Keeping up to date with hybrid rice developments especially in Southeast Asia is not really an enduring task. However if the price of rice is tantamount, it means following the rice pledging saga of Thailand (see below).
But let's start with some company news.
Devgen, the Belgian rice-hybrid pioneer, is being gobbled up by Syngenta (Bloomberg, 21 Sept.). Price is just over US$ 520 million, including a 70% premium! The logic behind is a gamble. But as competitors such as Bayer and BASF are already ahead in the game, it's a not a question of why not to step in, but when. Now.
Interesting is that the major players are looking more into pipeline technologies, so as to be able to combine hybrids with their own produce. They are not in the seed business. Or else a company such as SL Agritech may well have been purchased ....
But let's start with some company news.
Devgen, the Belgian rice-hybrid pioneer, is being gobbled up by Syngenta (Bloomberg, 21 Sept.). Price is just over US$ 520 million, including a 70% premium! The logic behind is a gamble. But as competitors such as Bayer and BASF are already ahead in the game, it's a not a question of why not to step in, but when. Now.
Interesting is that the major players are looking more into pipeline technologies, so as to be able to combine hybrids with their own produce. They are not in the seed business. Or else a company such as SL Agritech may well have been purchased ....
Hybrid hype?
SL Agritech will team up with Capital Rice of Thailand to produce hybrid rice in
Burma. SL will provide technical input, Burma the cheap land/labour and
poor legislation while CR will market the produce ... If all would be so
wholesome, why the need to obtain land in Burma?
Local news
Another deal done with China (Phnom Penh Post (PPP), 5 Oct.). But is it a deal done?
Rice registration? The PPP (4 Oct.) treats it's readers to an unclear article. Or is the proposed policy unclear?
Well, the Arab Emirates are not buying in Thailand, but according to the PPP (2 Oct.) they may well want a slice of Cambodia's rice cake. The good news:
Cambodia = World's Best Rice? According to the World Rice Conference, Cambodia was the winner. From Oryzae.com.
Not directly rice, but PPP (27 Sept.) reports that transport costs remain high in Cambodia:
Laos has decided that it's farmlands are worth protecting. In line with some other Southeast Asian countries (the Philippines?), changing the land use of paddy field to anything other than that may become more difficult. According to the Vientiane Times (9 Oct.):
And what if the enlighten folk of Lao PDR manage to steer this through? A venomous and embarrassing (to the Lao officials) piece of writing is to be found on New Mandala. In the article, the author goes to lengths to scratch the veneer and delve the depths of just one land removal (= land-grab), albeit the most famous, that of Vientiane's Don Chan gardens. A must read.
Rice registration? The PPP (4 Oct.) treats it's readers to an unclear article. Or is the proposed policy unclear?
'In an effort to promote rice exports among Cambodian farmers, government officials said on Tuesday they will register the type of rice seed set for export and the rice seed produced for the national market'.
Well, the Arab Emirates are not buying in Thailand, but according to the PPP (2 Oct.) they may well want a slice of Cambodia's rice cake. The good news:
'Kim Savuth [Chairman of the Federation of Cambodian Rice Exporters] said he already conducted a study about the Arab market last year.Let's hear it for not strict. The bad news? The articles title is misleading [UAE asks for more rice], it´s Cambodia wanting to push their produce ....
“I found out that they are not strict on the quality of milled rice,” he said'.
Cambodia = World's Best Rice? According to the World Rice Conference, Cambodia was the winner. From Oryzae.com.
Not directly rice, but PPP (27 Sept.) reports that transport costs remain high in Cambodia:
'The comparison found Cambodia’s free on board (FOB) costs were US$ 35 a tonne, whereas Thailand and Vietnam costs per tonne were $17 and $16 respectively'.That's more than double.
'PCF’s comparison shows that poor logistics and infrastructure make Cambodia not only more expensive but also less efficient than its neighbours'.Organic rice? PPP reports (26 Sept.) that
'Five metric tonnes of certified organic rice — the first such shipment from Cambodia — will depart for the European Union this Friday'.Organic not only refers to the method of growing, but also to the miller.
'“For insect and vermin control, we avoid using poisons. In terms of catching mice and rats, we set traps rather than risk contaminating the paddy by poisoning them,” he [Green Trade chairman and director-general Virak Thon] said'.I hope they he is not implying that non-organic rice contains rat poison?
Laos has decided that it's farmlands are worth protecting. In line with some other Southeast Asian countries (the Philippines?), changing the land use of paddy field to anything other than that may become more difficult. According to the Vientiane Times (9 Oct.):
'If the proposed regulation goes ahead, it will prohibit the converting of agricultural plots which have been surveyed and allocated for agricultural production purposes, for non-agricultural usage'.Considering that the intention is sustain food security they will have to limit this to rice paddies, me thinks ...
