About agriculture

With dealings between millers, exporters & government invisible to public, rice industry corruption seems likely but also impossible to prove.

Click button to listen to Rice Corruption to download

Economics
MORTGAGE SCHEME

Fears of rice fraud rise

Boonsong vows to pursue any anomalies
1/05/2012
Phusadee Arunmas

The government's high benchmark prices under the rice mortgage scheme have resulted in widespread corruption by participating mills, potentially devastating Thailand's reputation as a quality rice exporter, industry executives say.

Colluding rice mills are reportedly taking the cheaper Pathum Thani and Phitsanulok varieties and mixing them with more expensive Hom Mali rice stored on behalf of the government, then passing off the rice as 100% Hom Mali.

This is due to the fact that the rice mortgage scheme, which offers up to 20,000 baht per tonne of Hom Mali paddy rice, has been intentionally structured to pay above-market rates under a government policy aimed at boosting farm income.

"The mortgage programme has resulted in massive corruption," one rice industry executive said privately.

The fact that the mortgage price is significantly higher than market prices has created a gap that unscrupulous people in the trade can easily exploit.

Rice mills can accept paddy pledged under the rice scheme and "turn" the same rice to receive additional payments under new pledges.

Such corruption is possible because the government depends on private rice mills to store rice on its behalf. Collusion also involves officials of the Public Warehouse Organisation and surveyors responsible for monitoring rice pledged to government stocks.

Another form of corruption involves falsifying inventory records, whereby a rice mill sells off government rice to packers or exporters to take advantage of favourable market conditions. The mill later purchases rice from other sources to return to storage when the government recalls the shipment.

Mixing lower-grade rice is another way to cheat the system. A rice mill holding Hom Mali rice for the government may sell the rice off and later purchase lower-grade rice to return to storage, thus pocketing the difference.

"We're seeing shortages in Pathum Thani rice in the market for this very reason," the executive said. "Now some are even moving to use Phitsanulok rice for mixing, as it's a long-grain rice quite similar to Hom Mali, but only lacks the jasmine smell.

Monitoring government rice stocks and catching fraud is a difficult task, as rice mills can always present quality rice during inspection times but manipulate inventories as soon as official inspectors leave.

Industry executives suggest that state officials modernise their monitoring systems to include DNA testing to ensure the integrity and quality of government stockpiles. Officials currently rely on traditional methods of cooking rice samples to check each shipment.

"When Kittiratt Na-Ranong was commerce minister, he said DNA testing machines would be purchased for use in the inspection process. That's all gone quiet now," one executive said.

Commerce Minister Boonsong Teriyapirom categorically denied allegations of politically related corruption in the rice trade. 

He said any parties found to have manipulated or falsified government stockpiles would be subject to criminal charges. 

"The Commerce Ministry just last month asked a team of investigators from the Department of Special Investigation to help inspect the government rice stockpiles, and there was no report of any irregularities," Mr Boonsong said.

He called on any parties with knowledge of corruption or theft to give the information to the Commerce Ministry for further action, adding that the DNA inspection scheme was still in process.

Mr Kittiratt, now the finance minister, insisted that the rice mortgage scheme was beneficial for farmers.

He said government policy is to sell its rice holdings at cost, or if necessary, a slight loss, to achieve its overall goal of pushing prices higher.

Under the rice mortgage system, farmers may borrow funds from the Bank for Agriculture and Agricultural Cooperatives by pledging their rice harvest as collateral at the benchmark price. Repayment may be made in cash, or more commonly by essentially allowing the government to claim the rice to clear the debt.

The process, long used by Thailand as an indirect subsidy for farmers, was changed during the Abhisit Vejjajiva government, which offered price guarantees that compensated farmers if rice prices fell below set benchmarks.

Critics of the mortgage scheme argue that the programme wildly distorts market prices, involves massive use of taxpayer funds and is open to abuse by rice mills who act as intermediaries between farmers and the state.

The government got 6.8 million tonnes of paddy under the mortgage programme during the first rice crop starting last November, and a further 4.9 million tonnes under the second crop harvested from March to April.

Officials predict that total pledges under the second crop could reach 6 million tonnes, resulting in 13 million tonnes of paddy (about 8 million tonnes of finished rice) owned by the government this year.

