Oryza Rice Recap – Thailand Rice Scheme Continues to Boil Over into a Major Political Scandal; China Confirms Pollution of River | Oryza

Thailand rice exporters continue to lower their quotes with most down about $5 per ton today from last week. Thai rice quotes are now only about $10-$30 per ton above equivalent Pakistani and Indian rice quotes and about $100 per ton above equivalent quotes from Vietnam. Thai rice is shown at about a $150 per ton discount to South American and U.S. rice quotes.

Thailand is hoping to reinvigorate its parboiled rice exports, raising them from an estimated 1.5 million tons this year to 2.5 million tons next year; in 2001 Thailand shipped about 2-2.5 million tons of parboiled rice a year, about five times what India was shipping at the time. Last year, India shipped about 2.3 million tons of parboiled rice. Indian parboiled 5% broken sortexe rice is today shown at about $425 per ton, about a $110 per ton discount to Thai parboiled 100% whole sortexed rice offered at about $535 per ton. Thailand’s rice mortgage scheme – in which farmers can pledge paddy at nearly $500 per ton – is being blamed for the nation’s uncompetitive prices and ideas of corruption under the scheme is feeding political scandal.

In Thailand, four rice mill operators, out of the 27 investigated, are being charged with embezzlement by the nation’s Public Warehouse Organization after their stocks didn’t match what they reported to the government. The stocks were found to be depleted and mostly rotting. Meanwhile about 8 mills and warehouse have been ordered to suspend rice pledging activities after they were found to have excess paddy and missing milled rice than they reported.

Locals say the reports are just the “tip of the iceberg” and “the depth and breadth of the current situation remains opaque to the Thai public.” Inviting between the ruling Pheu Thai Party (PTP) and the opposition continues to escalate. Locals say that the PTP has rejected corruption claims from outside the party and is now trying to give the impression that it is cracking down on corruption – pointing to the relatively small tonnage of missing rice as a sign that the government is acting but that the scheme is not as riddled with corruption as critics claim it is. A couple of days ago the PTP accused the deputy permanent secretary for finance and the chairman of the Law Reform Commission of Thailand of working with the opposition to “undermine” the government after they had said there was risk of corruption at every step of the rice mortgage scheme process.

One reader on the Bangkok Post said, “Three very important cultural rules have been broken in this pathetic combat. 1)Ms Supa [deputy permanent secretary for finance] the made her government and other important people lose face with her allegations. This gives everyone a reason to be mad at her. According to Thai culture, she should have handled the matter internally and not let the public know about it. 2) She has apparently made an observation about something negative going on. You should always avoid talking about negative things. 3) She has spoken the truth, and everyone knows it. But sadly, in Thai culture, the truth cannot be spoken if it is a critical or negative truth. You should pretend it does not exist.”

Fed up with the failed scheme, another reader posted on the Bangkok Post, “I suggest the “Reds” [supporters of former and self-exiled prime minister, and brother to the current prime minister, Thaksin Shinawatra] eat the rice from stockpiles including the Government, we will switch to potatoes.”

Other Thais are fed up with the Democratic Party’s (the opposition party to the PTP) distraction scandal story about a You Tube clip of two men discussing a plot to bring Thaksin back to Thailand. The PTP of course says the clip is not real. And some locals say the Democratic Party (Dems) isn’t interested in the future development of Thailand but is working for a military dictatorship.

All that seems certain is that the political climate in Thailand is boiling and when it boils over into an attempted return of Thaksin and/or a military coup and/or a civil war, or some other dramatic event is unclear. It may depend on how the public and manipulated and what they are willing to endure. The rice scheme is likely to come under increasing pressure but the government has yet to back down from this unsustainable program.

On the subject of rice scandals, following findings of cadium in rice in parts of China, the Chinese government has confirmed that a section of the Hejiang River (shown in the map above) has been polluted upriver with thallium and cadmium – both toxic to humans. Illegal mineral processing is being blamed for causing the contamination.

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Rice Exports From Thailand to Advance as Support Prices Reduced – Bloomberg

Rice shipments from Thailand, the second-biggest exporter, are set to increase as the government reduces the price paid to farmers to rein in spending, according to the Thai Rice Exporters Association.

Sales may total 7 million metric tons this year and 8 million tons in 2014, said honorary president Chookiat Ophaswongse. His previous forecast was 6 million tons to 6.5 million tons for 2013. The National Rice Policy Committee approved yesterday a 20 percent reduction to 12,000 baht ($388) a ton from 15,000 baht in support prices for the unmilled white variety, said Commerce Minister Boonsong Teriyapirom. The decision needs final endorsement from the cabinet.

Thailand has paid farmers as much as 50 percent more than domestic market rates since October 2011 to boost incomes. About 588.7 billion baht have been spent to buy 27 million tons of milled rice, equivalent to 70 percent of annual global imports. The program may have lost 136.9 billion baht in 2011-2012, the government estimates. Moody’s Investors Service Inc. said on June 3 that losses hamper the goal of achieving a balanced budget by 2017 and are negative for sovereign ratings.

“The reduction in support will make Thai rice cheaper on international markets, boost exports and put pressure on world prices,” Chookiat said in a phone interview yesterday. “The extent of the increase in shipments will depend on the reaction from Vietnam and India, which could lower prices to compete with Thailand.”

Price Declines

The price of Thailand’s 5 percent white rice dropped 8.9 percent this year to $532 a ton last week, according to data from the exporters association. That’s the lowest since January 2012. The rate fell on speculation the country would cut support prices and on increased supply from India and Vietnam. Rice prices in Asia are declining as wheat, corn and soybeans enter bear markets, curbing global food costs.

The cut in support prices announced yesterday will probably take effect from July 1 for the second harvest of the year which ends in September, according to Boonsong. Purchases will be limited to 500,000 tons per farmer, he said. For rates in 2013-2014, the National Rice Policy Committee will consider prices in the range of 12,000 baht to 13,000 baht, he said.

The committee may set the support rate for 2013-2014 in one of three ways, according to a government statement. It could reduce the price by 15 percent to 20 percent, use the farm ministry’s assessment of production costs plus 25 percent, or use market prices with a 10 percent premium, it said. The committee will finalize the proposal by the end of this month, Boonsong said.

Fiscal Discipline

“The revision is not because the government doesn’t have enough money,” Boonsong told reporters yesterday, saying no date had been set for the cabinet approval. “We want to be responsible for fiscal discipline and the program shouldn’t carry losses of more than 100 billion baht a year,” he said.

Thailand has been selling rice from inventories to domestic users and importers including China and Ivory Coast. The country sold 76 billion baht of stockpiled rice from October 2011 through March and sales will rise to 149 billion baht by September, according to the government.

Inventories in Thailand will probably increase to a record 15.2 million tons in 2014, from 12.1 million tons this year, according to the U.S. Department of Agriculture.

To contact the reporters on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij;

To contact the editor responsible for this story: James Poole at jpoole4

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