Thursday, October 9, 2014

Found lacking

Ups/downs
What's hot news, what's not? 

Arguably in the hybrid rice world there's nothing bigger than this momentarily.
Researchers on hybrid rice in China claim to have a hybrid rice which breaches productivity of 15 ton/ha (Oryzae.com, Oct. 6). Whether it's tasty or not remains unclear ...

But in the rice export headlines it's this: India is expected to be no. 1 rice exporter  for 2015, so reports Oryzae.com (Oct. 8). Mostly due to increased production and higher demand. That spells prices going down ....

But neither have major implications. Productivity with hybrids is still not changing the perspective, while prices going down is just too good a news item that we're not interested in at all!

Slight
Meanwhile in Cambodia ...
The first 9 months have passed. And exports are up ..., but only just. Phnom Penh Post (Oct. 6): 
'A report from the Cambodian Ministry of Agriculture published Saturday shows that from January to September, the Kingdom exported about 270,000 tonnes of rice, up 1.2 per cent from the same nine-month period last year.
Sok Puthyvuth, president of the Cambodian Rice Federation, said the figure represents only a slight improvement on last year but that Thailand’s stockpile selloff in late 2013 had impacted the market'.
Adding to this. AMRU Rice hopes to be in the position to export 2,500 tonnes of organic rice from the province of Preah Vihear later this year. Destination Europe. Small write up by Phnom Penh Post (Sept. 9).

As expected Cambodia lost the bid to deliver rice to the Philippines (Phnom Penh Post, Sept. 19).

The Cambodia Daily (Sept. 12) is putting it's money on China as a potential super importer of rice from Cambodia: 
'China’s contaminated agriculture sector and robust demand for rice has created a potentially lucrative opportunity for Cambodian ex­porters if they can better promote their produce to compete with re­gional rivals, experts said at a workshop on rice markets in Phnom Penh on Thursday.
...
But in order to obtain a greater share of the Chinese market, speak­ers said, Cambodia must work to dispel the country’s notion that Cambodia’s rice is overpriced and of low quality.
....
Hun Lak, vice president of the Cambodian Rice Federation, said China has given Cambodia the “green light” following an agreement last month between China’s state-owned China National Ce­re­als, Oils and Foodstuffs Corp., or Cof­co, and Cambodia to import 100,000 tons within a year.
“The 100,000 ton quota is a trial. They’ve given us the green light to see if we can commit,” he said'.
Ground breaking research by the Asian Development Bank. The Cambodia Daily (Oct. 3): 
'A lack of skills and knowledge among farmers is to blame for the underdevelopment of Cambodia’s rice sector, as growers are unfamiliar with commercial farming methods that produce higher yields, according to a study released by the Asian Development Bank on Thursday'. 
The study finds that dry season rice growing is more productive (but not necessarily economically attractive ...?), so the conclusion is that more farmers should grow dry season rice. Even though it might not be finacially beneficial? But why aren't farmers producing in the dry season? Lack of water? The brief summary also has this: 
'Since increased farm size is one of the most important factors for raising the levels of farm production and commercialization, investment climate factors that induce reallocation of land may potentially have greater value over the long term than those that only affect short-term production'. 
This seems at odds with the reality where smaller farms produce more efficient, both in terms of productivity and financial returns. Begs the question, why bother reading this report ....?

Milking
Across the border Thailand´s rice merry go round is continuing unabated.
With the Thai junta's honeymoon now passed they seem to be losing favour, as could be expected. Graft continues, but apparent incompetency by rulers is gaining popularity, no surprises there. So what to do? Curry favour!
The Bangkok Post (Sep 19) note 
'A government panel agreed Friday to expedite subsidy payments to rubber farmers in exchange for them dropping planned street protests while policymakers work to reform the industry'. 
It's been well-noted that the government has been pursuing better policies for rubber farmers in the south who would be more inclined to support the current government and the anti-Taksin stance. 
However not all is hunky dory: 
'The country, meanwhile, laid plans to unload all the rubber it holds in state stockpiles, starting with 100,000 tonnes which it already agreed to sell. However, the head of Thailand's rubber industry group complained to Bloomberg that the published terms of the sale were unclear. The government did not name the buyer and gave a sales price above the spot market.
"We are afraid that the deal could be just a political ploy to tell the market that the stocks have been slashed," Perk Lertwangpong, head of the
Rubber Growers Cooperative Federation of Thailand, told Bloomberg Tuesday. "But the rubber may not have gone anywhere and could still
keep pressuring prices, with the government still paying burdensome storage costs." After Friday's meeting, Gen Prayut acknowledged that the committee has not yet reached a decision
whether to sell the stockpile, which was built up under the previous government's rubber-support scheme'. 
On this news prices of rubber dropped to a 5-year low ... A day later the Nation reports likewise, all rubber farmers are sorted out. They hope.

Success in protesting nurtures more. The Bangkok Post (Sept. 29): 
'Rice farmers recently asked for help from the government after a similar call from rubber growers in 16 southern provinces demanding intervention to arrest the seemingly unstoppable fall in rubber prices.
...
Rice farmers [] have demanded the government guarantees 10,000 baht per tonne of paddy against market price of 8,000-9,000 baht. The government, however, does not want to repeat the previous governments' populist policies by guaranteeing a rice price or through a pledging scheme, but prefers to help the farmers reduce their production costs by about 500 baht per rai.
Fertiliser and pesticide traders' associations have been asked by the NCPO to provide more discounts to farmers, and landlords have been told to cut rental fees for farmland. The price of rice seeds for cultivation too will be lowered. Also, cheap loans will be made available to farmers by the Bank for Agriculture and Agricultural Cooperatives'. 
Well fancy that: you can tell landlords to lower their rent. Doubt it! Anyway the article then goes on to champion organic rice growers who won't gain anything from the above measures to lower inputs. It also stresses the low productivity in Thailand and the low net income Thai farmers gleam from their toils ...

