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 Niño 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? 

Saturday, May 17, 2014

Small talk

Sentimental
Robert Zeigler, director-general of International Rice Research Institute feels free to share his thoughts, most notably on anti-technology zealots, wow. COSMOS (the science of everything) magazine publishes an interview on it's website (Feb. 3):
'As an intellectual direct descendent of the architects of the Green Revolution it is truly heartbreaking to see their noble endeavours attacked by people claiming to defend the environment and the interests of the poor. I know as much as I know anything at all, that if we continue to listen to the shrill cries of anti-technology zealots we will be distracted from taking on and solving the most serious problems that face us and our grandchildren'. 
Aha, yes.
'Sadly, while we were working to make our dreams reality, the strange brew of anti-corporate sentiment, extreme environmentalism, romanticised traditional organic but land-hungry agriculture and fear of new technologies boiled over to create a powerful anti-technology backlash. The extreme regulations for GMO crops demanded by self-proclaimed protectors of the environment, had the perverse result that only the largest multinationals could afford to develop such crops. Predictably, this resulted in the same camp denouncing the growing domination of agriculture by multinationals. As costs for developing crop varieties escalated, the few seed companies that could afford the work focused only on areas with large markets. The marginal farmers were once again excluded.
This time, though, who is to blame?'. 
That's a cheap shot. IRRI itself is in the doldrums as they have no direction and seem to research only those rice growing regimes encouraged by big business, be they seed companies, fertilizer producers, pesticide producers or end-produce traders / exporters.
Heavily dependent on donors they are seeking more funds, preferably bigger funds with less strings attached, especially in regards to greener technologies. Under Zeigler, IRRI seeks to be more belligerent on non-significant goals such as Golden Rice or pipe dreams such as hybridisation / corporatisation of seed inputs while publicly shunning alternatives presented such as SRI or economics in their purest form (higher prices = more production). 
And though IRRI should be part of the solution, it seems to be more part of the problem. Soul searching?

Note also this article from GRAIN (30 April) in which they highlight the resistance to IRRI's Golden Rice, a sugar coated programme which IRRI fails to understand why resistance is mounting.
'Local farmer groups from Luzon, Visayas and Mindanao numbering to 200 individuals converged and went to the gates of the Department of Agriculture to call on Secretary Proceso Alcala to disapprove the application for Golden Rice commercialization. They also brought and ate kamote (sweet potato) which contains five times more beta carotene than Golden Rice to show the DA that there are readily available, cheap and natural sources of Vitamin A'.
Recover
The main movement in the market has been the downward price trend as Thailand seeks to clear out stocks while they are rolling up their pledge programme. Not only are prices down, Thai exports are the flavour of the month once more.

Bangkok Post notes (3 April) that the Thai government seeks to double sales. Exports will rise by more than a quarter whereas those from India and Vietnam will drop by 5% and 10% respectively.

The Wall Street Journal (8 May) seems to be getting it wrong, drawing conclusions from two independent facts:
'Thailand’s rice exports are recovering after the government ended its controversial stockpiling policy'. 
The fact that Thailand would up its exports comes independently of the cessation of it's rice pledging scheme.

A week later (10 April), the same news outlet confirms that Thailand is back from it's sojourn from the world's rice markets. They quote the UN's FAO that  estimates that Thailand will estimate 8.7 million tonnes, just 0.8 million tonnes behind current leading exporter India and more than a million ton more than presumed third placing of Vietnam.

Opponents of the Thaksin regime in Thailand are hoping that the rice pledging scheme would the sword onto which they will fall, so reports the Nation (2 May). Not because the scheme failed, no because it might seem that the PM was too busy to oversee each and every meeting.

The Nation has an extensive article on the supposed end of the love affair between Thailand's rice farmers and government subsidies (6 May). And though that may be what they set out to do, it's more about the current unravelling of the rice-pledge scheme. Considering farmers felt it was such a success there's bound to be more of the same, once a government can once again rule.

