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.

...

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.

...
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.

...

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.

...

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.

...

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.
... 

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.

...

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.

...

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.

...

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.

...

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.

...

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.

...

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'.

Headache

A reference to an article by The Guardian (Sep. 14) on the Monsanto - Bayer deal kicks off this posting. The relevance is Monsanto leading the GMO production and leading the debate on GMO's with a hawkish view:

'Werner Baumann, chief executive of Bayer, which is most famous for developing aspirin, said “the combination of our two great organizations [will] deliver substantial value to shareholders, our customers, employees and society at large”.

But farmers and environmentalists warned the deal could lead to a reduction in seed variety, an increase in genetically modified crops and higher seed costs and therefore crop and food prices.

The proposed takeover is likely to face intense regulatory scrutiny in the US and Europe, particularly as it quickly follows two other mega-deals in the agriculture industry and would leave control of almost two-thirds of the world’s seeds and pesticides in the hands of three firms.

...

Hugh Grant, Monsanto’s Scottish chief executive, hit out at environmentalists saying their concern about GM crops “drives me a little bit nuts” and said they should be more worried about how to feed a fast-growing global population while using less water as global temperatures rise'.

Well, it seems that the formation of an agro-industrial behemoth seems to be of more importance to those taking a dim view of the merger. 
The companies involved would do better to address the legitimate fears, though with Monsanto, one of the globes most feared companies, it's quite unlikely to happen. 
And no doubt it's not the need to feed the world that lies at the heart of the merger, rather a complex financial deal ensuring shareholders and management an outrageous return.

Bloomberg (Sep. 19) takes a look at the logics of the merger and has difficulties at seeing the positives. 

'It appears that some of the opposition to the deal can be traced to a dislike of the companies involved, especially Monsanto'. 

The article notes that there's not much overlap between the companies, Bayer certainly is not involved in GMO, well far behind Monsanto. So the emerging company would have no monopoly power in GMO. 

It also concludes that it may well be management that stands to profit and also notes that the widespread dislike of Monsanto should not be the guiding principle into decisions concerning government regulation on mega deals. If the deal does fall through it would be Bayer shareholders who would end up the better.

Affirmation

With Cambodia cozying up to China, it's no surprise that China is sort of looking at acquiring Cambodian produce. Do note that even though there's substantial talk about a deal here and there, quite often they fail to fruit. After all the exported produce still needs to be sold to a consumer in China and they are increasingly becoming picky. 

So let's start with this from what Mekongoryza (Sep. 9) reports:

'Cambodia’s Prime Minister Samdech Akka Moha Sena Padei Techo Hun Sen held a short, but fruitful bilateral talk yesterday evening with his Chinese counterpart H.E. Li Keqiang, on the sidelines of the ASEAN Summits and Related Summits in Vientiane, Lao PDR.

According to the National Television of Cambodia (TVK)’s report, the talk focused on rice trade and China’s development assistance to Cambodia, as well as scholarship programme for Cambodian students.

H.E. Li Keqiang affirmed to increase the purchase of Cambodian rice from 100,000 tons this year to 200,000 tons next year, ...'.

Even the Bangkok Post (Sep. 9)  notices that Cambodia's Foreign Affairs stance is paying off.

'The Chinese government will import 200,000 tonnes of rice annually from Cambodia from next year, double the current amount, ...'.

Oddly, Laos is moving the other way.  Laos cuts rice exports to China so headlines the Vientiane Times (Sep. 17). It seems to contradict all rice export logic:

'Laos is reducing the amount of rice it exports to China after failing to fulfil an order for 8 tonnes placed by the country this year.

Director General of the Trade and Product Promotion Department under the Ministry of Industry and Commerce, Mr Somvang Ninthavong, told Vientiane Times on Friday that Laos had only been able to supply 2.5 tonnes of rice so far.

...

Mr Somvang said there was no policy to compete with China, Vietnam and Thailand in the rice market because Laos was a small producer. Instead, the department emphasises the high quality of the rice grown in Laos, focusing on this niche aspect rather than quantity.

...