Apparently a better plan is in the making. It would mean that rice farmers would be persuaded to give up their crops in return for planting the rice fields with other crops. The junta would thus thrust money at rice farmers and wean their political support from Thaksin and hope that farmers would not complain about drought conditions. The Nation (Oct. 2):
'Northeastern Rice Farmers Association president Panupong Pattarakhon-ngam yesterday said he was aware of the drought threat, but he could not agree with the government plan.
...
Panupong described such a plan as a populist scheme that would hurt rice farmers in the long run.
"We grow rice not just for sale. We grow it for our family's consumption too," he said.
He said the size of paddy fields in Thailand had already been shrinking naturally in response to demand-and-supply mechanisms.
On the rice price, Panupong said the problem was now serious because the government was still trying to release a vast amount of rice from its stockpiles'.
Rice farmers might want to stage a protest ...

Having thus tested the waters, the Thai government has now decided against dissuading rice growing. Of course they were never in favour of this, it was all scaremongering, etc. Well so is one to believe (The Nation, Oct. 7). But:
'The junta chief said the focus would be on utilising less farmland and water while at the same time increasing productivity.
...
Prayut [PM slash junta chief] said farmers would be classified into four groups - very poor or landless, those owning more than 40 rai of farmland, those with more wealth or those who use tractors or other machinery, and those operating farms and also leasing other farmland.
All groups would be eligible for different kinds of government assistance or subsidies'.
So now suddenly the previous rice pledging scheme does not look too bad ..., certainly in the way it was executed and the possibilities of graft. Another whopper season ahead for cashing in on the hapless farmers of Thailand! (And the tax payers ...).

The PM responds and says that the free cash is not forever (Bangkok Post, Oct. 3). Apparently it is to help the farmers to "adjust" from the previous government's handout to some new handout.

The Bangkok Post (Oct. 5) adds
'This will cost you 40 billion baht. But while it's the most jaw-dropping, widespread and legal give-away in the country's history, it's actually just a tiny part of the stimulus package unveiled by MR Pridiyathorn and his boss. It amounts to more than a third of a trillion baht of spending in a tiny timeframe.
Critics called it a "freebie" and pinned on it the most ignominious label of the day: "Populist."
The Bangkok Post already sees 1 problem (Oct. 3) What about the 800,000 landless rice farmers? They get nada? Their landlord gets the dough? Or is this new idea just as brainless? Or heaven forbid worse ..

And in a reversal of fortunes, the above plans have caught other farmers out. Why are rice farmers been given cash handouts and not others? The Nation (Oct. 4) notes that rubber and corn growers are protesting. And so are the landless rice growers. Back to square one?

It comes as no surprise that many farmers have already hoped to get their share by registering. The Nation (Oct. 8): 
'THOUSANDS OF farmers have eagerly registered for the government's scheme to hand out a Bt1,000 subsidy for each rai of their paddy fields'.
New Mandala (Sept. 19) features on the rice / rubber support saga's. Are the powers trying to buy off allegiance? Are they indeed hoping to divide and rule?

Finally, some hyper news, Thai exports will hit 11 million tonnes, so reports Bangkok Post (Oct. 1). This would be Thailand's highest ever annual export figure. No mention is made of the cost to farmers and tax payers ...

Thai exports of rice up 60%, so reports the Nation (Oct. 3). That's what happens when a normal year follows a poor one ...

Tuesday, September 9, 2014

On track

Less on price developments this time, doesn't seem to be high in the press reports. Probably because there is a downward trend meaning that many of the soothsayers are yet on the wrong side of predictions ....

With the rains pouring down it's all about meeting targets. Vientiane Times (Sept. 3) notes the following:
'This year’s wet season rice crop is on track to reach 98 percent of the planned target if no more fields are flooded or affected in any other way'. 
Total output was hoped to reach 4 million tonnes.
Oddly enough the flooding occurring now in Thailand has yet to effect press reporting on rice statistics.

However Thai rice exports did hit a 3 year high. For July, so says the Nation (Sept 1). And though everybody seems upbeat, the higher volumes come at much lower prices ...

Lengths of Enthusiasm
The biggest news from Cambodia concerns non-news. Coming up in November: the World Rice Conference is set to take place in Phnom Penh. After winning prestigious prices for it's rice in years past, the Phnom Penh Post (August 28) reports on the decision for Cambodia:
'“Cambodia was chosen for its enthusiasm and efforts to develop export trade and raise its potential in high-quality rice markets, as well as for its excellent facilities in hosting the event,” said V. Subramanian, vice president of The Rice Trader'.
Meanwhile Cambodia's rice sector is to be boosted by increased storage under the name of Cambodia Rice Bank (CRB,  Phnom Penh Post, August 29): 
'CRB, which was established in Battambang province in 2011 but took years to build the necessary infrastructure like silos and storage sheds, emerged yesterday with $30 million in capital'.
Bidding for the Philippines has not brought much for Cambodia, yet. The Phnom Penh Post (September 5): 
'Despite failing in its latest attempt to win the Philippine government’s bid to import rice, Cambodia will once again throw its hat into the ring when the offer is reissued, industry representatives said yesterday'. 
Interesting is especially the comment on this article: 
'I am always amused whenever I see articles of Cambodian rice exporters claiming to be bidding in such international rice tenders that are rather meant for "Big League Exporters". When one sees the names of global trading firms involved in the bidding process coupled with all the technical terms & conditions imposed in the Filipino tender documents, one simply "know" Cambodia is far off from being at that level yet. Filipino tender documents require such complicated technical terms & conditions that none of the Cambodian rice exporters could even fulfill and meet'.
Troubling data? 
'European rice imports from least developed countries, mainly Cambodia, have soared 51 percent over the last year, a figure that Italy’s National Rice Agency has labeled “troubling new data” in its battle to have tariff-free exports scrapped.
...
Mr. Carriere [director of the Italian Rice Millers Association] said the National Rice Agency has drafted a dossier on Cambodia that it will submit to Italy’s Minister for Economic Development to organize an industry meeting to discuss protecting its rice sector'. 
The article (Phnom Penh Post, Aug. 28) is interesting especially to the non-answer from Cambodia.
Not all European companies view Cambodian rice imports as a threat. Oryza.com has an interview with Bart Rouwers of Alesie Food (July 29). Oddly the opportunities Alesie see are importing rice from Cambodia (sic) ...!