The government, meanwhile, regularly sells off rice stocks to private exporters and packagers, a process that experts say lacks transparency and is open to abuse.

"No one knows when the government sells off its rice stocks or at what price the sale is done at. It's not right," one executive said.

Other officials are upset that Siam Indica, a subsidiary of President Agri Trading, reportedly told overseas buyers that it could procure as much Thai rice as needed but failed to fulfil the delivery.

President Agri has a chequered past in the rice trade, including backing out of a 1.7-million-tonne bid in 2004 and accusations of fraud and embezzlement over 30,000 tonnes of rice in 2007.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, declined to comment directly about corruption allegations in the rice trade.

He said rice exports in the first quarter fell 33% year-on-year to 33 billion baht. In volume terms, rice exports in the first quarter totalled 1.48 million tonnes, down 48% from the same period last year.

According to the latest US Department of Agriculture estimates, Thailand is projected to export 6.5 million tonnes of rice this year, with Vietnam and India set to pass the country as the world's top rice exporters at about 7 million tonnes each.

Rice exports by Vietnam in the first quarter totalled 4.2 million tonnes, up 24% from a year earlier.

Exports off 63%: Thai rice loses competitiveness.

(Source: Bangkok Post, Economics, MORTGAGE SCHEME, Fears of rice fraud rise, Boonsong vows to pursue any anomalies, 1/05/2012, Phusadee Arunmas, link) 

Rice Mortgage Scheme 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 mortgage scheme - the name of the government system for making sure that farmers get a good price for their rice
mortgage scheme

fraud - the crime of tricking and lying to people in order to get money การฉ้อโกง การหลอกลวง เล่ห์เพทุบาย การปลอมแปลง (See Wikipedia)
fears of rice fraud rise

vows - promises, declares they will do
pursue - to try to achieve something; to work at something or carry it out   ดำเนินตาม, พยายามเพื่อให้ได้มาซึ่ง ทำให้ลุล่วง
anomalies - things that are not right (that need to be explained)
pursue anomalies - try to find out why wrong things are wrong

Boonsong vows to pursue any anomalies

benchmark - a standard for comparison, a standard that other things can be compared to and measured by
benchmark prices - important prices that other prices can be calculated from

widespread - happening or existing in many places, or affecting many people อย่างแพร่หลาย
corruption - (See Wikipedia on bribery, corporate corruption, and political corruption)
widespread corruption

rice mill - a factory for making rice that can be sold from rice from farmer's fields
participating mills - rice mills that have joined the government program
potentially - may happen; possible in the future ที่อาจเกิดขึ้นได้ possibly เป็นไปได้
devastating - very harmful and damaging
potentially devastating - could be very harmful and damaging
reputation - the opinion that people have about how good or bad someone or something is ความนับหน้าถือตา ชื่อเสียง
Thailand's reputation as a quality rice exporter
potentially devastating Thailand's reputation as a quality rice exporter
executives - a high level manager in a company (making plans and ensuring they executed successfully) ผู้บริหาร
industry executives

The government's high benchmark prices under the rice mortgage scheme have resulted in widespread corruption by participating mills, potentially devastating Thailand's reputation as a quality rice exporter, industry executives say.

collude (verb) - working together to break the law or do something bad
colluding rice mills
on behalf of - do it for someone else
do X on behalf of Y - do X for Y
rice stored on behalf of the government
pass off - pretend that something is something (that it is not); lie about what something is 
pass off X as Y - pretend or lie that X is Y 
passing off the rice as 100% Hom Mali.

Colluding rice mills are reportedly taking the cheaper Pathum Thani and Phitsanulok varieties and mixing them with more expensive Hom Mali rice stored on behalf of the government, then passing off the rice as 100% Hom Mali.

paddy - rice after it has been harvested from the field ข้าวเปลือก
Hom Mali paddy rice
intentionally - deliberately; done purposely อย่างตั้งใจ you really want to do what you do, not an accident; clearly wanted to do it, not an accident
intentionally structured to pay above-market rates
policy - a set of plans or action agreed on by a government, political party, business, or other group นโยบาย (See Wikipedia)
boosting - increasing เพิ่ม
income - money that people receive from work or some other source, used for household consumption and savings
farm income
boosting farm income
a government policy aimed at boosting farm income