The middlemen who buy rice in Champassak province would like farmers to grow a lot more rice that smells and tastes good, but farmers are unwilling to do so because the brokers aren't prepared to pay a higher price.

Farmers are growing plenty of rice but not the higher-grade varieties that middlemen want.

The kind of rice they seek yields about 2 or 2.5 tonnes per hectare and costs about 2,500 kip per kilogramme. But few farmers grow this kind o f rice because buyers won't pay a fair price'.

Market chills

Meanwhile it's domestic prices to the fore in Cambodia. Especially with the harvest near and the prices low, certainly lower than expected. But before we head there, let's look at this article in the New Mandala (Sep. 8):

'A four centuries long downward trend means grain prices aren’t set to soar any time soon, writes Jim Plamondon.
A decade ago, when grain prices spiked sharply upwards, many were convinced that rising grain prices were the ‘new normal.’
Influenced by new factors such as the economic emergence of China, global climate change, population growth, water shortages, and more, surely the price of grain (and especially rice) would continue to rise… right?
Wrong.
...
Clearly, the historical trend has been downward for more than 400 years. One might agree that this was true, and yet argue that “this time it’s different,” perhaps due to global climate change, population increases, changing dietary habits, the end of the Green Revolution’s productivity gains, water shortages, and the economic rise of rice-loving Asians, among many factors.
...
Their July 2016 publication, the OECD-FAO Agricultural Outlook 2016-2025, states that grain prices are likely to fall, and includes Figure 5 below (for rice, see the right-most chart in Figure 5). Notice that the real (that is, inflation-adjusted) price of rice is expected to fall more steeply than the other grains'.

The article then concludes that it is probably much better to invest public money away from that supporting grain production. 
In a further comment the articles author, Jim Plamondon, adds a possible surprisingly solution: don't produce grain, produce a product:

'But the thing that makes it [Cambodian Jasmine Rice] the best — its higher concentration of 2-acetyl-1-pyrroline, its main aromatic component — evaporates long before it reaches the high-value consumer. By chilling the best Cambodian Jasmine Rice ASAP after harvest and milling, and keeping it chilled until it reaches the consumer’s home, Cambodia can establish a new, de-commoditized, gourmet rice product'. 

Well, not surprisingly this lesson has not come too mind in the past month in Cambodia. Starting off with the Khmer Times (Sep. 16): 

'The Cambodia Rice Bank (CRB) will intervene to prevent the price of fragrant rice from falling further by offering to buy the staple grain directly from farmers at the market price of 840 riel (21 cents) a kilogram. The CRB also called on farmers to stop selling fragrant paddy rice to millers at below market price, according to a statement released yesterday.
...
Srey Chanthy, a rice expert told Khmer Times that many farmers could be made bankrupt if the price per kilogram of fragrant rice stays around 700 riel, from 1,200 riel previously.
“These farmers have debts to pay to microfinance institutions, fertilizer companies and mechanical harvester owners. On top of that they have no proper place to store their harvested paddy rice and no access to silos during the rainy season,” he said.
Mr. Chanthy said the only way out of this quagmire was for the government to disburse the promised emergency loans, through the Cambodia Rice Federation or RDB, of between $20 million to $30 million to rice millers and exporter to purchase rice for processing.
...
In a statement on Monday, the Ministry of Agriculture ordered all provincial agricultural departments to take action against rice millers who exploit farmers due to their inability to command a fair price for their paddy harvest because of a lack of bargaining power.
The ministerial order bans rice millers from block-buying the whole rice crop from farmers, just before harvest, and offering them a below market price for the exclusive purchase'.

Well, it's not known whether this measure will have a lasting effect, it did serve as a prelude to more ruffling of the rice feathers. 
The Phnom Penh Post (Sep. 19) reports a few days later how farmers are taking to the streets. Albeit unpaved country lanes ... :

'Attempting to call attention to the havoc low rice prices are wreaking on their livelihoods, hundreds of farmers in Battambang’s Sangke district took to the streets yesterday, symbolically pouring rice onto National Road 5.  

...