Possibly the Thai PM will face impeachment procedures for her (non?) role in the rice pledging scheme (Nation, 8 May). 
No, wait for it, her opponents have found a different stick ...

Scrap
The change in the market is also affecting Cambodia where rice exports have dropped by 10% so reports the Cambodian Daily (11 April). It has also decimated rice exports from Cambodia to Thailand:
'Exports to Thailand for the first quarter of this year were virtually wiped out, falling from 13,000 tons in 2013 to 300 tons this year. Last year, Thailand was the sixth biggest importer of Cambodian rice, buying 23,550 tons'.
There are also wider implications as prices plummet. Cambodia's rice is relatively expensive to the market meaning that with lower prices and fixed (or even rising) costs for storage, transport and marketing, Cambodian is putting itself outside of the market. That's unless farmers are willing to accept lower prices. And with prices in a downward trend, traders are also making losses which will see them less willing / able to buy future stocks.

So it comes as no surprise that Phnom Penh Post reports (8 April) the following:
'The government-backed Rural Development Bank (RDB) will lend $64 million to Cambodia’s agriculture sector in 2014, the bank’s top official said yesterday.
Sun Kunthor, president of RDB, said most of the funding would be used to support growth in Cambodia’s rice sector as it strives to meet the government’s export target of one million tonnes by 2015.
“The rice sector needs more than $300 million to reach its full potential,” Kunthor said'.
But doomed to fail?

Dry season rice farm output in Cambodia is said to drop by 1.9%? So reports the Phnom Penh Post (7 April):
'The government commended the farmers’ efforts, citing a 2.5 per cent drop in producing land, due to the effects of flooding. On average, farmers actually increased their average tonnage per hectare from 4.1 tonnes in 2013 to 4.3 tonnes this year, according to the ministry'.
The FAO also suggests that Cambodia's total annual rice output would equal last years output, 9.4 million tonnes. So reports the Cambodia Daily (15 April):
'In its April rice market monitor report, issued quarterly, the FAO said as long as the industry does not encounter any major setbacks—such as floods between September and Novem­ber—Cam­bodia will produce 9.4 million tons of rice paddy, slightly up from last year'. 
It would certainly be interesting to see if the lower prices and the expected lower leakage to Thailand will have any effect on the output.