The Phnom Penh Post (Aug. 21) notes that the results of the agricultural census have been made public: 
'The 33-page report states that 2.2 million out of a possible 2.6 million or 85 per cent of all households are engaged in some form of agricultural-related activity, such as growing rice, raising livestock, fishing or extracting rubber.
Of that number, the census states that 1.9 million households are officially considered to have agriculture “holdings”, meaning they have at least two large livestock or three small livestock or 25 poultry or land equal to 300 square metres.
...
According to the preliminary census results, 73 per cent of all agriculture-related households operate only to serve home consumption, leaving 27 per cent who are reportedly selling their crops and livestock.
“This pointed out the dependence of the rural households on agriculture for food,” the report states, adding that on average each household has about four members.
Non-aromatic paddy rice is by far Cambodia’s largest crop, with 90 per cent of all holdings engaged in growing the cheaper variety.
“This was due to the fact that the cost of using non-aromatic paddy was not too expensive compared with the aromatic paddy/rice,” the report reasons'.
Seems strange as the local rice is also characterised as aromatic, not anymore ...?

The Cambodia Daily (Aug. 26) reports on upcoming innovations on how possibly farmers can get more up-to-date info.
'An international agriculture NGO is preparing to roll out a nationwide project in partnership with computer-chip maker Intel whereby more than 25,000 farmers will be able to receive real-time advice on farming methods via a smartphone app'. 
As the programme will also be handing out smartphones themselves, no doubt it will prove very successful until their stock runs out ...

Committed
Strange as it may seem, but there is just the one article on the Thai rice pledging scheme. Information has been weaned from the Thai government, apparently sample's are not up to what ever grades required:
'The inspection found that only 235 rice samples out of 1,339 samples tested from July 7-31 passed the standard quality, said the document distributed on Friday evening.
The rest failed to meet the standard because it was apparent the colour was "wrong", the samples went bad or were damaged by pests, or were mixed with cheaper grains, among other things'.
In other non-rice news, Asiaone reports (August 28) on Vietnam Rubber Group's rubber investments in Lao P.D.R. and Cambodia. After being globally shamed they are now putting into place a systems through which affected communities can complain and their complaints can be addressed. Global Witness gives this system 2 years to prove itself.
 
The same story is carried by the Phnom Penh Post (August 23). It adds:
'David Pred, managing director at Inclusive Development International, which advocates for displaced communities, said via email Friday that another Vietnamese rubber giant, the privately owned Hoang Anh Gia Lai (HAGL), had also agreed to some concessions.
HAGL, which is also partly funded by the World Bank and also accused by Global Witness of illegally clearing forests and displacing communities, recently went under the microscope of the IFC ombudsmen, who is now mediating negotiations between the company and affected communities.
“Company representatives have told us and the communities that they recognize that they have made mistakes and are committing to correct them,” Mr. Pred said.
“However, we are waiting to see whether this commitment will really be translated into the return of community land and sacred areas that the HAGL concessions illegally confiscated.”
Eang Vuthy, executive director at Equitable Cambodia, which has lobbied for the displaced communities, said that for some, there is no compensation that could be adequate.
“It is difficult to compensate. These are indigenous people and they have a different way of living, a different culture,” Mr. Vuthy said.
“Burial grounds and spirit forests cannot be replaced. And it also must be said, what they have done is illegal.”'.
Rubber is also in the news in Thailand (Bangkok Post, August 26). With dropping prices farmers are starting to despair. One of the problems is the Thai government selling their stocks probably before prices drop further. But naturally this means that prices will head downwards due to the sale itself, a self-fulfilling proficiency? Farmers typically want more. As most rubber is down in the unrestive south, it seems the treatment of these farmers is better than those of the north dependent on rice ...

In Laos research has been presented concerning contract farming. The Vientiane Times (Sept. 1):  
'Results demonstrated that contract farming is a strategy with potential to modernise agriculture and reduce rural poverty in Laos.
...
In some cases, contract farming in Laos reduced rural poverty. For instance, contract farming contributed to poverty reduction by about 12 percent in the maize case and by 170 percent in the bananas case.
Meanwhile, commercialised large-scale agricultural investments are likely to deteriorate land resources in the future. Unless appropriate measures are in place, the economic gains from contract farming in Laos may not outweigh the economic costs to the country.
Director General of NERI Dr Leeber Leebouapao told Vientiane Times on Friday that he was very concerned about the herbicides used in contract farming, fearing that overuse of chemical substances would impact people's health and the environment'. 
So not so positive ...

Thursday, August 14, 2014

Tightening

No brains
Many rice price spotters are reporting that the circumstances leading to rice prices are changing. 

Some views:
  • The Bangkok Post (July 23) notes that due to droughts rice production will drop in Thailand. Farmers are also planting less as subsidies have also dried up.
  • The Bangkok Post reports on a supposed upswing in Thai rice fortunes (Aug. 5). China will get their rice and auctions will start once again.
  • The upside of the rainy season? Cambodia's output to rise, so says the Phnom Penh Post (Aug. 5).
  • Cross border (Vietnam to China) trade no more? Vietnamnet (8 Aug):
    'According to Khanh [rice trader in Hanoi], China has prevented the rice imports across the border in order to tighten control over tax payments made by Chinese rice importers'. 
    As unofficial statistics put this figure at 2 million tonnes, this may well drive prices and traders crazy at least until market finds different ways to accommodate the trade. Prices in Vietnam to drop, in China to rise  ...  
In any event there are many factors to be considered but no main trends.
For a more background on global rice prices and especially on Thailand, take a look at Sam Mohanty's recent (July 31) views. On Thailand:
'In the case of Thailand, it is becoming more evident that its ricepledging scheme will not come back. Without it, it is a no-brainer that Thai farmers will plant less rice in the wet season. But, that should not be a problem for the global market because Thailand has plenty of stocks to make up for the shortfall'. 
He does however warn the countries most involved in the rice export and import business to keep their heads cool as a new price crisis may evolve. Though I seriously doubt this, can it be true that nothing has been learnt from the most recent past?