Some have blamed the dip in prices on an upsurge in the amount of rice imported from Vietnam. “Vietnam produces far cheaper rice than we do, so it is very appealing to the traders to buy Vietnamese rice and distribute domestically,” said Khem Bunlen, executive director of the Cambodian Farmer Rice company'.

The Phnom Penh Post (Sep. 19) does note some hope:

'Rice millers said yesterday they welcomed the prime minister’s announcement that the government would make over $20 million in funds available shortly to support cash-strapped millers and prop up falling paddy prices.
“We’ve been waiting for these loans for a long time like fish waiting to be fed,” said Phon Nary, director-general of Heng Huch Rice Mill in Battambang province. “I hope to receive the loans soon so that we can survive.”
Cambodia’s rice industry is facing a crisis as two consecutive years of drought take their toll on farmers and millers struggle to stay afloat.
...
Song Saran, CEO of Amru Rice, said he welcomed the prime minister’s announcement, but he felt the government’s commitment to the rice sector was long overdue and the loan package would only cover about 10 percent of the capital needed by millers to buy rice from farmers at a fair price. He estimated that an additional $50 million would be needed to ensure that prices remained stable'.

As does the Cambodia Daily (Sep. 20). Note how the press are skeptical in whether or not the policy will have any effect.

'In the latest effort to mitigate the impact of plummeting rice prices, Prime Minister Hun Sen said on Monday that the government was seeking $300 million from China to boost the capacity of rice millers and provide funds to them for purchasing paddy from farmers.

The announcement, made during a graduation ceremony in Phnom Penh, came just days after the premier approved a $27 million grant to rice millers for purchasing paddy—$20 million from the government and $7 from the Rural Development Bank. The average price per ton of paddy dropped from $250 in mid-August to $193 last week.

...

Miguel Chanco, lead regional analyst for Economist Intelligence Unit, said the government’s financial intervention was no surprise, as it “could benefit the ruling party politically at the coming commune elections” set for June next year.

“However, if we were looking at a longer time horizon, I wouldn’t say that it’s a sector that I would put all my cards on as rice prices are unlikely to return to the heights seen in the late 2000s,” Mr. Chanco added.

“Public funds would be better spent on long-term measures to wean more people off rice farming, thereby reducing Cambodia’s vulnerability to the ebb and flow of global commodity prices.”

Then come unorthodox measures. The Phnom Penh Post (Sep. 21):

A day after a state bank called on Cambodians to buy domestically milled rice to help a government scheme to stabilise prices in the sector, multiple ruling party officials were reaching into their own pockets to do just that.
The Rural Development Bank – tasked with distributing $27 million in emergency grants to millers so they can raise their price for paddy rice – yesterday featured a list of officials and businessmen on its Facebook page who had heeded their call on Monday to buy local product.
Noting some of the buyers were members of Cambodian People’s Party working groups, the post said the group had bought more than 100 tonnes from Battambang miller FedRice.
Undersecretary of Finance Ros Seilava, among those to order from the Battambang firm, echoed Rith’s remarks. “I do not think it is about political affiliation,” he said. “The government intends to solve the problem.”
The government’s loan package aims to stabilise the price of paddy rice, which has fallen precipitously from $240 per tonne to $192 per tonne over the past month, leading to protests by rice farmers over the weekend in Battambang.
Millers will be offered loans at 8 percent annual interest on the condition they purchase rice paddy from farmers for no less than $218 per tonne – a price that ensures farmers make a profit on their crop.
Reached yesterday, FedRice stock controller Chi Vaon said the company was selling their product at between $530 and $540 per tonne, which included transportation to Phnom Penh.
Vaon welcomed the demand in the wake of the bank’s call, but called for more government measures to improve exports.
Political analyst Ou Virak yesterday said that the mobilisation of the CPP’s patronage network to “rescue” farmers might bring short-term relief for some, but did nothing to address the need for long-term reforms.
“The problem with the patronage system [is that it] kind of works in a way, but it’s limited to crisis response,” Virak said.
“It’s also part of the reason why there’s no systematic or institutional way of dealing with or preventing these crises.”
Meanwhile, Miguel Chanco, lead ASEAN analyst for the Economist Intelligence Unit, said he wasn’t surprised to hear of CPP working groups moving in to help create demand, particularly with commune elections approaching.
“I think short term, there’s no question it is going to provide some relief to rice prices, but at the end of the day, Cambodia is still very much out-priced in the global rice market, which is at the moment oversupplied,” he said.
“So regardless of what the government does in the short term, international price trends will still remain very weak going forward.”

