Disbursement

Falling prices for rice are holding Southeastasian nations at a ransome as rural communities are taking their complaints to the urban centers of power. 
It also means that the governments are in an uneasy position to answer the age old question: how to transfer funds from the urban rich to the rural poor?

Cambodia with it's administrative efforts still in their infancy has chosen to seek the business sector to invest more. 
Problem is that with falling prices the business sector (if interested) is only interested in buying at deflated prices, as after cleaning, grading, storing and handling prices would probably tend even lower, So by offering even more deflated prices they just might make a slight profit. Or they will not take the risk at all.

The Phnom Penh Post (Oct. 10) reports on the recent industry targeted initiatives:

'Three weeks since Prime Minister Hun Sen approved $27 million in emergency loans to prop up the struggling rice sector, the state-owned bank charged with disbursing the funds said yesterday that it has only granted $1 million in loans, claiming that the number of eligible applications has been lower than expected as millers have failed to meet the necessary collateral requirements'.

Foul
Thailand meanwhile has a long history of devising schemes to transfer funds to rural areas. 
Unfortunately the current junta has chosen the previous democratic governments efforts in this area as a way to write the politicians possible futures off altogether. Instead of focusing on the real shortcomings in the electoral system and dealing with these. 
It has meant that any transfer which directly enhances prices or puts money in the hands of farmers is now circumspect. 

But how to deal with previous regime's policies? Criminalise them, personalise them. What this means, that once the junta will step aside (much of their policies are likewise having little effect) is probably underestimated by themselves ...

Let's start with the Bangkok Post which has an opinion article (Oct. 13). In it they seek to solve the riddle of transferring funds to rural areas. What they fail to realise are economics in which the earnings of urban classes are a multitude of those in rural areas with the gap widening.

Former prime minister Yingluck Shinawatra has cried foul about the compensation, sought by the current regime, for damages caused by her government's loss-ridden rice-pledging scheme. She should instead have paid heed to concerns over irregularities and the scheme's lack of sustainability when she was in power.

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What these governments have in common was the failure to help farmers realise the risks in their investment, learn how to enhance their productivity, and become more competitive. Those policies did not help uplift their livelihoods in the long term.

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Mass production should be shifted to farming that creates a niche based on rice varieties. For example, a strong focus should have been given to organic rice breeds with unique and high quality. Policy makers should also capitalise on existing studies that can help farmers improve rice quality. However, if rice continues to be used by politicians as a political commodity, it will be unable to reach its true potential for a niche market. It will be used as part of populist policies without sustainable measures to truly uplift the quality of Thai rice and Thai farmers.

With a political process which has vote buying at it's heart, there will never ever be substantial progress in delivering to the rural communities other than hand-outs. And as said it fails to understand the opportunity costs, even the rural poor understand that running a business trumps toiling in rice fields. 
But also look at the so-called west, even here handouts in rural areas are seen as possibly the most effective way to ensure a degree of food sufficiency as well as encouraging a livable countryside.

The junta has finally done their sums and has presented the costs to the ex-PM. The Bangkok Post (Oct. 21) reports on the roughly 1 billion $US fine:

Former Prime Minister Yingluck Shinawatra said the junta had fined her 35.7 billion baht over the rice pledging scheme. She said outside a Bangkok court on Friday that she had received a notice two days ago ordering her assets to be seized.

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Gen Prayut Chan-o-cha, in his capacity as the junta chief, in mid-September issued an order by his absolute power under Section 44 of the 2014 interim constitution to have the Legal Execution Department seize the assets of state officials liable to pay civil damages under the scheme. The executors will have immunity in doing their duties.

Is this realistic? The Asian Correspondent (Oct. 26):

THAILAND’s Prime Minister Prayuth Chan-ocha [junta chief] has defended the regime’s order seeking BHT35.7 billion (US$1 billion) in compensation from his ousted predecessor Yingluck Shinawatra as punishment for her role in her administration’s failed rice scheme.

According to Bangkok Post, the leader said he believes the fine to be fair, noting that the quantum was decided after consultation with lawyers, including those who drafted the 1996 Tort Liability by Officer Act. He said his legal advisers assured him that the punishment does not violate the spirit of the law.

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On Monday, the leader of the Pheu Thai Party slammed the military regime for the punishment, accusing it of applying different standards on Yingluck.

“In the past, there were many public policies that used state funds to solve problems, but no former prime minister had to take responsibility for them, even in clear cases of losses of state funds.

“What’s also important: Does a government from a coup have legitimacy to demand accountability from the government that it seized power from?” Pheu Thai Secretary General Phumtham Wechayachai wrote on Facebook, according to Khaosod English'.

Then the junta's scheme. The Bangkok Post (Oct 28) notes the impatience:

'The government is being urged to speed up the implementation of measures to curb a sharp fall in price of Thai Hom Mali rice, particularly this year's pledging scheme for farmers with their own rice barns'.