In any event prices have nudged up slightly this year (Oryza.com, Aug. 4)

Squeeze
A trending topic for some months has been Italy's protest to the EU of trade favours to Cambodia and Myanmar meaning tariff free imports of rice from both these countries.

Despite being much richer and having the EU to protect them, the Phnom Penh Post (July 21) notes that farmers in Italy want a fairer rice deal. The irony is that the fairness should be paid from their colleagues in Cambodia and Myanmar, which seems totally contradictory. Part of the interesting article quotes that rice plantings in Italy have dropped by more than 20% on an annual basis as a consequence of Cambodia's tariff free importation.

But what is actually at stake are the ever increasing costs in Europe faced with stagnant prices for rice production. The dilemma is that farmers are being squeezed out with those producing at higher costs eing the first to go. For the consumer the only way to maintain lower prices is to import from regions where the cost of labour (and rice growing) is negligible.

United
Cambodia joins the bigger boys (boys?) as it announces that it will take part in seeking to bid to import rice in the Philippines, so reports the Phnom Penh Post (Aug. 5):
'Thon Virak, chairman and director-general of Green Trade, a Cambodian state-owned milled-rice exporter, said the Kingdom is ready to make a bid this time, after missing out on a similar tender by the Philippine government last year due to a shortage of able exporters.
“This is the second time the Philippines has invited Cambodia to the bidding,” Virak said.
“We missed previous bidding because we did not have a united exporter group yet to transport the huge load. But now we have one, we are ready,” he said, referring to the recently founded Cambodia Rice Federation (CRF), which united the country’s rice exporter community in one organisation.
“I do not work alone. We are working together in the group now.”
Virak, however, admitted that Cambodia’s high transportation and shipping costs could hamper the country’s chances of landing the deal'. 
Cambodia Daily reports likewise but two days later ...

Cambodia yet again to export to China? Or will this time round prove reality? Phnom Penh Post (Aug 12): 
'The Chinese government-run China National Cereals, Oils and Foodstuffs Corporation (COFCO) will today formally agree to import 100,000 tonnes of rice from Cambodia, local officials say.
...
But trust between the two nations might not be the only reason for today’s deal, according to David Van, president of local rice producing firm, Boost Riche Cambodia.
“The South China Sea dispute lately may have also played indirectly a part in China wanting to diversify its rice import base as imports from Vietnam hit a substantial figure. China imported over 66 per cent of its total rice imports from Vietnam in 2013, while only 1 per cent came from Cambodia,” Van said'.
Note that China has said illegal rice imports from Vietnam must stop (see above).

Not satisfied
While adding the rice kernels the Bangkok Post (July 22) mentions some losses from Chachoengsao province. It adds it's own opinion on the matter:
'The dust-to-dust discovery was only the latest chapter in rice-pledging scheme's disastrous history. The programme, cooked up by the Pheu Thai Party and former prime minister Yingluck Shinawatra, paid farmers 50% above market rates for rice in an attempt to bolster the party's popularity in rural areas and distort the international rice market.
But by now the Thai junta instigated national rice audit is apparently near completion, so reports the Nation (July 28). It doesn't mention any estimates other than this which will come as a disappointment to the ruling elite:
'However, the upshot of the inspection in the East's 14 provinces was that only a few flaws were found. There were 429.8 tonnes of rice missing or 0.018 per cent of the 2.32 million tonne total on the lists, the Second Army Area spokesman said yesterday'.
Some positive news for the rotten rice storers: ethanol is your answer (Bangkok Post, July 30):
'Finance permanent secretary Rangsan Sriworasart, chairman of a sub-committee on closing the rice pledging scheme account, said inspectors had so far found about 100,000 tonnes of inedible rice which could be processed into something else'. 
After checking 90 percent of the stocked rice, 3m out 18m tonnes of rice were deemed substandard, so quotes 
'... a source from a committee charged with checking the stocks.'
According to the Nation (Aug. 13). More or less short of expectation?

Meanwhile the Nation (Aug 6) mentions the first junta approved auction of rice is to take place. However not everything went as planned despite all the transparency built in. The Nation (Aug. 8):
'The working committee did not expect the bids to be lower than floor prices, so it may need to ask for a mandate from the chairman of the Rice Policy Committee to adjust some floor prices in order to release rice from the government's stocks.
If the prices are not satisfactory, the government will not be in a hurry to sell rice from its inventory, as pressure to do so has lessened because of a low supply in the market'.
Clearly some work is still required.

Daft
The junta has been very quiet on what their plans are to be for the future for rice farming in Thailand.
The Nation (July 23) likes the idea of a pension for farmers. It looks like fun:
'Under a draft bill dealing with the farmers and rice development fund, farmer members will pay about three per cent of their monthly income to the fund and the state will also contribute an unspecified amount. When the farmers retire at the age of 60 or 65, they will have a monthly pension of about Bt4,000'. 
Though the concern mat be genuine, there's nothing like creating a pot of gold for politicians to put their hands in. Daft idea, makes the rice pledging scheme look a lot better.

And the past?
The Bangkok Post (Aug. 6) has a foggy article about all the debt which seems to be transferred from one government company to another, though everyone understands that the non-repayment is resulting in additional interest costs brought on by the rice-pledging.