More short term stop gap measures ...

And who is to blame? Cambodia Daily (Sep. 22):

'With the government scrambling to protect farmers from rapidly falling rice prices, Agriculture Minister Veng Sakhon on Wednesday poured blame on the private sector for boosting competing countries at the expense of Cambodia by importing products that could be sourced locally.

...

During a news conference at the Agriculture Ministry’s headquarters in Phnom Penh on Wednesday, Mr. Sakhon said Cambodia’s general failure to compete with its neighbors in rice sales was due to a lack of innovation and research by local businesspeople.

“Regarding the private sector, they are careless and not smart about competing in business,” he said. “They are not smart enough to compete regionally.”

Both Vietnam and Thailand have gradually lowered the price of their exported rice since 2012 in order to compete internationally, Mr. Sakhon said.

Cambodian businesspeople “should study the market prices and what our friends around us are doing—what they are able to do and what we are not able to do. Because it is very unfortunate that although we have customers, we make a loss,” he said.

...

Lay Chhun Hour, CEO of City Rice Mill in Battambang province, said basic utility costs were already stretching the private sector, and that the government needed to come up with a plan to support long-term efforts to strengthen the country’s rice sector.

“How can we be smart if the cost of electricity—an important factor of production—is high?” he asked, citing significantly lower costs in neighboring countries'.

It may well be, that these measures have effect. The Cambodia Daily (Sep. 26):

'The government’s injection of funds into the rice sector and call for officials and wealthy friends to purchase paddy has put the domestic market back into motion after a sudden plunge in prices, according to the Rural Development Bank (RDB).
...
Ser Lalen, general manager of Hakser Rice Mill in Kompong Cham province, said he had seen a drastic increase in sales since the government’s campaign began about a week ago. Because of this, sales for this month and last month increased by 30 percent compared to last year, to 45 tons of milled rice.
He said the government stimulus had driven the increase.
“As we have support from the market, we decided to buy much more paddy from farmers,” he said, explaining that the mill’s intake had doubled from 50 tons during this period last year to 100 tons this year.
But according to Sam Arth Veasna, vice president at Federation of Cambodia Farmer Organizations for Development, many farmers have still been left out.
“The government has spoken out about the falling paddy price, but I see that implementers—rice mills, traders—do not listen,” he said, adding that farmers in Battambang province were still being offered well below normal prices despite blocking a highway in protest last week'.

More measures. Phnom Penh Post (Sep. 27):

'The state-owned bank entrusted with extending $27 million in emergency loans to millers to purchase rice paddy has marginally lowered the interest rate on these conditional loans in an effort to shorten some of the strings attached.

The Rural Development Bank (RDB) announced late on Sunday that it would lower the annual interest rate on loans to rice millers to 7 percent, from 8 percent.

...

Under the terms of the lending package announced last week, millers who accept the loans are required to purchase paddy rice from farmers at $210 per tonne at the farm gate or $225 per tonne at their warehouse'.

But alas. The Cambodia Daily (Sep. 30):

'Rice paddy prices have taken a new dive to less than $150 per ton ahead of the Pchum Ben holiday in an ongoing crisis that has only deepened despite government intervention earlier this month.

Sinking from $250 per ton in the middle of last month to $192 earlier this month, the government approved $27 million in subsidies to help mills purchase paddy from farmers and appealed to officials and friends of the CPP to buy paddy and dry it themselves, making room for more at mills.

...

With international paddy prices continuing to fall, Hun Lak, vice president of the rice federation, said the current crisis is likely to carry into the country’s main harvest season in November unless the government intervenes again.

At that point in time, the issue would become “bigger than now,” he said.