Bangkok Post (Oct. 28):

'Farmers in Chai Nat province have started putting up "for sale" signs on their farmland amid plummeting rice prices. The decisions came after they could no longer shoulder losses and needed cash to repay bank loans'.

Bangkok Post (Oct. 29):

Rice farmers in some provinces have grown increasingly impatient and are imploring the government to help them after prices plunged to a 10-year low.

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Rice prices around the world have fallen as a record crop is forecast for the 2016-17 harvest season, the UN Food and Agriculture Organization (FAO) said in its latest Rice Price Update.

The FAO’s All Rice Price Index showed international rice prices in the first eight months of 2016 were 9% below the levels of a year earlier

The International Grains Council (IGC) also noted a sharp fall in export prices of Thai rice in August.

“The market in Thailand was weighed down by sluggish international demand and increasing secondary crop arrivals, while additional pressure stemmed from efforts by the government to offload state reserves through a series of auctions,” it said. “At $369 [a tonne], 5% broken rice was down by $43 month-over-month."

Then the details, once again from the Bangkok Post (Oct. 29):

'The government is set to announce the pledging scheme for farmers with their own rice barns in a move to curb the fall in rice prices. Commerce Minister Apiradi Tantraporn said the scheme, which will go before a national rice policy committee meeting on Monday for approval, will set a pledging price of not less than 10,000 baht a tonne for Thai Hom Mali and glutinous paddy'.

The announcement. Bangkok Post (Oct 31):

'The Rice Board has set the price the government will pay farmers under its barn programme at 11,525 baht a tonne for hom mali paddy compared to the market price of around 9,000 baht.
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Col Sirichan Ngathong, deputy spokesperson of the National Council for Peace and Order [junta], said on Monday that present rice prices were abnormal and there might be attempts to intervene market mechanisms for political purposes. 
This government's answer to the costly rice-pledging programme of its predecessor is a barn-pledging scheme. Although the methods are similar, a key difference is the government only subsidises the interest a state bank should have received for the loans to farmers. Growers also keep the grain in their barns instead of at contracted warehouses like in the rice-pledging programme. There are also restrictions which limit the number of farmers eligible for the subsidy to effectively one third of all farmers, unlike the "buy-every-grain" pledge of the Yingluck Shinawatra government'.

Soar

Despite all the negativity, the Phnom Penh Post (Oct. 7) reports that recent rice export figures are on the up:

'Cambodian rice exports soared by 54 percent year-on-year in September, after failing to meet last year’s levels for six consecutive months from March through August, according to the latest report by the Secretariat of One Window Service for Rice Exports.
Total rice exports in September amounted to 41,429 tonnes, compared to 26,969 tonnes one year earlier.
The surge in rice exports still leaves the cumulative total of rice exported since the start of the year – about 361,000 tonnes –two percent below the total shipped during the first nine months of 2015'.

And there's possibly more. The Phnom Penh Post (Oct. 25):

'Cambodia is close to signing an ambitious agreement with the Indonesian government that would pave the way for the Kingdom’s rice producers to export 1 million tonnes of rice under a new quota scheme, a state official said yesterday.

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Cambodia signed an MoU with the Indonesian government back in 2012 which outlined a more modest goal of exporting 100,000 tonnes of rice a year. Sophary could not comment on whether the target of the agreement was ever achieved'.

Then there's a Khmer Times (Oct. 14) article which reports on government involvement in branding the nations rice. It's not going well:

Two years after the Agriculture Ministry announced that it wanted a single brand under which Cambodian rice would be exported, disagreements between the ministry and the Cambodia Rice Federation (CRF) mean that nothing has yet been approved.

Despite the CRF proposing “Angkor Malis” as their preference, a lack of support from the Agriculture Ministry has meant that brand registration efforts have stalled, explained CRF vice president Hun Lak'. Upgrade
Meanwhile in Thailand, more progress on the branding front. The Bangkok Post (Oct. 12):

'The government has upgraded quality standards of Hom Mali fragrant rice in a move to highlight the identity of Thailand's premium long-grain fragrant rice. Duangporn Rodphaya, director-general of the Foreign Trade Department, said the Hom Mali designation will apply only to grains that contain 92% or higher Hom Mali content from December onwards. Grains with Hom Mali content of 80% or more, with amylose content of 20% or less, will be called Thai jasmine rice, Thai fragrant rice or Thai aromatic rice. Ms Duangporn said the overhaul aims at upgrading Thai rice quality standards to comply with the current trading situation, which requires a diversity of rice products'.

Vietnam has some problems. The vn.express (Oct. 1):

'Vietnam’s Ministry of Agriculture and Rural Development has decided to temporarily put on hold exports of rice to the U.S. due to pesticide residue issues.