Other initiatives to stimulate rice exports. Custom fees are to disappear in Cambodia in an effort to assist rice exports, so reports the Phnom Penh Post (18 April):
'The Ministry of Economy and Finance (MoEF) will scrap customs fees for rice exporters from May 1 in an effort to reduce production costs and boost Cambodia’s competitiveness in the sector, according to a letter obtained by the Post.
“[The ministry] has agreed to eliminate charges relating to customs processing fees for exporters of rice in order to boost the rice export industry,” said the letter, signed by Department of Customs and Excise officials.
The letter goes on to say that the fee changes will become effective on May 1, in less than two weeks time.
The government’s changes to the customs tariff scheme have been welcomed by rice industry officials and economists.
Kim Savuth, president of the Federation of Cambodian Rice Exporters (FCRE), said the government’s move will help cut production and export costs by at least $15 per shipping container'.
Indeed 15 $US per container so no huge incentive. The Cambodian Daily (29 April) adds:
'Lim Bunheng, chairman of both the Loran Import-Export Co. Ltd. and Cambodian Rice Exporter Association, said the directive would allow his company to save at least $15 per container.
Mr. Bunheng added that the tax change will help increase his milled rice exports, which last year amounted to 23,000 tons of milled rice.
“I plan to increase my rice exports by 50 percent more than last year,” he said.
Srey Chanthy, an independent economist, said although the tariff removal will be a boon to the industry, there still needs to be a greater focus on rice milling ca­pacity and quality to ensure that Cambodian rice meets international standards.
“[The tax break] will speed up the rice export process, and rice exporters will be able to sell more milled rice and make prices competitive in the international market,” he said'.
Up and down
With prospects for rice fading, there seems to be more attention for other crops.
Mangoes picture are a more rosy picture. Phnom Penh Post (4 April) has an interview with
'Mong Chanthol, the youngest son of agriculture business tycoon Mong Reththy. As the manager of Mong Reththy Group’s mango plantation and soon-to-be built mango packaging plant in Preah Sihanouk province, Chanthol says Cambodia is on its way to becoming the home of one of the world’s most luxuriously priced fruits – the Irwin mango'.
And what the future will bring:
'When we start to export the Irwin mango, we envisage it will be sold for $20 per kilo. Our farm currently has about 80,000 trees of Irwin mango and we will add another 50,000 trees by the end of this year. 
...
Tell us about the Mong Reththy Group’s businesses here in Preah Sihanouk.
Over the 30,000-hectare estate, we have a pig farm, palm oil, rubber and now mango plantations. About 60 people are employed in the mango business already. Maybe 250 people are employed in our pig farming operation and more than 5,000 in the palm oil operations during the high season.
This interview has been edited for length and clarity'.
And then a week later the same newsoutlet adds:
'Agriculture tycoon Mong Reththy yesterday confirmed a second shipment of Koe Romeat mangoes, twice the size of the first, will be headed for China this week from his Preah Sihanouk plantation'.
Rubber. The Phnom Penh Post (8 May) sees fit to repeat a Ministry of Commerce release on the national rubber market: exports are up, prices are down.
'The latest figures from the Ministry of Commerce show natural rubber exports grew 26 per cent during the first quarter of 2014, compared with the same period last year.
Meanwhile, overall revenue from natural rubber sales fell 28 per cent.
“Last year, rubber was selling at about $2,800 per tonne, but early this year, surprisingly, the price has dropped to as low as $1,980 per tonne,” Heng Sarath, deputy director of the General Directorate of Rubber, said, adding that prices had been on the decline since 2011'. 
A week later (16 May) the Cambodia Daily is a lot more pessimistic:
'Cambodia’s steadily declining rubber prices have hit critically low levels that are destined to only get worse as Thailand prepares to offload huge rubber stocks, the secretary-general of the Association for Rubber Development of Cambodia said Thursday.
As the price of natural rubber has paralleled a global price drop, tumbling to $1,500 per ton, down 31 percent since the start of the year when rubber was selling at $2,200 per ton, Men Sopheak said the industry has been thrown into disarray.
“Falling prices have led to processing factories pausing operations because they are struggling to cover labor costs,” Mr. Sopheak said. “The farmers are getting very little profit and if the price drops further they will be making a loss.”
Approximately 30 to 40 percent of the 60 factories in Cambodia that process raw rubber have suspended operations and farmers are working with narrowing profit margins, he said'. 
The culprit is yet again Thailand as the rubber scheme is now unravelling.

The World Banks is scrutinizing it's portfolio. Maybe the postponement of planting is a blessing in disguise. The Phnom Penh Post (8 May) notes:
'Controversial Vietnamese rubber giant Hoang Anh Gia Lai (HAGL) has suspended part of its operations in Ratanakkiri province amid an investigation by the World Bank’s investment arm into claims of land grabbing, a company memorandum reveals.
...
Last year, UK-based NGO Global Witness published a report accusing HAGL of illegally logging outside concession areas and being in possession of at least 47,000 hectares of economic land concessions – almost five times the legal limit.
The IFC, Deutsche Bank and, later, Credit Suisse were all singled out for investing in HAGL. Deutsche Bank subsequently divested, while Credit Suisse claimed that its holdings predated the Global Witness report'.
Longan growing another alternative? The Phnom Penh Post (16 May) notes:
'The amount of land used to grow longans has doubled in the past two years, but a lack of supply-chain infrastructure is hampering farmers’ ability to get top dollar for their product, the fruit’s body says.
Sreng Sreang, deputy director of the Pailin Longan Farmers’ Community (PLFC), said the fruit growers are in desperate need of storage facilities to hold large amounts of their stock in order to avoid being left with an oversupply at the end of the harvest season between January and March, which in turn brings prices down'.
Away from rice, palm oil looks set to be in for a hard time. The Nation (11 May) reports that weather patterns will affect Southeast Asian output, meaning higher prices for consumers. And one would believe higher prices for farmers?