And what if the enlighten folk of Lao PDR manage to steer this through? A venomous and embarrassing (to the Lao officials) piece of writing is to be found on New Mandala. In the article, the author goes to lengths to scratch the veneer and delve the depths of just one land removal (= land-grab), albeit the most famous, that of Vientiane's Don Chan gardens. A must read.
One way of dealing with land-grabs is to call on consumers. For instance CropWatch mentions (on Sept. 11) that Cambodia activists (read mostly non-Cambodians, but with their hearts in the right place) are trying to garner international attention.
'Human rights monitoring groups and Cambodian activists are calling for an international boycott of Tate & Lyle and Domino Sugar, who do business with sugar suppliers accused of participating in government-sanctioned land grabs and illegal evictions throughout rural Cambodia'.
To pledge
We now have a tedious listing of the past months newsworthy pieces concerning Thailand's rice-pledging system.
Recap. On the face of it, the main factors are all too simple. For political reasons the government seeks to intervene in the market, i.e. acting as wholesale buyer at preferable rates. Fine for farmers, everybody now knows the rate and it means less fluctuation in price (so better to forecast returns). The government then needs to act on what they have purchased, it's stockpile. Because of the favourable price, the stockpile is bigger than the estimate. But governments are poor market players. Possibly they could sell easily in an market with increasing prices, but with prices remaining the same or dropping they need to use their non-existent business acumen.
Recap. On the face of it, the main factors are all too simple. For political reasons the government seeks to intervene in the market, i.e. acting as wholesale buyer at preferable rates. Fine for farmers, everybody now knows the rate and it means less fluctuation in price (so better to forecast returns). The government then needs to act on what they have purchased, it's stockpile. Because of the favourable price, the stockpile is bigger than the estimate. But governments are poor market players. Possibly they could sell easily in an market with increasing prices, but with prices remaining the same or dropping they need to use their non-existent business acumen.
In the meantime, competition (from other countries) will be making hay. With little or no effort, their produce will have increased in price (the supply has been choked) while volume will also have increased.
See here the winners (traders and farmers all over the globe) and losers (Thai government / taxpayer; tank u!)
But in practice the rice-pledge scheme has now become a daily battle front with traders and the Thai opposition on one side and the government on the other. What here follows is just the last 3 weeks worth of reports:
- The government will continue the rice pledging scheme according to Bangkok Post (BP), 20 Sept.:
'A recent opinion poll showed farmers appeared to be supporting the programme. It was found that 86.5 per cent of farmers surveyed wanted the government to implement either a price-pledging or a price-subsidy scheme. And more than 35.4 per cent of the respondents said they were more satisfied with the price-pledging option because they could get more money and get paid faster'.
- 22 Sept., BP:
Discussion has forty plus reactions ...'MR Pridiyathorn [former deputy premier and finance minister] is one of the key people campaigning against the rice pledging scheme as he believes it will "cost the country a huge loss".
On 11 Oct. BP reports though that the legal challenge has been lost ...
- Nation (22 Sept.): Traders question goverments estimates:
'Was the projection based on the total pledging volume this year? And how can the government prove that all that rice seed is Thai?'
- BP (24 Sept.) gives air-time to former PM Thaksin: Rice-pledging is a good thing. Example:
'Southeast Asia's second-biggest economy expanded 4.2% in the three months through June from a year earlier, exceeding all 16 forecasts in a Bloomberg News survey that had a median prediction of a 3.1% rise. The rice policy "helped boost the economy in the first and second quarter," Arkhom Termpittayapaisith, secretary-general of the National Economic and Social Development Board, said on Aug 20'.
- Thai Central Bank advises against extending rice-pledging programme (Nation, Oct. 3).
- BP (4 Oct.) lets PM respond:
'Ms Yingluck said Tuesday the rice pledging programme was aimed at helping rice farmers and the rising incomes of farmers would eventually stimulate the national economy'.
- BP reports (on Oct. 9) that a 'panel' has uncovered fraud. A mish mash, including:
'... about 200 tonnes of rice smuggled into Sa Kaeo from a neighbouring country has been confiscated. Authorities suspect the owners of the rice intended to sell it under the pledging scheme as domestically produced paddy. A probe has started'.
Yet again, forty plus reactions.
- The Nation (Oct. 9) notes that the Agricultural Bank needs to top up on cash for pay-outs to farmers. It also lists the whole discussion once more. Including this:
That will be the day ...'The government believes that when Vietnam sells its rice, the price of Thai rice will automatically rise'.