This is due to the fact that the rice mortgage scheme, which offers up to 20,000 baht per tonne of Hom Mali paddy rice, has been intentionally structured to pay above-market rates under a government policy aimed at boosting farm income.

massive - very large in size, amount or numberใหญ่โต
massive corruption
executive - the highest level managers in a company
rice industry executive

"The mortgage programme has resulted in massive corruption," one rice industry executive said privately.

significantly - in an important way อย่างสำคัญ
significantly higher than market prices
gap - the distance or difference between two things ช่องว่าง
unscrupulous - willing to do anything to get what they want; prepared to act in dishonest or immoral way to get what they want
unscrupulous people
trade - 1. business; 2. the buying and selling of goods การค้าขาย; 3. a job, especially one which needs special skill; occupation อาชีพ
unscrupulous people in the trade
exploit - take advantage of an opportunity for gain and profit; use unfairly for one's own gain (See glossary) ตักตวงผลประโยชน์ เอาเปรียบ, หาประโยชน์ใส่ตัว  หาประโยชน์จาก
unscrupulous people can easily exploit
created a gap that unscrupulous people in the trade can easily exploit.
competitiveness - how well a business can do compared to other firms (does it have lower price or higher quality?) การแข่งขัน
pledged - seriously promised to do something สาบาน
paddy pledged under the rice scheme

The fact that the mortgage price is significantly higher than market prices has created a gap that unscrupulous people in the trade can easily exploit. Exports off 63%: Thai rice loses competitiveness. Rice mills can accept paddy pledged under the rice scheme and "turn" the same rice to receive additional payments under new pledges.

collusion (noun) - working together to break the law or do something bad
Public Warehouse Organisation (PWO) - the government agency that stores rice for the government
surveyors - people who watch over something (to look for problems)
stocks - large amounts stored for future use
government rice stocks
rice pledged to government stocks
monitoring - watching something closely and checking for problems จับตาดู
monitoring rice pledged to government stocks.

Such corruption is possible because the government depends on private rice mills to store rice on its behalf. Collusion also involves officials of the Public Warehouse Organisation and surveyors responsible for monitoring rice pledged to government stocks.

inventory - goods that a company has bought and stores for future use or sale (See Wikipedia) สินค้าที่จัดเก็บในสต๊อก
records - pieces of information describing something written down or stored on a computer บันทึุก
inventory records
falsify - lie about something; say or write something that is not true
falsifying inventory records
take advantage of favourable market conditions.
storage

favourable market conditions - the prices and supply are good (for you)   
advantage - a condition giving a greater chance of success ความได้เปรียบ
take advantage of - use some good opportunity to do something
take advantage of favourable market conditions

storage - the putting and keeping of things in a special place for use in the future การเก็บ

Another form of corruption involves falsifying inventory records, whereby a rice mill sells off government rice to packers or exporters to take advantage of favourable market conditions. The mill later purchases rice from other sources to return to storage when the government recalls the shipment.

grade - a level of quality of a good
lower-grade - low quality
lower-grade rice
cheat - gain or get something from someone by lieing and being dishonest to them
purchase - buy
pocket the difference - take money for yourself (that you get from buying and selling at different prices)

Mixing lower-grade rice is another way to cheat the system. A rice mill holding Hom Mali rice for the government may sell the rice off and later purchase lower-grade rice to return to storage, thus pocketing the difference.

shortages - when there are not enough goods for people to buy การขาดแคลน
reason - an explanation of an event, why an event happened เหตุ ; เหตุผล ; สาเหตุ
for this very reason
grain - the seed from cereal crops such as rice, wheat, or corn เมล็ดพืช
long-grain rice

"We're seeing shortages in Pathum Thani rice in the market for this very reason," the executive said. "Now some are even moving to use Phitsanulok rice for mixing, as it's a long-grain rice quite similar to Hom Mali, but only lacks the jasmine smell.