Help
The Phnom Penh Post (July 31) is let on a not-so secret: it finds out that cashew numbers aren't adding up. As do none of the agricultural commodity statistics do. Production = export + internal consumption. It doesn't add up, officially. What the statistics do show:
'Unshelled cashew nut exports totalled close to $2.5 million in the first six months of the year, with 2,800 tonnes exported, a rise of 200 per cent over the same period last year, a report from the Ministry of Commerce shows.
But despite the increases, officials and industry leaders told the Post that Cambodia produces close to six times the recorded export figures.
...
When questioned as to where the unrecorded nuts were going, Ken Ratha, spokesman at the Ministry of Commerce, said cashew nuts may be slipping through smaller corridors at the borders where figures are not recorded.
“Farmers export cashew nuts by themselves, or traders are avoiding tax,” he said'.
Phnom Penh Post (July 23) features the lack of a way forward for the nation's corn farmers. Prices are down, so lot's of headaches. Interestingly it highlights how traders and storers are not wanting to get involved leaving farmers with little place to sell. Or store.

The Cambodia Daily (Aug. 13) finds out that the way forward is to diversify and seek niches. In this case pepper. Attributing the lack of poor markets for rubber farmers in some locations are turning to pepper:
'In Dar commune in Tbong Khmum province’s Memot district, one of the richest pepper-growing areas of the country, the number of households farming pepper has increased from 1,730 last year to 2,300 this year, while cultivated farmland has doubled from 600 hectares to 1,200, according to Yin Sopha, executive director of the Dar-Memot Pepper Agriculture Development Cooperative'. 
Though the article and the interviewees are upbeat one should know that the global market is relatively small, such large changes in production can only come at a loss of other growing areas; 30-40 years ago Malaysia's Sarawak tried to corner the global market, it didn't occur ...

Cassava growers are less fortunate.
'Cassava farmers are calling on the government to standardise prices and help stabilise demand as the market for the root crop continues to prove risky for growers'. 
Phnom Penh Post (Aug 6) reports on the phenomena of prices going up and down: 
'The price increase has been reluctantly welcomed by farmers, who are tired of the crop’s volatile price and fluctuating market demand.
“The price is up today and down tomorrow. Farmers are taking big risks of losing money if crops cannot be sold at a good price,” Pailin province cassava trader Song Sarum said.'
Well, the government is hardly the answer.

Sunday, July 20, 2014

Odds and ends

Stacking the odds
The big news is that the new Thai regime has started to count the rice. In stock. The Bangkok Post (July 3): 
'Nationwide checking of the government's rice stockpile began on Thursday amid allegations of corruption in the Yingluck Shinawatra administration's rice-pledging scheme, and to allow for planning of future rice management'.
One problem I foresee is that the stockpiling and reporting will take an immense time: time enough to cook the books either way ..... 

 Suits sorting the (rice) scheme out (source).

The Nation (July 5) has some preliminary findings. As expected there was bad rice. More surprising was the fact that they also found 
'disorderly stacking of sacks'. 
Bangkok Post (July 5) gives us a blow by blow account
'Disorderly stockpiles, deteriorating quality, inconsistent IDs on sacks and mixed grades of rice are among the problems that have emerged on the third day of the nationwide inspection of state rice stocks'.
A day later the Nation continues with the listing of discrepancies. Unfortunately, there's no reference to what degree this affects the total warehoused stock nor whether the amounts stocked were  as expected.

Well, two days later (July 7) the Nation mentions that in 1 province 90,000 tonnes were 
'missing'. 
But not too revealing. 
The Bangkok Post (July 8) then goes on to reveal that  the 
'woes' 
are spreading! It also holds this sentence: 
'According to criteria set by the inspection team, a police complaint can be made only when more than 5% of rice is missing from stocks, ML Panadda said, adding that a check at one warehouse found about 7% of the rice was unaccounted for'. 
So if you make away with 4.9% you're still in the right with the police, strange.
What's in store for the culprits? Bangkok Post (June 25):
'A court has sentenced rice trading tycoon Apichart "Sia Pliang" Chansakulporn to three years in prison for embezzling state rice in 2007
...
In June 2007, the Commerce Ministry's Department of Foreign Trade authorised President Agri Trading Co to improve 20,000 tonnes of white rice from 5% to 100% quality, before the grain was due to be shipped to Iran. But the company failed to deliver the improved rice to a port where Iran had sent a cargo ship to pick it up.
...
According to the court ruling, the company and the defendant were found to have embezzled 16,400 tonnes of 5% white rice worth 175.4 million baht'.
Murky.
The latest news is that in Phichit nearly 47,000 tonnes is missing (Bangkok Post, July 20)

Handsome
Cambodia's rice export a big task so says the Phnom Penh Post (July 4):
'The pace of Cambodia’s rice exports are expected to slow this year. Unable to maintain the steady rate of previous years, the export volume for the first half of 2014 is much the same as it was this time last year.
At the end of June, milled rice exports had reached 178,000 tonnes for the year, barely above the 176,000 exported for the first six months of 2013.
And with the government’s looming target of 1 million tonnes exported in 2015, the trend suggests it will be a difficult goal for the industry to reach'.
Phnom Penh Post has an article (July 9) based on a report by Oryza:
'Cambodia duty-free rice exports to the European Union have this week come under fresh attack from producers in Italy, who say the beneficial treatment is restricting the potential of Italian rice exports.
An Italian agriculture collective of farmers, which includes representatives from the Italian Association of Rice Industries, will protest in some of Italy’s largest rice-growing areas, according to a July 7 report by rice industry publication Oryza.
The cause of the uproar, says Oryza, is the preferential treatment Cambodia receives under the European Union’s Everything But Arms scheme, which allows tax-free access to EU markets for all states on the UN’s list of least developed countries, which includes Cambodia. Italian rice producers say cheaper Cambodian imports create an unfair playing field for their products.
...
The acting secretary-general of the Cambodia Rice Federation, David Van, responded to the concerns of Italian farmers in an opinion piece published in the Post on Monday.
Van said Cambodian exports had merely replaced those from countries, such as Thailand, that exported less than before. Therefore, he said, market pressure on Italian farmers would have changed little from previous years.
Van said that one of the more popular Cambodian grain varieties – jasmine rice – was grown very little if at all in the EU, thus creating room for exports from the Kingdom to meet demand'.
Cambodia though is not the only country to suffer from knee-jerk reactions, Myanmar is also been targeted (Oryza, 17 July).

