Rice politics and the death of Thai farmers

Rice politics and the death of Thai farmers

Hardest hit of all in the rice-price crisis are the small-size farmers. (Post Today photo)
Hardest hit of all in the rice-price crisis are the small-size farmers. (Post Today photo)

The latest dramatic fall in the price of rice could not have come at a worse time for Prime Minister Prayut Chan-o-cha.

As his government has sought 35 billion baht in compensation from ousted prime minister Yingluck Shinawatra for losses allegedly caused by her government's rice-pledging scheme, prices of rice paddy have been falling to five baht per kilogramme -- the lowest in decades.

Farmers are feeling the pinch. In a video clip which has gone rival since late last week, Suphan Khampimai, a rice farmer from Nakhon Ratchasima issues a plea for Gen Prayut to rescue farmers. The clip sparked a rallying cry from rice farmers across the nation. The government was forced to respond with a price support measure.

Meanwhile, the government last week issued an administrative order demanding Ms. Yingluck pay a 20% portion of the alleged total loss.

Suranand Vejjajiva was secretary-general to the prime minister during the Yingluck Shinawatra government and is now a political analyst.

In parallel, a criminal case against the ousted premier is with the Supreme Court's Criminal Division for Political Office-Holders. If found guilty, she could face a jail sentence and a lifetime political ban. Legal battles in the next few months will be intriguing and have wide political repercussions.

Under its rice-pledging scheme, the Yingluck administration procured rice from farmers at the inflated price of 15,000 baht a tonne. Now without such a subsidy, rice farmers bear the brunt of selling their rice at actual market prices which fell to 8,000-9,000 baht a tonne before hitting the decades-low point of 5,000 baht.

Since the economy is still in the doldrums, the government does not want to see widespread protests by rice farmers which could spill over into other sectors. And it certainly would not want the discontent to turn into renewed political support for Ms Yingluck ahead of the Supreme Court's ruling in June next year and the scheduled general election at the end of 2017.

Historically, the plight of Thai rice farmers is commonly known. It has resulted from decades of price subsidies of various forms which were subsequently politicised. A few words in this article will never be able to cover the extent of the problem. But this is my take on the issue as it now stands.

Small-scale farmers drew the short end of the deal. Most of them are indebted at the beginning of the growing season as they have to pay for seeds, fertilisers and other costs.

The financial burden is worse for those who have their land mortgaged to local businessmen. They live at bare subsistence levels. Following the harvest, prices are set by rice millers who have various techniques and tricks to lower their buying prices and increase their profit margins.

Thai rice exports go through five large corporations, known as the "Five Tigers". Collusion in various deals is common in the rice trade. Profits are divided between rice millers, exporters and distributors. Farmers can expect to make barely above the basic minimum.

Several governments had their own farm subsidy programmes which went under different names. From subsidies to price support, price guarantees to pledging, credit schemes to debt moratorium -- all have been tried. But the bottom line is that farmers are still short changed.

Nonetheless, there are changes in some quarters.

Farmers who grow high-value jasmine rice can demand higher prices, especially when they have negotiating power through organised farmers' groups or cooperatives. The rest are those producing rice of good enough quality, purposed for mass domestic markets and exports, who essentially end up as price takers.

The Yingluck government's subsidy scheme was appealing to farmers because it put cash directly into their hands. With the pledged price of 15,000 baht a tonne against the fluctuating market price of around 8,000-10,000, the programme gave farmers extra income that they could use to reinvest and clear their debts.

Overall, it stimulated local spending that contributed to national economic growth.

Of course, the policy had its flaws when it came to implementation, especially in the way the Commerce Ministry handled the sales of rice in stock. Clashing interests among rice millers, traders, exporters and agriculture conglomerates who control wholesale and retail distribution channels put a curse on the scheme.

Even Ms Yingluck knew that the scheme would not last forever. Towards the end of her administration, an "agriculture zoning" programme was designed for all farm products including rice. It aimed to designate certain farming areas for specific economic crops to boost productivity and command certain prices with minimum interference and adjustments. It was planned to be a managed market mechanism to balance supply and demand. Unfortunately, it was a long-term solution cut short by the coup.

Price supports and subsidies are just short-term measures which are usually politicised to satisfy political constituents. The current government's idea to pledge rice at barn as proposed by the National Rice Committee is no different from Ms Yingluck's scheme -- an effort to resolve the immediate predicament which is not a sustainable solution.

Putting politics aside, there is the need for a long-term solution to fundamentally change the way things are in the agriculture sector.

The current government, who may not have a political stake in the upcoming election, should come up with a comprehensive strategy for the sector to bring about domestic food security and ensure steady farmer incomes from exports.

One possible measure to consider is agriculture zoning that applies GPS mapping to lay out land use for different purposes such as preservation of forests and upstream water resources, and prevention of floods and drought.

But zoning takes time. Income supplement schemes are needed to support farmers as they try growing new economic crops.

The government should support farmers who are determined to get together to do their own milling, packaging and selling. Distribution channels must be opened for them. They should have access to modern storage facilities, so they do not have to depend on barns which are are susceptible to damage and waste, or rice mills that require them to pay storage fees.

Thailand's antitrust and anti-monopoly laws are not viable. They should be implemented to break the stranglehold by the middlemen and conglomerates.

More importantly, farmers' lives should no longer be politicised. Even though they are the backbone of the country, they have been choked by the politics of vested interests.

Suranand Vejjajiva

Former secretary-general to the prime minister

Suranand Vejjajiva was secretary-general to the prime minister during the Yingluck Shinawatra government and is now a political analyst.

Email : info@bangkokvoice.com

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