catching fraud - finding the people who are doing fraud (who are lieing to and cheating other people)
task - a piece of work that someone does หน้าที่ ภารกิจ
catching fraud is a difficult task
inspection - an official process of checking that things are in the correct condition or that people are doing what they should การตรวจสอบตรวจตรา
inspection - the act of looking closely at something or someone and to check that everything is as it should be; examination การตรวจสอบอย่างละเอียด
manipulate - to control something or someone to your advantage, often unfairly or dishonestly ชักใย
official - approved by the government or some authority ที่เป็นทางการ
official inspectors 

Monitoring government rice stocks and catching fraud is a difficult task, as rice mills can always present quality rice during inspection times but manipulate inventories as soon as official inspectors leave.

state - government รัฐ
state officials
DNA testing
ensure - to make certain that something happens or is done รับรอง ให้ความมั่นใจ ให้การยืนยัน
integrity - the quality of being honest and having strong moral principles that you refuse to change ความซื่อสัตย์, ความซื่อตรง
ensure integrity and quality
stockpiles - large amounts of something stored for future use กองสินค้าในโกดัง
government rice stockpiles
traditional - things (clothes, music, customs, etc.) that have been part of a country or society for a long time
traditional methods

Industry executives suggest that state officials modernise their monitoring systems to include DNA testing to ensure the integrity and quality of government stockpiles. Officials currently rely on traditional methods of cooking rice samples to check each shipment.

commerce - the activity of buying and selling goods 
commerce minister
inspection
process - a series of actions that you take in order to achieve a result แนวทางปฏิบัติ, กระบวน, วิธีการ
inspection process

"When Kittiratt Na-Ranong was commerce minister, he said DNA testing machines would be purchased for use in the inspection process. That's all gone quiet now," one executive said.

denied - said it was not true
allegations - accusations; a claim that someone has done something wrong (that has not been proven yet) ข้อกล่าวหา
denied allegations

Commerce Minister Boonsong Teriyapirom categorically denied allegations of politically related corruption in the rice trade. 

parties - people or companies entering into a business arrangement or deal
falsified - changed in order to deceive people ปลอมแปลงเพื่อหลอกลวง
manipulated or falsified government stockpiles
criminal charges - bring a criminal case against a person

He said any parties found to have manipulated or falsified government stockpiles would be subject to criminal charges. 

inspect - to look at something carefully ตรวจสอบ
inspect the government rice stockpiles
irregularities - a situation in which the rules, laws or usual ways of doing something have not been followed ความไม่สงบ things that are not normal and therefore suspicious (might indicate problem or wrong-doing)

there was no report of any irregularities
theft - (the act of) dishonestly taking something which belongs to someone else and keeping it การลักขโมย
insisted - say firmly that something must happen or is true, and will not change mind
beneficial - helpful or good มีประโยชน์
beneficial for farmers

"The Commerce Ministry just last month asked a team of investigators from the Department of Special Investigation to help inspect the government rice stockpiles, and there was no report of any irregularities," Mr Boonsong said. He called on any parties with knowledge of corruption or theft to give the information to the Commerce Ministry for further action, adding that the DNA inspection scheme was still in process. Mr Kittiratt, now the finance minister, insisted that the rice mortgage scheme was beneficial for farmers.

holdings - things that you own
rice holdings
sell at cost
sell at a slight loss
funds - money needed or available to spend on something เงินทุน
borrow funds 
borrow funds from the bank
harvest - gather in ripe crops เก็บเกี่ยว การเก็บเกี่ยวผลผลิต
collateral - things of value that can be taken by the lender if the borrower fails to repay the loan  (See glossary) ทรัพย์สินผูกพันตนเพื่อเอาไว้หักชำระหนี้หากไม่ชำระหนี้นั้น
pledging their rice harvest as collateral at the benchmark price
cash - money in the form of notes or coins เงินสด

repayment made in cash
debt - an amount of money that you owe หนี้
clear the debt - put an end to the debt (usually by paying back the money) 
claim the rice to clear the debt
claim the rice - take the rice and call yourself the owner of the rice
essentially - for the most part ที่สำคัญที่สุด
essentially allowing the government to claim the rice to clear the debt.