Companies based in the more freer world and hence forced to be accountable to the general public are increasingly being targeted for the lack of environment and/or HR standards when operating elsewhere, in Cambodia f.i. Phnom Penh Post notes (July 7) that ties between Australia's ANZ bank and the Phnom Penh Sugar Company have been severed.
The severance comes after an ANZ audit revealed that
'... from 2010 to 2013 the company failed to address 60 per cent of recommendations made by Bangkok-based auditor International Environmental Management, including ones related to worker health and safety'.
But damned if you do, damned if you don't: 
'“As a major financier of the sugar project, which has no doubt profited handsomely from it, ANZ has a duty of care to the people whose land was grabbed and that duty does not go away when it recalls its loan,” David Pred, managing director of Inclusive Development International, said'.
Nonchalance
More rice market news, Thailand believes that production will dip this year, so reports the Nation (July 9). That's due to delayed rains. Note should also be made of lower plantings as subsidies have disappeared. 

There seems to be confusion regarding the measures which India will take to soften domestic inflation. They have announced that they will be using as much as 5 million tonnes of their stockpile to amend the domestic situation. Phnom Penh Post (June 25) notes that
'Cambodia’s rice producers fear that any spillover into the global rice trade may impact local exports'. 
If any impact, it would mean less rice in the international market, thus higher prices, thus more demand & higher prices for Cambodia. No fear.
That's illustrated by the Oryza index of rice prices which has been notched around the 450-475 $US for the past 3 years.
However over at IRRI (July 14), they regard this as foreguard of the next storm:
'On the surface, rice markets remain calm and stable, but underlying market sentiments are rapidly changing because of weather disruptions in many rice-growing nations. The global rice market faces the possibility of a production shortfall in the major rice-growing regions in South and Southeast Asia and also in China because of El NiƱo events. So far, the market has been quite nonchalant about this possibility because of large buffer stocks in key rice-growing countries. Global rice stocks, at least on paper, have increased by 36−80 million tons since the rice crisis in 2007 (USDA: 36 million tons; FAO: 80 million tons). However, the majority of these increases in rice stocks have occurred in three countries (India, China, and Thailand) and they have largely been held by the state agencies'.
That is disconcerting. As illustrated above Thailand's state storage programme seems to be less so.
The authors believe the key maybe public policies in India:
'If India remains open for business, the rice market will behave rationally and prices will be determined by fundamental factors. However, if India imposes any export restrictions, particularly quantitative restrictions, then the market might panic'.
Funny, if the reason for impeding storm is the lack of public storage on a global scale, why not advocate this instead of singling out a triggering situation ....

Meanwhile in Lao
As if Laos has no experience in growing rice without any external inputs, the Vientiane Times (July 7) reports that a Chinese company will now produce organic rice in the people's democratic republic: 
'A large Chinese company plans to grow organic rice in Laos for export to markets in China and Europe.
Chief Executive Officer of SEIF Holdings Mr Frederick Tan and his delegation met with Deputy Ministry of Agriculture and Forestry Dr Phouangparisak Pravongviengkham in Vientiane on Friday, where the company detailed its plans to invest between US$300 million to US$1billion in growing rice in Laos.
He informed Dr Phouangparisak the strategy of the venture with the company initially targeting Vientiane and then the two provinces of Borikhamxay and Champassak for its operations.
“Laos is suitable and it's very good for growing organic rice crops as the soil is not contaminated and the air is clean,” Mr Frederick Tan told Deputy Minister Dr Phouangparisak'. 

Tuesday, June 24, 2014

Obvious

Schocking
Probably the most important news this month is the report published by GRAIN conerning issues of land grab. 
With the increased agricultural prices of the last few years, land grabbing has become a pandemic which seems to be never-ending. From the summary:
'Despite the inherent shortcomings of the data, we feel confident in drawing six major conclusions:
  1. The vast majority of farms in the world today are small and getting smaller
  2. Small farms are currently squeezed onto less than a quarter of the world's farmland
  3. We are fast losing farms and farmers in many places, while big farms are getting bigger
  4. Small farms continue to be the major food producers in the world
  5. Small farms are overall more productive than big farms
  6. Most small farmers are women.
Many of these conclusions might seem obvious, but two things shocked us. One was to see the extent of land concentration today, a problem that agrarian reform programmes of the 20th century were supposed to have solved. 
... 
The other shock was to learn that, today, small farms have less than a quarter of the world's agricultural land ...'. 
The report is a damning of current policies driving farmers off their land, mostly for the acquired land to be distributed to wealthy investors who struggle to meet the efficiencies of those farmers who have been displaced. When, if ever, will this stop?

Pay-back
With prices for rice dropping, inevitably victims are falling. 

Victim 1? Apparently the Cambodian company named Megagreen Imex Cambodia was in line for fame and especially fortune in the nation's rice export dream. Phnom Penh Post (Jun. 6):
'In December 2011, the managing director of Megagreen Imex Cambodia, Renne Outh, proudly announced that his firm had inked a $21 million deal to be the first to ship Cambodian rice to the Philippines.
Nearly two and a half years on, not a single Cambodian grain has reached Manila. Export figures for the first five months of 2014 show that Megagreen, once among the top 10 rice exporters in the country, has fallen to 48th out of 84.
The failed Philippines deal marks a pattern of broken promises, as the agricultural wholesaler now finds itself besieged by creditors and lawsuits seeking damages in excess of $1 million, with flawed agreements from one end of the supply chain to the other'.
Lower prices have meant that Cambodia's rice millers are left with unsold produce. And supposedly banks with unpaid loans. Phnom Penh Post (June 18) hints why:
'Cambodian rice currently trades at $440 per tonne. Meanwhile, rice in Thailand and Vietnam is selling for $385 per tonne and $405 per tonne respectively.
With the next harvest season due to begin in just three months, Lim Bun Heng, chairman of rice export firm Loran Group, said that millers had been pressuring his company to find buyers for Cambodian grain.
...
A rice mill owner, who asked not to be named for fear of damaging his business’s reputation, said that he had more than 2,000 tonnes of rice waiting for a buyer in Battambang province.
The mill owner added that he had accrued over $400,000 worth of bank loans to buy the rice off local farmers in the hope of selling it on to exporters for overseas markets.
“To pay back the bank only, I am forced to sell the paddy off at a lower price than what I bought it for,” he said'.
Expect the bill for these losses to be passed on to farmers come next harvest 

