the export volume with the price gain from last year. This is different from the income guarantee scheme that did nothing to push up the global prices of Thai rice," he said.

trend - a gradual change or development that produces a particular result ทิศทาง แนวโน้ม
upward trend

drought - a period of time when there is very little rain and water available ความแห้งแล้ง  (See Wikipedia)
the drought in the US and India

unload its stock - sell the amounts of a good or commodity that it is storing  
release - allowing someone to go free การปล่อยตัว to allow a substance to flow out from somewhere ปล่อย ปล่อยเป็นอิสระ

transparently
- openly; having nothing hidden or secret อย่างโปร่งใส
release the stock gradually and transparently

In recent weeks, luck seems to be on the government's side. Global rice prices are back on the upward trend due to the drought in the US and India but the government is likely to unload its stock, waiting for the prices to go higher. Nipon Puapongsakorn, president of the Thailand Development Research Institute, suggested the government release the stock gradually and transparently and stop selling it when domestic paddy prices drop.

urged - requested them to do, advised someone very strongly about what action should be taken วิงวอน

sector - a part of the economy ภาคเศรษฐกิจของประเทศ (public sector = government, private sector = all businesses, household sector = families and consumers, banking sector,...) (See Wikipedia)
private sector - all the businesses in a country (owned by people, not the government)
public sector - the government

urged the government to let the private sector do the trading

price speculation - buying an asset hoping that its price will go up and you will make money, it could go down with a loss of money, assuming the risk of loss in return for the uncertain possibility of a reward (See Wikipedia)
stemming from - caused by, coming from

warned of the danger stemming from price speculation

deteriorated - became worse ทรุดโทรม, เสื่อมโทรม, เลวลง, ชำรุด
deteriorated quality

offset - move in the opposite direction, reduce by moving in the opposite direction, counter-balance, compensate in the opposite direction ("x offsets y" means "x reduces the effect of y"), make up for (profits from the manufacturing business offset losses from the retail business) (See glossary)

deteriorated quality may fail to offset the gain.

focus - be concerned with one main thing ให้ความสำคัญ
count on - rely on, depend on (it needs this for its plans to succeed)

cannot count on quantity when the prices are not competitive

competitive - involving competition มีการแข่งขัน

He urged the government to let the private sector do the trading. More importantly, he warned of the danger stemming from market timing and price speculation because even though the prices may increase, expenses and losses incurred by deteriorated quality may fail to offset the gain. He suggested the government focus instead on improving the rice quality in the long term as the country cannot count on quantity when the prices are not competitive.

intervened - became involved in an activity (to solve problems and fix things)
intervened in the prices of other farm crops

tapioca
- cassava, an important food source of carbohydrates, also source of ethanol car fuel (See Wikipedia) มันสำปะหลัง

maize
- corn ข้าวโพด (See Wikipedia)
red shallot - a kind of red onion (See Wikipedia)

Besides paddy, the government has also intervened in the prices of other farm crops such as tapioca, shrimp, rubber, pineapple, maize, red shallot and some fruits.


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