It's the dry season, so no wonder news is about the drought. Drought affecting production. Bangkok Post (12 April): 
'Rice, sugar and rubber output in Thailand is at risk because of prolonged drought, according to the government forecaster, which warned that the dry conditions may be aggravated by the development of an El Nino this year'.
(Too) small fry?
Local initiatives taking off, this time in Laos. The Vientiane Times reports (12 April):
'Overseas customers are showing keen interest in buying Khao Kataven (‘Sun' brand rice) after it gained Lao government ‘One District, One Product' (ODOP) approval at the end of last year.
The product is produced by the Khamphengphet Chengsawang Export and Import Co. Ltd. in Nasiew village, Naxaithong district, Vientiane.
“Companies from Korea, China and Thailand are currently studying the quality of the rice; we are still in negations and it will take time for us to complete export contract negotiations,” company director, Mr Khampheng Sengthavy told Vientiane Times on Tuesday.
“The markets in these countries need good quality rice, especially organic rice, for selling within their country,” he said'. 
The article though fails to mention how much is sold over the Lao borders, out of their total produce of 7,000 tons.

An interesting research was reported in the Oryzae.com website (15 April). Apparently bats are a common enemy of plant hoppers. Thailand -wide savings are nearly 3,000 tons which can be increased with the use of so-called bat roosting boxes.

More local iniatives, that of Ibis Rice. The Phnom Penh Post (5 May) reports:
'The Wildlife Conservation Society (WCS) says its Ibis Rice project has recorded a production surplus for the first time in its five-year history, prompting a bid to export the boutique product overseas.
Concentrated in Preah Vihear province, Ibis Rice farmers produced more than 435 tonnes of organically grown, fragrant Malis rice during the 2013-14 harvest season, up 54 per cent from the previous season, according to a WCS report.
The Ibis Rice project is operated by NGO Sansom Mlup Prey (SMP) and pays farmers a premium of up to 150 riel ($0.03) per kilogram more than other local buyers. In return, farmers commit to strict regulations barring them from additional land clearances, thereby protecting surrounding wildlife areas including the Kulen Promtep Wildlife Sanctuary.
...
David Van, deputy general secretary of the Alliance of Rice Producers & Exporters of Cambodia, commended the Ibis Rice project’s design; however, he warned that it is
a tough export market for small producers.
“I would honestly say an annual production of . . . less than 500 tonnes is negligible,” Van said in an email.
“Ibis’ format/approach is far too small in cultivated surface area and tonnage produced to be at anytime commercially viable,” he added, citing the project’s premium buying stance as a potential
set back'.

Wednesday, April 2, 2014

On the bounce

The past few weeks have resulted in less press for rice growing and rice exports regionally. It's probably because the Thai rice bubble has burst, the worst possible scenario for Thai farmers: pledges will go unpaid, prices are falling and there's going to be no alternative for the foreseeable future.

The scenario is now also resounding throughout the region. Thailand now lays claim to being the no. 1 world exporter once again. But that is thanks to the need of the Thai government to off-load it's deteriorating stocks. The source, so mentions The Nation (Mar. 24) is CP Intertrade. Based on figures of the first 2 months of this year it estimates that Thailand is back on top. It also notes that this comes at a price: lower prices for exporters.

Giving weight to this assumption, oryzae.com notes that the income for the extra amounts dropped by 10% ...
'Thailand has exported 696,558 tons of rice in January 2014, up about 20% from around 580,983 tons exported in January 2013, according to the Thai Country Chamber and Office of Import-Export Goods Standards. However, in terms of value, Thailand’s earnings from rice exports declined to around $376.51 million in January 2014, down about 10% from $416.23 million earned during the same period in 2013'.
And as could be expected, Thailand's gain is Vietnam's wane. Again oryzae.com (Mar. 3) mentions that Vietnam's exports are down by above 10% for January 2014. A solution to Vietnam's woes: to stock up and wait for better times, presumably after April ...