Another loser in the making? Vietnamnet reports (June 6) on the countries dealings with the Philippines: 
'Vinafood 1 and Vinafood 2 have been severely criticized for offering overly low bids in an effort to obtain the contract with the Philippines. Analysts believe that Vietnam made a major mistake when analyzing the situation, which then led to the wrong decision. Tuan of Thinh Phat [company] pointed out that Thailand was the major rival of Vietnam in the bid for the rice export contract because it was nearer to the Philippines than India and Pakistan, which allows savings on transportation costs. However, Tuan said Thailand should not have been considered a threat to Vietnam. NFA said that the Philippines would only accept rice harvested no earlier than four months ago. Thailand stopped collecting rice in February 2014. “This means that Thailand only had rice harvested in 2012 and 2014, and that Vietnam was the only seller in the market,” Tuan said'.
Re-wiring
The rice pledge scheme in Thailand. As it's now being wrapped up by the junta, there are a few articles concerned. first, the Nation (May 25) mentions that 
'The ousted government was able to pay about Bt100 billion to the farmers until now, but another Bt90 billion is still owed to 80,000 farmers'. 
The only reason for the outstanding amounts not to be made was that the prevoius government was a caretaker government. Luckily the junta has no law to uphold so can do as it pleases. Another PR activity.

The Bangkok Post (May 26) however mentioned that farmers were happy (who isn't nowadays?) as stalled payments were now being paid.

Thai farmers now having been paid, want new handouts. So mentions the Bangkok Post (June 2): 
'Songpon Poonsawat, chairman of the Council of Farmers in Ang Thong province, said his organisation would propose short-term assistance packages for the NCPO [the junta] to consider, to help farmers suffering as a result of lower prices. Mr Songpon suggested the intervention be carried out for the next two crops, until the market price of rice returns to normal'.  
But what is normal?

Then some confusing news. The Nation (June 5) has a short item on the end of the rice-pledging scheme: 
'Former Democrat MP Warong Dechgitvigrom Thursday called on the National Council for Peace and Order to end the controversial rice-pledging scheme'. 
It has already ended.
'He said the NCPO should replace the scheme with a rice price guarantee'. 
In other words: a rice pledging scheme!
And on June 8, farmers came up with a new proposal (Nation): 
'Rice farmers yesterday proposed that the National Council for Peace and Order set a price for rice based on the average production cost plus a 40 per cent profit margin so they can survive'. 
That also looks like a rice-pledging scheme. The Bangkok Post notes (June 10) that the military are unsure what to do. Going by previous experiences they fail to take decisions unless you criticize them... They prefer to shoot the messenger of bad news.

The junta has spoken and there will be a new subsidy scheme. The Bangkok Post (June 18): 
'Gen Chatchai said that participants agreed with the idea of a "cultivation subsidy" and soft loans for rice growers nationwide in the 2014/2015 crop season. The subsidy was set at 500 baht per rai (1,600 square metres) for up to 15 rai (24,000 square metres) per family, based on rice growers' estimated cultivation costs of about 4,000 baht per rai'.
One problem will be the way the subsidies will be doled out, probably through subsidies to ag input sellers. While there may be limitations on hand-outs per family, there will be all of a sudden be a lot more families in Thailand ....

Top dog
The bargain sales have resulted in Thailand returning to the top of the rice exporting nations. The first five months of this year have seen this sale recapture the buyers spirits and Thailand is yet again the no. 1 exporter in terms of tonnage. Bangkok Post (June 4): 
'Somkiat Makcayathorn, secretary-general of the Thai Rice Exporters Association, said on Wednesday that from Jan 1 to May 20, 2014, Thailand exported a total of 3.93 million tonnes, surpassing India (3.74 million tonnes) and Vietnam (2.4 million tonnes) in the same period'.  
Hurrah! Back to no. 1. But why obsess with who is no. 1? Surely it should be the income generated for the nation which should count. The article continues to assist the junta's PR machine: 
'The fall happened when the Yingluck Shinawatra government increased the price of Thai rice through its loss-ridden rice-pledging scheme, which promised over-market  prices to farmers. Many were never paid'. 
It appears that the exporters and general traders and millers are the ones cheering. Farmers are a lot more quiet ...

Meanwhile, Channelnewsasia (June 4) reports on the Thai Rice Exporters Association's prediction of a 20% rise in exports for Thailand this year.

Est
The Bangkok Post has the story on the losses of the old rice-pledging scheme (May 28): 
'Estimated losses from the previous five crops under the Yingluck Shinawatra government’s rice-pledging scheme could be lower than 500 billion baht, says the Finance Ministry'. 
Or 15 billion US$! Inflation? PR? Hmmm, ...

The previous government and their sceme (-ing?)? They should be tried: 
* loss of nearly 3 million tonnes (swept under the carpet?), 
* poor quality and 
* failure to calculate what the loss was. 
The Bangkok Post (June 10) reports that the former government want a quick resolution on the charges. As everything is in a flux, there probably can't be any conviction unless one based on politics.

As Thailand has no clue as to what they have stockpiled in the past it comes as no surprise that the Bangkok Post reports (June 13) that an audit will take place. We also know that the audit will find less rice than expected ...
National affairs
The Cambodia Daily (June 3) sees the positives in a 1% rise in rice exports from Cambodia. Quite confusing as it also mentions rising imports to or from Thailand?

