Agricultural price supports

The Abhisit administration has put in place a true system of crop insurance and agricultural price supports. Payments to farmers used to be used as a system of "political booty" to gain voter support in elections.


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rice bags on truckAbout six years ago the government became a much bigger buyer of rice than it used to be.

Primarily for political gain, the government began offering prices for rice that were much higher than market prices in what became known as the rice "pledging" or "mortgage" scheme (See infographic below).

However, rice that ended up going to the government was mostly not grain owned by poor farmers but surplus output.

In the end, these agricultural price supports benefited rich farmers with large irrigation systems a lot more than they did poor farmers.

Providing social welfare benefits directly to poor farmers would have been a more efficient way to deal with the needs of poor farmers.

Those price support schemes for rice were also a potential threat to the long-run competitiveness of Thai rice on international markets.

High pledging prices weakened the capability of farmers to improve rice quality and caused the quality of rice to fall over time according to noted economist Ammar Siamwalla (See article).

Risk management tools such as put options were eventually put in place to help farmers manage risk and provide an insurance policy for rice prices.

Long-term strategies to raise crop yields and productivity and accelerate investment in research and development of crop varieties and breeds are also needed to upgrade competitiveness (Read IRRI report).

Vocabulary begins after infographic:

rice price support infographic

insurance - a system of protection against loss, a person pays money every month (premiums) for a guarantee that the company will pay them money if they or their property is damaged or lost (See Wikipedia) การประกันภัย
crop insurance - insurance protecting farmers against the loss of their crops due to natural disasters, such as drought and floods, or the loss of revenue due to declines in the prices of agricultural commodities (See Wikipedia) การประกันผลผลิตทางการเกษตร
booty -
valuables taken by soldiers, bandits, or robbers
political booty -
here means: money taken from the govedrnment and paid to people for political support
support - hold up, prevent from falling
price supports - government policy to prevent prices of certain goods from falling
agricultural price supports - the above market prices set by the government for a limited quantity of crops in price support programmes
primarily - the most important reason (but there are other reasons)
market prices - prices determined by the supply and demand of sellers (supply) and buyers (demand) in a market
pledge - promise to give something
price pledging programme - a price support programme, when the government purchases large quantities of rice at above market prices so as to guarantee farmers a price for their rice (price support systems as insurance against short-term price fluctuations should match long-term market prices, if they don't they are a subsidy and income redistribution, not price insurance)
mortgage - agreeing to hand over property to someone who lends you money if you do not pay the money back, a pledge of property to a creditor as security for the payment of a debt.
scheme - a plan that is developed by a government or large organisation in order to provide a particular service for people แผนการ โครงการ
grain - the seed from cereal crops such as rice, wheat, or corn เมล็ดพืช
surplus - an amount above the required or necessary amount
X benefited Y - person or group Y gained from X
irrigation - the process of bringing water to land through a system of pipes, ditches, etc. in order to make crops grow ระบบชลประทาน (See Wikipedia)
welfare - living in good conditions (with health, wealth, and happiness)
social welfare - help given, especially by the state or an organization, to people who need it; good care and living conditions สวัสดิภาพ
benefits - money, services, or goods you receive from a government or company programme เงินช่วยเหลือ
efficient - doing a task with no waste of time, money or energy

potential - possible ความเป็นไปได้
threat - a danger อันตราย
competitiveness - how well a business can do compared to other firms (does it have lower price or higher quality?) การแข่งขัน
international - across all countries, between countries ระหว่างประเทศ
capability - the ability to do something ความสามารถ
noted - famous, well-known 
improve - to make better ทำให้ดีขึ้น
derivative - an asset built on top of the value of another asset, its value is "derived" from the underlying asset (See Wikipedia)
options - the right to buy an asset at an agreed price at some date in the future, one type of derivative (See Wikipedia)
a put option -
the right to sell an asset at a particular price before a given date (See Wikipedia and explanation)
eventually - at the end of a period of time or at the end of a process ในที่สุด
put in place - create for the first time
risk - danger, how likely or possible it is for a bad event that causes harm and damage ความเสี่ยง
provide - to give someone something that they want or need
policy - a set of plans or action agreed on by a government, political party, business, or other group นโยบาย (See Wikipedia)

strategies - long-term plans for how to succeed in the future กลยุทธ
yields - how much crop a farmer gets from farming one hectare of land ผลผลิต
productivity - producing more for the same amount of resources (labour, capital, machines)
accelerate - go faster and faster , at an increasing rate, to cause to happen more quickly เร่ง
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
development - the gradual growth and formation of something
breeds - particular types of plants พันธุ์
upgrade - improve; make new, modern, and up-to-date

International Rice Research Institute (IRRI) -  rice research institute established in 1960 by the Ford and Rockefeller Foundations in cooperation with the Government of Philippine government, developed new breeds of rice and played an important role in starting the Green revolution (See website and Wikipedia)
Green Revolution - applied agricultural research in the 1960s that resulted in high yielding varieties of rice, maize, and wheat that allowed food production to keep pace with worldwide population growth (See Wikipedia)

Related search: rice, Thailand, agriculture

About the author

columnist
Writer: Jon Fernquest
Position: Online Writer