The lower prices are also affecting prices in Cambodia itself. Phnom Penh Post (Mar. 3) has an article on the losses for Cambodia. With harvests already stored, it's mostly the traders who will get stuck with declining stock value while having lent money to purchase the stock. The article also adds a soothsayer:
'Exporters and rice millers should keep their fragrant rice paddy and wait until the supply in the global market declines, advised Srey Chanty, an independent economist who focuses on agriculture issues.
“I think in the next three or four months, the fragrant rice price will bounce back to normal,” he said'. 
Now I don't believe he will be putting his own money in this thought ...

Such is the dire consequences that even the Bangkok Post sees the need to report on this (Mar. 3) quoting oryzae.com that prices for Cambodian rice had dropped by 7%.

And then today, the Phnom Penh Post notes an overall drop in rice exports from Cambodia:
'As Thailand sells its rice reserves and reforms in Myanmar are rewarded with more access to markets abroad, Cambodia’s total exports of milled rice are on the decline, falling more than 10 per cent in the first quarter of this year compared with the same period in 2013, according to industry insiders'.
Adding insult
As has been reported earlier in this blog, the EU are starting to flex their muscles trade-wise. Co-incidence or not, it comes after political uncertainty, have the rulers won the last election or not? 
Next up are fish exports, so reports the Cambodia Daily (Mar. 24):
'The European Commission (E.C.) will today ban all fish imports from Cambodia, carrying through on its threat made in November to punish the country for failing to show genuine commitment to tackling the global problem of illegal fishing, according to a memo released Friday'. 
Part of the problem seems to be lack of regulation.

Earlier in the month the EC also took aim at the sugar exports of Cambodia, though somewhat reluctantly it seems. 
There does seem to be a direct correlation between the number of land-conflicts and the recent surge in exports (quadrupling) of sugar from Cambodia. And it does help that the government is now weakened. 
The Cambodian side though is playing fair weather:
'He [Council of Ministers spokesman Phay Siphan] added that calls for the EU to use its sizeable aid as leverage on the government was not constructive.
“No one is the master, we are partners … [with] a different culture and a different mindset. [But] it doesn’t mean that the government is not doing anything to improve that. We [work] daily to tackle the issues.”
More problems on the rice export horizon: hackers. The Phnom Penh Post (Mar. 21): 
'Cambodia's rice industry has come under attack in recent months from online criminals attempting to defraud buyers and disrupt exporters’ websites, industry insiders say'.

Wednesday, February 26, 2014

Hypocritical

I could spend a huge amount of this blog on the on-goings in Thailand: rational analysis, past present and future. But I am not.
Much of what has played out in the last few weeks in Thailand concerning rice pledging and political scheming was to be expected. Government is weak and has problems continuing programme: the dèja vu! It's all great when you start the rice pledge programme, but it's like a drug: there's no way you can stop. without tears that is.
So yesterday, Thai farmers were in arms, today it's believed they might get their pay, so they are back on the land. Thai government corrupt? Oh no! Not again!
Despite the good years, it's odd to see how fast some farmers are to switch their allegiance ...

Well what else is there to report about?

Rules, my a**?
We could start off by looking at how Cambodia is struggling to market it's rice. The Phnom Penh Post (Feb. 17) reports on stringent rules concerning providence of it's rice export so as to prove to Europe that yes indeed it is Cambodia produce.
'Exporters requesting a certificate of origin from the Ministry of Commerce will be required to show proof through invoices and receipts that the rice is local.
An audit committee consisting of both industry and non-industry representatives is tasked with investigating claims of fraud.
Penalties include the permanent revocation of an exporter’s certificate of origin, which strips the business of duty-free access to Cambodia’s largest market'. 
If this were to happen, the cost of exporting Cambodian rice just got more expensive and wrought with administration, yea! Note that David Van in a comment says it's bollocks, there is no need for a certificate. So article wrong?