But ..., the problems in Thailand have had an impact on Cambodian direct exports to Thailand. They have nearly disappeared, so reports the Phnom Penh Post (May 29).

Real growth lies elsewhere. Via Phnom Penh Post (May 19) it is reported that Cambodian organic rice is finding a market in Hongkong:
'While the US and Germany have traditionally been the key markets for Cambodian organic rice, with about 300 tonnes sent there last year, CEDAC president Yang Saing Koma told the Post that his organisation has exported 30 tonnes to Hong Kong this year, as the market for the Kingdom’s natural produce expands'.
With rice losing favour, the rural sector is losing a taste for alternatives. The Cambodian Daily (May 27) notes that cassave exports are also down:
'Cassava exports dropped by about $25 million during the first four months of 2014 compared to the same period last year, according to figures provided by the Ministry of Commerce on Monday.
From January to April this year, Cambodia exported 203,934 tons of cassava, worth about $13 million, the figures show. In the corresponding period last year, 273,415 tons, worth about $38 million, were exported'. 
A typical double whammy: lower prices and less production. This contrasts heavily with black pepper. Cultivated in patches near the coatsal towns of Kep - Kampot as well as near Kampong Cham, production was on the up, so reported the Phnom Penh Post (May 27):
'Kampot pepper has the WTO’s geographical indication (GI) status linking the quality of the product to its origin. Exports and prices have been on the rise since receiving the status in 2010.
The total cultivated area of GI Kampot pepper reached 90 hectares this year, twice that of 2013 – but it will still be years before many of these plants mature and are ready for harvest.
Him Anna, a pepper farmer in Kampot, told the Post that she had exported 3 tonnes of pepper this year and the market was hungry for more. “There is huge demand in the market with a very good price, but until now we still have a problem with supply.”' 
Let's just hope that prices remain attractive and markets can deal with the upsurge in acreage from Cambodia. It remember that the Malaysian state of Sarawak had the intention of cornering the pepper market, however expansion didn't reap rewards.

Well with farmers being caught with increased corporisation, they are now urged to go green, so reports the Phnom Penh Post (May 23): 
'Officials from the Ministry of Agriculture have called on farmers to cease using chemical pesticides and adopt environmentally friendly methods in an effort to increase yields and reduce damage to produce. Hem Em, a farmer with 7 hectares of pepper-growing land in Kampong Cham, said he had spent more than $300 on pesticides this season to ward off pests.
“If we do not use pesticide, we will not be able to harvest crops because the insects destroy the flower and our crops give no fruits,” he said'.
It wouldn't hurt if green produce was paid more, but that's probably not the message.


Founding father
The Phnom Penh Post (May 23) on the new Cambodian Rice Federartion (CRF). An interview with  CRF’s newly elected president and CEO of SOMA Group, Sok Puthyvuth. Some of the Q and A's:
'How is your rice body going to represent farmers?
This is the foundation of the rice sector. If the foundation is not strong, forget about the millers or exporters.
One of our major priorities is to really look at the foundations of the sector, how have the farmers been doing? Whether the access to all this support, like finance, fertiliser or techniques are up to date? 
...
Your father is the deputy prime minister. Have your family ties helped you land the CRF job?
I am the new generation. You could say it is a coincidence that I happen to be in this position, but it was not appointed. We went through an election. I don’t think people voted for me because of who I am. If they feel that I am someone who doesn’t know what I am talking about, I don’t think they would have voted for me'.
An earlier article by Phnom Penh Post (May 20) also noted that his father-in-law is the PM himself ..., so that might help, certainly with the election process. It also noted that all other industry bodies would be dissolved ...

The Phnom Penh Post (May 30) has an interesting coverage of a rice industry workshop:
'The rice industry's quest for greater quality at lower cost reached a dead end yesterday at a conference in Phnom Penh, with exporters and farmers polarised on how to achieve greater returns for the industry.
The workshop, titled "Improving Rice Value Chain and Enhancing Farmers’ Livelihoods", was attended by more than 70 farmer representatives, businesses and government officials. On one side exporters want farmers to provide a better-quality rice grain, but on the other, farmers cannot afford the premium to pay for the higher-quality seed ... Kan Vesna, a farmers representative from Battambang province, rebutted the millers concerns, saying millers systematically reducing prices across the industry created little incentive for farmers to improve their crops'.
With prices dropping and companies feeling the pinch, no doubt lower prices for farmers will be the indiustry's answer to their problems (passing on the buck).

The Cambodian Daily comes with a farmer based article (May 30) concerned with the same workshop:
'Cambodia’s rice farmers are being neglected amid the government’s push to ramp up exports of milled rice to one million tons by the end of next year, a goal that will only be reached with improved cultivation, agriculture experts and farmers said Wednesday at the Royal University of Phnom Penh'.
Mitigating
The World Bank has some bad news: world food prices are going up (source). We never see this sort of alarmist news when prices are dropping (though we never notice it in the shops  ..., lower prices mean more profit for end-use companies ...). The price rise is lead by rises in wheat and maize, due to political instability in Ukraine and wider implications of the conflict. Only rice prices were dropping ... The report also notes: 
'Food price shocks can both spark and exacerbate conflict and political instability, and it is vital to promote policies that work to mitigate these effects'. 
The only way forward is to reverse policies on creation of national reserves. For years the World Bank has been advocating selling of strategic stocks thus exacerbating price rises! Another hmmmm
World prices seem to be on the drop at least in the short term. India has announced to offload it's reserves on the internal market so as to drive down prices and thus inflation (source). But that means less exports further on down the road and eventually higher prices.

King
Meanwhile farmers are proving to spoil local markets in Laos. According to Vientiane Times (May 23):
'The price of rice in the markets of Borikhamxay and Luang Namtha provinces increased 500 kip per kilogram this week, while staying the same in most other provinces. The price rise is believed to be caused by some farmers stocking their rice to consume through the wet season, causing a shortage in the markets'. 
Oddly the article features no official response to the price rises. Are Lao farmers king?