He said government policy is to sell its rice holdings at cost, or if necessary, a slight loss, to achieve its overall goal of pushing prices higher. Under the rice mortgage system, farmers may borrow funds from the Bank for Agriculture and Agricultural Cooperatives by pledging their rice harvest as collateral at the benchmark price. Repayment may be made in cash, or more commonly by essentially allowing the government to claim the rice to clear the debt.

subsidy - when the government supports some activity by paying part of the costs of it เงินสนับสนุน เงินชดเชยที่รัฐเป็นผู้จ่ายให้
indirect - not direct; A affects B affects C affects D (effect only comes through a chain of effects)
indirect subsidy
indirect subsidy for farmers
compensated
price guarantees that compensated farmers if rice prices fell below set benchmarks.
benchmarks - standards ro reference points that can be used for comparison and measuring others
benchmark price
fall below benchmark price

The process, long used by Thailand as an indirect subsidy for farmers, was changed during the Abhisit Vejjajiva government, which offered price guarantees that compensated farmers if rice prices fell below set benchmarks.

critics
critics of the mortgage scheme
distort
wildly distort
wildly distort market prices
abuse - to use or treat someone or something wrongly or badly, especially in a way that is to your own advantage ใช้ในทางที่ผิด
open to abuse
open to abuse by rice mills
intermediaries
act as intermediaries between farmers and the state
predict - to say that an event or action will happen in the future, especially as a result of knowledge or experience คาดการณ์ว่า พยากรณ์จากสถิติว่า
transparency - an honest way of doing things that allows other people to know exactly what you are doing ความโปร่งใส details are made public (no secrets or hidden private aspects)
lacks transparency

Critics of the mortgage scheme argue that the programme wildly distorts market prices, involves massive use of taxpayer funds and is open to abuse by rice mills who act as intermediaries between farmers and the state. The government got 6.8 million tonnes of paddy under the mortgage programme during the first rice crop starting last November, and a further 4.9 million tonnes under the second crop harvested from March to April. Officials predict that total pledges under the second crop could reach 6 million tonnes, resulting in 13 million tonnes of paddy (about 8 million tonnes of finished rice) owned by the government this year.The government, meanwhile, regularly sells off rice stocks to private exporters and packagers, a process that experts say lacks transparency and is open to abuse.  "No one knows when the government sells off its rice stocks or at what price the sale is done at. It's not right," one executive said.

upset - unhappy, disappointed, angry about something that happened วิตก กังวล  ทำให้หงุดหงิด
officials are upset
subsidiary - a company that is owned by a larger company บริษัทลูก บริษัทในเครือ
procure - buy
procure rice
fulfil the delivery
failed to fulfil the delivery

Other officials are upset that Siam Indica, a subsidiary of President Agri Trading, reportedly told overseas buyers that it could procure as much Thai rice as needed but failed to fulfil the delivery.

chequered past
backing out of a deal
bid - an attempt to do something ความพยายาม
backing out of a 1.7-million-tonne bid in 2004
accusations - bad things that others say that you have done (but not yet proven)
embezzlement - the crime of stealing money that your company has entrusted you to take care of (See Wikipedia) การยักยอกเงิน, การฉ้อโกงเงิน
accusations of fraud and embezzlement over 30,000 tonnes of rice in 2007.

President Agri has a chequered past in the rice trade, including backing out of a 1.7-million-tonne bid in 2004 and accusations of fraud and embezzlement over 30,000 tonnes of rice in 2007.

comment - to express an opinion แสดงความคิดเห็น remark, telling what you think or what your opinion is about an issue หมายเหตุ
declined to comment
allegations
corruption allegations
declined to comment directly about corruption allegations
first quarter
volume - the quantity or amount of something
in volume terms
estimates - guesses of what the size, value, amount, cost, etc. of something might be การประมาณค่า 
the latest US Department of Agriculture estimates
projected - expected, forecast; - the amount that experts believe for the future
Thailand is projected to export 6.5 million tonnes of rice this year

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, declined to comment directly about corruption allegations in the rice trade. He said rice exports in the first quarter fell 33% year-on-year to 33 billion baht. In volume terms, rice exports in the first quarter totalled 1.48 million tonnes, down 48% from the same period last year. According to the latest US Department of Agriculture estimates, Thailand is projected to export 6.5 million tonnes of rice this year, with Vietnam and India set to pass the country as the world's top rice exporters at about 7 million tonnes each.  Rice exports by Vietnam in the first quarter totalled 4.2 million tonnes, up 24% from a year earlier.