Earlier this month (Feb. 4) the Phnom Penh Post had a re-cap / re-hash on the story. 
Italy seems to be lobbying for denying no-tariff imports for Cambodian rice. It's unfair to Italian farmers. This despite the fact that Italy produces different rice and hardly any note-worthy exports from Cambodia. Reaction:
'David Van [there he is], deputy-secretary general for the Alliance of Rice Producers and Exporters of Cambodia, said in an email yesterday that it was hypocritical of the Italian government to claim developing countries were receiving unfair subsidies, as European countries have long benefited from similar EU deals'. 
Trouble is that the importing country sets the rules ....

Lower market prices for Thai rice result in poor conditions for Cambodian rice exports, (Phnom Penh Post, 20 Feb.):
'Stockpiles accumulating since the [Thai rice pledging] scheme was introduced in 2011 have risen to record levels [in Thailand], and an anticipated fire sale has buyers holding out in anticipation of cheap rice flooding the market. Cambodia and other countries are taking the hit'.
Exporters must decide: to move their stock or to accept lower prices. 

Elsewhere, the importance of rice and rice exports to Cambodia was highlighted through a World Bank assessment which highlighted how the number of poor in Cambodia had halved since 2004. Main reasons were increasing prices for rice and higher productivity. 
Especially higher prices seems to contradict common logic which says that low prices are good for the poor. They're not.
The article in the Cambodian Daily (Feb. 21) also highlights that though the poor has halved, most now languish in the near-poor category!

Resistance
Or we could note that Burma exports are increasing to Japan (Nation, Feb. 7). As well as smuggling to Thailand. Britain's Telegraph (Feb. 4) has a first-hand report from Burma, opposite Mae Sot, where large scale smuggling is taking place.

Meanwhile in Laos, farmers are apparently defying private armies trying to rob them of their lands (Radio Free Asia, Jan. 22), now why is this not a headline? 
'In a rare act of resistance, dozens of rice farmers in northern Laos have defied armed police orders to vacate land seized by a Chinese company wanting to build an airport as part of a casino-driven special economic zone, according to villagers.
The 50-odd farmers refused to budge when policemen, armed with AK-47 assault rifles, moved on Friday to enforce an order by the King Romans (Dok Ngiew Kham) Group for the farmers to leave their rice fields to make way for the construction of the airport in Tonpheung district in Bokeo province'.
Then in the Philippines where rice smuggling, or rice importing at inflated prices is all the rage. But those pinpointed alleged receivers are suddenly not fit to face a Filipino Senate committee (Oryza, Feb. 24).

Up your street
Or we could note that Thai research has found out that their farmers are a lot worse off than Vietnamese and Burmese farmers (despite the higher prices?). Thai farmers are hampered by the high cost of inputs so concludes the article on the research by University of the Thai Chamber of Commerce (Bangkok Post, Feb. 26).
But a quick flick through the article learns that the low productivity is the crux of the discussion and probably the high cost of labour, it's not clear.
Even worse is the conclusion, that it in part is due to the governments rice-pledging scheme. That seems to be the world upside down. But yes, that's how it is seen. The backers are requesting the government (which one?) to use subsidies to drive down production costs. 
But how? Will they want to lower labour wages? Give hand-outs to fertlizer and chemical producers? 
If you believe rice-pledging was hampered by graft and accountability, then why would you propose even less accountable alternatives?
One mistake (besides graft and accountability; no matter what you do these will always remain a problem in the Thai context) the government made was to think that the rice pledging programme would be self-sufficient: hoarding would lead to higher world prices. Market conditions were not so and the government failed to act.
And now I still being sucked into the discussion ....

Anyway, Siam Kubota's profits will drop so reports the Bangkok Post (Feb. 25 ) mainly due to lower purchasing power of farmers because the price for rice is lower. So, obviously the reverse is true, the rice-pledge has lead to increased investment. Or not?

And the Bangkok Post (Feb. 24) has a rather lengthy exposé in which they calculate that organic rice growing is as profitable as for non-organic. So if their consequence support for lowering input prices (above) is thought through, this would be distorted and yes the subsidies would mean more chemicals on the farms, good to see Bangkok Post jumping on this bandwagon!