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The rice mountain: Thai govt sticks to its worst and most costly policy

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Thailand's economy
The rice mountain

An increasingly unpopular government sticks to its worst and most costly policy

BANGKOK: -- IT HAS not been a happy second anniversary for the government of Yingluck Shinawatra. Thousands of diehard opponents of her elder brother Thaksin Shinawatra, himself a former prime minister, took to the streets of Bangkok on August 7th to protest against a bill that could grant Mr Thaksin an amnesty for past offences and open up the possibility of his return from exile.

Probably Ms Yingluck is used by now to these kinds of protests, along with the usual rumours of coups. More worrying, perhaps, is widespread and growing dismay over her government’s economic performance, supposedly its strong suit.

This week an opinion poll carried out by Bangkok University found that the government’s approval rating has fallen to its lowest level yet. Most damaging to its reputation is its flagship scheme to subsidise rice. This was the brainchild of Mr Thaksin, who dictates most of his sister’s policies from afar. It was a useful vote-winner during the election campaign in 2011. But its costs now jeopardise both the government’s finances and the economy as a whole.

The rice subsidy was classic Thaksin populism. Two-fifths of Thais work in agriculture, most of them as rice farmers. Ms Yingluck promised that, if she were elected, her government would buy unmilled rice directly from farmers at about twice the market rate, or 15,000 baht (about $500) per tonne. This would put money into poor farmers’ pockets and stimulate domestic demand. Naysayers warned that the scheme would be impossibly expensive.

Full story: http://www.economist.com/news/asia/21583281-increasingly-unpopular-government-sticks-its-worst-and-most-costly-policy-rice-mountain

-- The Economist 2013-08-09

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From the link comes this pinpoint assessment of the rice pledging scheme by The Economist:

It is a fiasco.

Well done Thaksin and company. bah.gif

"Eternal Brother calling Agent Thaksin. Mission accomplished. Return to base."

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I'm fascinated by the long-term implications of this policy. International buyers are just biding their time, waiting for the grand Thai-rice fire sale. There's no way Thailand will ever regain it's position as the world's top rice exporter. It's reputation for supplying high-quality jasmine rice has already gone if people are suspicious that old or foreign-sourced grain has been mixed in.

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Meanwhile, daily revelations of incompetence and corruption surrounding the rice scheme take their toll on the government’s standing, and investors fret about the wider effect on the public finances. Government debt levels are rising, and Moody’s, a ratings agency, has warned of the risk that the rice scheme poses to the country’s fiscal discipline.

All part of the plan, after Thaksin returns he will blame the whole mess on Yingluck and take over to save the country.

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I'm fascinated by the long-term implications of this policy. International buyers are just biding their time, waiting for the grand Thai-rice fire sale. There's no way Thailand will ever regain it's position as the world's top rice exporter. It's reputation for supplying high-quality jasmine rice has already gone if people are suspicious that old or foreign-sourced grain has been mixed in.

It's getting to a point of being unsellable because people now know that future crops will be subsidised less, and thus cheaper.

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Rice Pledging Scam to help poor farmers, in the BP recently a piece says that the scam actually only helps rich farmers as the ones needing help do not qualify to participate

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I'm fascinated by the long-term implications of this policy. International buyers are just biding their time, waiting for the grand Thai-rice fire sale. There's no way Thailand will ever regain it's position as the world's top rice exporter. It's reputation for supplying high-quality jasmine rice has already gone if people are suspicious that old or foreign-sourced grain has been mixed in.

But are they really waiting? If so, it may be a long wait. In addition to low quality, dirty, spoiled produce, Thailand cannot be seen to dump rice below international market prices. It has a legal obligation to ASEAN, the WTO and the United Nations. No easy way out that I can see. And still there are some people who insist that Thaksin has vision - how very shortsighted.

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Why dont they turn it into wine? Very popular in Europe.

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Why dont they turn it into wine? Very popular in Europe.

Why not indeed, the Austrians once put anti-freeze in their wine so what could the Thais do with rotting rice ?

Chateau Cardboard could take on a whole new meaning.

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BANGKOK 25 July 2017 12:01
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