- Then it gets weird. BP (10 Oct.):
'Officials who implement the government's controversial rice pledging scheme could be damaging the country and risk being taken to court, a senior economist from the Thailand Development and Research Institute (TDRI) has warned.... ... claims the rice pledging scheme is a breach of the constitution as it causes market distortions and disrupts normal trading practices'.The end of government?
- The Nation (10 Oct.) meanwhile lists the winners and losers.
'An exporter source said the country's top five rice exporters - with the exception of Siam Indiga - have faced export drops in terms of both volume and value by an average of 40-50 |per cent....According to reports from Thailand's Foreign Trade Department and Customs Department, during the first seven months of this year, rice exports to Indonesia have dropped significantly by 52.61 per cent to 297,640 tonnes; to the Philippines by 99.85 per cent to 246,000 tonnes; to Bangladesh by almost 100 per cent to 58,000 tonnes; to China by 65.8 per cent to 65,003 tonnes; and to Ivory Coast by 46.24 per cent to 173,014 tonnes. Remarkably, those markets have been named by the government as its key buyers under government-to-government contracts'.
- Sales might have taken place according to BP (12 Oct.):
'Mr Boonsong [Commerce Minister] has claimed the government has signed contracts to export 7.3 millions tonnes of rice under the controversial pledging scheme, though critics question whether the deals exist and have called for evidence.Addressing a press conference yesterday, Mr Boonsong provided only slightly more information than he had previously. The minister was ordered by Prime Minister Yingluck Shinawatra to disclose "as much as possible" on the G-to-G deals so that the public might better understand the much-criticised pledging scheme'.
- Topping off (BP, 13 Oct.):
'The use of a cargo terminal at Don Mueang airport to store pledged paddy has become the latest headache to hit the government's controversial rice pledging scheme....The reason the government had to store the pledged rice for the time being was not because it had a problem with exporting the product but because it needed to wait until rice prices improved in the world market, he said'.
- Then there is the Nation's (11 Oct.) own wrap-up. Excerpts:
'On the subject of Thailand's rice policy, many will agree that raising the price of rice is a good thing as long as it is not so high that Thailand prices itself out of the market completely. Unfortunately, that is increasingly the case...But poor Thai farmers won't know what to do or who they can turn to when the sky falls, as their government's policy has completely destroyed the very mechanism that has successfully sold their crops all these years'.
What is clear is that government involvement is thwart with so many potential disasters, even if in hindsight the original objectives are achieved, upsetting the market chain is hardly going to have a positive outcome. One wonders if simply handing out the cash might have been a better way of supporting the rural poor ...
Interesting is the discussion on Thaivisa. Q:
'How Much Does A Thai Rice Farmer Receive Per Kg ? ?'A:
'The only person I know whose wife is a rice farmer got 12,000 baht per ton of rice up here in Khampaeng Phet province instead ot the "promised" 15,000 baht.
Not too bad in a way as it was "only" a 20% ripoff instead of the usual 30 or more %.
...
Last year the wife decided to sell some of her rice to get the governemnt price which I think was supposed to be 20B/kg. Anyway first she had to have her land papers as only people with proper chanote title could claim. So she loaded up the truck, about 3 tonne, and headed to the local major rice buyer, there are several but only one that buys for the goverment scheme. Gets there at about 8am takes a ticket and finally gets to be the second last load to be taken for the day at just before 4:30pm. They take a sample and tell her, "too much red rice, no good, can't buy" so she brings it home. Next day she heads off to the smaller buyer she normally goes to and he pays her 14.5B/kg'.
Oh, and by the way, Laos now wants to do the same. Vientiane Times (25 Sept.) reports the following:
'The government is proposing that, during the wet and dry seasons of 2012-2013, the public and the authorities should buy paddy sticky rice from farmers or producers for no less than 2,500 kip per kg, and not over 3,000 kip per kg from the rice association, rice mill groups or other businesses'.
Odd, so it's just an advice, like hell that will work. Not.
It also notes that last year policy:
It also notes that last year policy:
'... the government banned farmers from exporting rice, including to neighbouring countries, as it had caused an unacceptable spike in the price of rice'.
So is the price too high or to low?
Prices
Interestingly, ODI mention that
'Unlike stocks held in China and India that are unlikely to be exported, those held by Thailand are such a strain on warehouses and finances, that at any sign of rising rice prices, they will probably be offloaded on the world market. They are therefore a significant insurance against rice harvest failures'.
So the Thai are doing global consumers a favour!
