Farmers see only a part of rice scheme's rewards

According to a Nation survey, at the price, farmers benefit to the tune of up to Bt2,000 a tonne. The rest goes to landlords, fertiliser and pesticide companies, labourers, truck owners, millers and middlemen. All that adds up to a loss of Bt136 billion in the first year of the scheme.

 

Farmers’ limited gain 

When the government announced its rice pledging price of Bt15,000 in 2011-12, landlords increased rents from Bt500-Bt800 per rai (Bt3,125-Bt5,000 per hectare) to between Bt1,000 and Bt1,500 per rai. 

Farm tractor rentals also increased from an average of Bt200 per rai per time to Bt380. Labour costs increased from Bt100-Bt150 per day to Bt300. 

Phuti Srisamutnak, president of the Thai Farmers Support Association, said farmers remained poor, despite the high pledging price. Humidity was the main factor that pressured the price, allowing farmers to earn much less than Bt15,000 per tonne. Usually, they get only Bt12,000 a tonne from millers, claiming the rice is of low quality.

“The cost of production has increased considerably in line with the high pledging price. After the government set the price at Bt15,000, the cost of production [including rentals, pesticide, fertiliser, labour, transport, tractor rentals, and fuel) also went up by Bt3,000 a tonne. The cost of production has been increased from Bt5,000 per tonne per rai to more than Bt8,000,” he said.

He called on the government to pay a direct income subsidy to farmers of Bt3,000 a tonne rather than set a high pledging price.

Phuti said farmers were aware that rice exports were sluggish because the price was too high.

Wichian Puanglamjiak, chief of the Thai Agriculturist Association, said that despite an increase in production costs, farmers’ net benefit from selling paddy remained around Bt2,000 per tonne.

At 30-per-cent humidity, farmers get Bt12,000. At 28 per cent, they get Bt12,500. The rice that is generally sold to the scheme is in the region of 27-28 per cent, he said.

To him, the government has to do more if it wants to help farmers. In Vietnam, Japan and the US, the governments take into consideration all factors from the upstream to the downstream. The pledging price just takes care of part of the problems. 

Thai Farmers Association chairman Prasith Boonchoey sees the pledging scheme as a short-term solution appealing to politicians with little real benefits for farmers. He stressed the value of self-development for farmers in realising holistic solutions such as reducing costs and increasing productivity. 

 

Millers/traders real beneficiaries 

Millers and middleman traders have been accused of extracting huge benefits from the pledging project and bargaining with farmers for low purchasing prices. 

Yongyut Kuntaweethep, a retired village chief in Pathum Thani, said that rice millers who joined the pledging scheme could receive lump-sum payments for processing rice, fees for transport of about Bt500 per tonne and additional gains of Bt500-Bt550 per tonne from sales of by-products such as rice bran, husk rice, broken milled rice, and straw.

According to The Nation’s survey, millers enjoy revenue from the pledging policy averaging Bt1,100 per tonne.

Pramoth Vanichanont, former president of the Thai Rice Millers Association, rebutted that millers have only acted as middlemen and stock keepers. Some millers with high morality will never cheat farmers, but they will gain incomes by participating in the government’s pledging project. Still, he acknowledged that some unscrupulous traders might pressure farmers to lower their prices. Circumvention of the programme may be found, but is not a general practice, he insisted.

 

Exporters suffer 

Thai rice exports have dropped dramatically in the past two years due to the high pledging price. Exports declined by 35 per cent from 10.6 million tonnes in 2011 to 6.9 million last year. This year, the Thai Rice Exporters Association projects that rice shipment will further drop to 6 million tonnes. Officially, Thailand exported 3 million tonnes in the first six months.

The country’s leading rice ex-porters and medium-sized enterprises share similar views that their incomes and profit have declined greatly during the past two years. 

A rice-exporter source said his company now faced some losses because of the high price, but it needed to accept some orders to maintain the business.

“Sometimes, only a few bidders participate in the government’s rice sales, which have been opened quietly. Additionally, the median price in the auctions were based on the domestic price, which is not competitive in the global market,” said the source. 

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said most rice exporters had suffered, as profit margin is only 1-2 per cent. Volume is the only significant factor to maintain income. However, the export volume has decreased substantially, down by around 40 per cent.

Because of their great number – about 200 registered with the association – the competition among Thai exporters has been intense. The large exporters can turn themselves into brokers, to seek rice from other countries and keep their customers. With a price that is 40 per cent higher than that of the global market, Thai rice cannot compete. The exporters that have not participated in the government rice auctions can continue their business if they have good customer bases or their brands have earned good names in global markets.