'Independent rice agency needed'

Economy May 19, 2014 00:00

By Petchanet Pratruangkrai


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The promotion of value-added rice may be an option for farmers, but in order to achieve a comprehensive and lasting solution, rice management should no longer be dependent on official policy-makers or any government - otherwise farmers will continue to be

While other countries such as Vietnam, one of Thailand’s major rice-export rivals, have a clear policy and direction to manipulate rice production and other parts of the industry, Thailand stepped backwards by relying on short-term subsidies, which caused a loss of strength and status as the world’s largest rice exporter, due to low rice quality and uncompetitively high prices.

The Thai rice industry has not been seriously developed for a long time, because it is considered as a propaganda pit for politicians come election time.

Successive governments have outlined wonderful-sounding rice-price subsidy policies in order to gain popularity, but no policy-maker has managed to come up with a long-term policy or sustainable development plan to promote the growth of rice farming and trading.

Following clear evidence showing the failure of the recent short-term subsidy regime, the time is now right to protect the rice industry from any form of politician intervention. Thailand should have an independent organisation to manage the sector, from upstream to downstream.

Since setting a high pledging price in 2011, the government has spent more than Bt700 billion to subsidise rice prices in the market. With such a high pledging price, the Kingdom has lost export competitiveness in the global market and is no longer the world’s largest rice exporter, after being the champion for more than 20 years.

The overall loss for the pledging scheme has not been finalised, but it is estimated to be at least Bt200 billion a year. The government also holds an enormous stockpile, which is projected at about 18 million tonnes of milled rice, in its warehouses.

According to the Bank for Agriculture and Agricultural Cooperatives, as of early this month, almost 1.2 million rice farmers had still not been paid under the pledging programme, with the arrears amounting to more than Bt90 billion.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said that because rice growing involved 18 million farmers and a huge budgetary allocation, politicians had favoured managing the industry and drawing up a rice policy as key propaganda weapon to win national elections.

And because the industry involves the allocation of billions of baht each year, unscrupulous politicians need little encouragement to reap benefits from the subsidy project, he said.

To ensure long-term development of the sector, Chookiat said Thailand needed to have an independent organisation to handle all aspects of rice farming and trading.

Sustainable development

"Thailand should have a sustainable-development agenda for rice. Rice should no longer be a political tool, as development of the Thai rice industry has been ignored for so long," he added.

During the era of military-led governments, when there were no rice-subsidy projects, the country used to have a national strategy for a long-term rice development plan, but it had never been implemented following the changeover to democratically elected governments, said Chookiat.

Every voted-in government has announced some form of subsidy policy, but each has focused only on the short term, he added.

With an independent organisation at the helm of rice policy and management, its head should not be answerable to politicians, which would allow the agency to draw up a long-term agenda for developing rice plantation, seeds, trading and marketing, he stressed.

The organisation should get a budget allocation from the government each year, but politicians should not then intervene in the budget. Any income from the sale of rice stocks should count as national income, after taking into account the operating costs of the independent agency, he suggested.

The development of seed quality, plantation methods and production-cost reduction should be high on the organisation’s agenda, he said, adding that without political intervention, rice stocks and budget would be safe from corruption.

Besides having an independent organisation, Chookiat also suggested Thailand should set up zoning areas for growing rice, in order to control the quality of rice grains.

The country currently has combined areas for growing each kind of rice seed, but this has resulted in grains being mixed when cultivated. This causes a problem for rice traders, as the quality of each variety of grain is different.

Chookiat said a zoning-area system would clearly delineate the type of rice grown so that traders could easily offer produce in accordance with demand.

For instance, the Northeast should be promoted to grow jasmine rice, while the upper North should grow hard-grain rice and the Central region should cultivate Pathum Thani rice.

If the country had such a zoning system, millers and exporters would easily be able to polish rice and export it under the same standard to meet demand in each foreign market.

For instance, the production of parboiled rice requires hard-seed paddy, but with mixed cultivation areas it is difficult for producers to differentiate the type of paddy. After cooking, however, consumers can tell that the characteristics are different, resulting in public dissatisfaction over the quality of the parboiled rice.

Chookiat said the quality of Thai rice had dropped significantly in the past few years. With lower quality yet higher prices, many rice buyers have switched to other countries such as Vietnam, Myanmar and Cambodia.

The quality of Thai jasmine and white rice, in particular, has fallen significantly, with their smell and appearance after cooking different from in the past, he explained.

More R&D required

The association’s honorary president said Thailand should also promote more research and development in the rice industry, with a focus on better serving market demand.

Until now, R&D has only been focused on seeds and farming, but has not concentrated on how each type of rice grain can better meet demand. Rice production should serve commercial demand as well as help reduce production costs and other problems for farmers, he said.

He noted that the development of Pathum Thani rice could be a two-edged sword for Thailand, as this kind of rice had severely damaged jasmine-rice production due it its very similar appearance, but lower cost.

If Thailand wants to promote jasmine – or hom mali – rice as a top grain, the development of other rice seeds should not result in confusion among consumers, especially those in overseas markets, he added.

Some markets have mixed jasmine rice with cheaper Pathum Thani rice in order to reduce their costs, but this has ruined the reputation of pure jasmine rice.

Wanlop Pichpongsa, former president and secretary-general of the Thai Organic Trade Association, agreed that Thailand should have a specific organisation to develop rice farming and trading in the long run.

A sustainable plan to develop rice farming and trading should be drawn up so that farmers do not have to depend on subsidy measures, while cost reduction, promoting the use of natural fertiliser and increasing quality should be highlighted, he said.

Wanlop said a subsidy should be used only for the short term, such as when market prices were too low. Pledging or direct purchasing for too long a period was unnecessary and should be gradually decreased.

Rice pledging or short-term subsidy should be scrapped, or at least modified into a sustainable measure, he said.

Political tools

Thailand will soon have another national election, and rice and rice farmers could become a political tool yet again if no one realises that the rice policy should be changed, and should become independent from political intervention, he said.

Any extension of the present policy would result in the industry continuing to be destroyed and losing yet more international competitiveness, he warned, pointing out that not only would farmers continue to suffer from merely short-term assistance, but taxpayers would be increasingly outraged at seeing huge amounts spent on subsidising rice prices each year.

The Kingdom would spend an enormous amount for only a short-term solution, while corruption under the rice scheme would never be solved, he stressed.

He said now was the right time for all parties and involved government agencies to propose a long-term agenda for the sustainable development of rice.

All parties needed to support such a long-term plan so that Thailand’s rice sector could re-establish its leading status again soon, he said, while farmers would no longer have to remain as essentially a group of poor people as they could survive and rely on themselves without any subsidy or assistance.

nThis is the final of a three-part series.