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The Vietnam Food Association cited information from the U.S. Food and Drug Administration (FDA) as saying that in the first four months of this year, the U.S. rejected 94 rice containers from Vietnam, which are equivalent to around 1,700 tons of rice'.

Wonders how their exports elsewhere are faring. Samesame? The Bangkok Post (Oct. 10):

'The Commerce Ministry is speeding up inspections of glutinous rice stocks in Chai Nat province which were found to be contaminated as it prepares to take legal action against those responsible'.

Then some reports on the Thai government is trying to play the market. The Bangkok Post (Oct. 26):

'The government will pause its efforts to dispose of state rice stocks to curb any adverse impact on domestic rice prices as the latest harvest enters the market'.

And again the Bangkok Post (Oct. 22):

'Rice exporters have agreed to buy 200,000 tonnes of Hom Mali fragrant rice and store it in warehouses during November and December, the period when new supply from the country's annual harvest season starts flowing into the market'.

Raft
Away from rice there's a description of how freeing up the wheat trade in Thailand is resulting in lower domestic prices for maize and cassava. The Bangkok Post (Oct. 10):

'The government has agreed to closely monitor wheat imports, requiring each importer to report the volume of their imports three months in advance. The requirement seeks to curb imported wheat, which is tariff-free and has resulted in lower domestic maize and tapioca prices, causing local farmers to cry foul.

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Thailand waived import tariffs on wheat in 2013 at the request of animal feed producers. Before the move, wheat prices were about one to two baht higher than maize prices.Imports rose following the waiver, and wheat prices have been one to two baht lower than maize prices since 2014'.

Not everything is going down. The Phnom Penh Post (Nov. 2) reports on the pepper trade which sees it success being copied and exploited:

'Given the wild success of Kampot pepper, which can fetch up to three times the amount per kilo as Cambodian pepper produced without its prized label, it is hardly surprising that the product has its share of imitators.

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Nguon Lay, president of the Kampot Pepper Promotion Association, said that despite its GI designation, Kampot pepper producers still struggle against a raft of inferior imitation products primarily geared toward the steady flow of passing tourists.

Pepper producers need to “raise public awareness of GI in order to strengthen the regulations and add value to the product”, he said. Lay added that it was up to individual producers to respect this privileged and protected status.

“We still find that around 25 percent of the market is using the Kampot pepper name without ensuring that it is actually a Kampot product or meets EU quality standards,” he said.

This was a substantial improvement, he admitted, from just last year, when a market survey carried out by the association found that 75 percent of pepper products were abusing its name'.

Vientiane Times (Oct. 7) reports on Vietnamese struggle with sugar prices set to drop as markets get freed up.

'Hoang Anh Gia Lai Group (HAGL) has finally confirmed it is negotiating with Thanh Thanh Cong (TTC) to transfer its sugar mill in Laos to TTC - both companies are giants in their field, Vietnam's local media reported this week.

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According to HAGL's financial report announced on August 23, the firm racked up losses of more than VND1.07 trillion (US$48.2 million) in the first six months of this year. In the same period last year, it reported a profit of VND1.04 trillion.

The company, which has invested in various fields in Laos, recently reported that it may sell 20,000 hectares from 40,000 hectares of rubber plantation in Laos to Chinese partners in the event its proposed debt restructuring plan falls through as the company has been plagued by financial woes over its loss-making agricultural arm, according to Vietnam's Tuoi Tre News last month'

The Phnom Penh Post (Oct. 28) has an interesting article on the current status of Cambodia's rubber rush which was lead by foreign investment:

'The large-scale rubber plantations that arrived in force in Cambodia a decade ago as global rubber prices moved to historic peaks are facing sober prospects as trees they planted before the commodity’s prices headed south begin to reach maturity.

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Jef Boedt, general manager of Socfin Cambodia, the local arm of a Belgian-Swiss agro company with rubber plantations spread across Africa and Indonesia, said the first batch of rubber trees that the company has planted on 7,500 hectares in Cambodia since 2009 reached maturity earlier this year. However, this first tapping season has been limited, both at Socfin’s plantations in Mondulkiri province, and at others like it across the country.

“Right now, all the plantations that started planting six or seven years ago should be tappable today,” he said. “However, because the price and demand is not strong we are only tapping around 700 hectares when it should be around 1,500 to 2,000 hectares.”

He said limited tapping operations were yielding about 1.2 to 1.5 tonnes of rubber per hectare, whereas the standard business model is closer to 2 tonnes per hectare. So far, the company has produced around 1,000 tonnes of natural rubber this year, he added.

Boedt previously told the Post the company had invested $80 million into its Cambodia operations. Having waited seven years already to begin recouping this investment, its decision to press ahead with tapping aims at covering overheads, ensuring that workers are paid, and funding further infrastructure expansion'.