Chan Sophal, director of the Center for Policy Studies for Cambodian Development, agreed that there is little that could be done to help farmers through this struggle, except by continuing to pour money into the sector.

“I don’t expect the government to have enough cash to help every farmer,” he said.

“It’s not looking good for the coming harvest in November and December.”'

If anything, a lesson learnt (though it was known before the lesson was started). Governments simply can not intervene in rice markets, other than becoming a major player one self. Throwing money at problems concerning rice pricing does not work.

The AECnewstoday (Oct. 5) tries to conclude the speed bumps, but adds:

'According to Reuters, the Cambodia rice sector have a hard time competing with other Asean rice exporters such as Thailand and Vietnam because of expensive transport and higher electricity prices.
Kenn Kunthy, chief executive of rice miller Battambang Rice Investment Co, told Reuters that falling rice prices were a global trend and the Cambodia rice sector faces fierce international competition. ‘”There have been no orders from abroad so millers couldn’t buy rice from farmers”,’ Mr Kann said.
...
Prices being offered by mills affiliated with the rice federation had fallen to about $150 per ton for paddy on October 5, despite the stimulus subsidies'.

Sealed 

Some sideline news from Cambodia. The Cambodia Daily (Sep. 29):

'In an effort to stir national pride and bolster the faltering rice sector, the Cambodian Rice Federation has created a seal emblazoned with the federation’s logo to identify rice that has been grown and milled in Cambodia.

And if the carrot doesn’t work, they are also prepared to use a stick: more vigorous enforcement of laws that punish those who sell imported rice falsely claiming that it is 100 percent Cambodian grown.

...

Var Roth San, an adviser to the Commerce Ministry, said that those selling “fraudulent rice” would be jailed for a year and have their business closed. Those who used the federation’s seal fraudulently would be jailed for five years.

The moves come as sluggish global demand for rice has hit markets across Southeast Asia, driving down prices and bringing Cambodian rice into steeper competition with its neighbors. The government has pumped money into the rice sector over the past two weeks to prevent farmers from going bankrupt.

Challenges also come from further afield. Nigeria, once the world’s second-largest importer of rice at 3 million tons per year behind China, which imports 4 million tons annually, started self-sustainability measures last year and for months at a time has completely frozen rice imports. Other West African nations are following suit, Mr. Bassett said.

Thailand, meanwhile, is trying to rid itself of a nearly 10 million ton rice surplus and Vietnam, with its more cost-efficient production, is able to maintain a significantly lower price point for its crops, which frequently cross its porous border with Cambodia'.

Then the concept of niche marketing. The Phnom Penh Post (Sep. 16):

'GIZ Cambodia, a branch of Germany’s international development agency, signed an agreement yesterday with local organic food retailer Khmer Organic Cooperative to provide technical support to develop organic vegetable production and to assist the firm in obtaining certification for its products.

The agreement calls for the establishment of two demonstration farms for organic fruits and vegetables that will later be used as a national organic training centre. It also aims to strengthen regional market linkages, establish local organic supply networks and raise consumer awareness'.

Fair and square

How to deal with political opposition? Get them financially.

Despite Thailand continuing to thrive on corruption and nepotism, the junta sees fit to persue legal challenges (from biased courts) so as to discredit previous democractic governemnts. And the stick used is the previous governments extravagant rice buying scheme which left precious little room for the role of the purchaser.

What follows are a couple of sound bytes:

Bangkok Post (Sep. 9):

'The Anti-Money Laundering Office (Amlo) is preparing to seize assets from two companies including Siam Indica in relation to allegedly fake government-to-government rice deals'.

Bangkok Post (Sep. 19):

'Former commerce minister Boonsong Teriyapirom and five ex-ministerial officials involved in the fraudulent government-to-government (G2G) rice sales have been ordered to pay 20 billion baht in compensation.

Commerce Minister Apiradi Tantraporn authorised the ministry's permanent secretary Chutima Bunyapraphasara to sign an administrative order demanding the payment.

But doubt has been cast over whether Ms Chutima is willing to sign the order and her expected successor, Wiboonlasana Ruamraksa, has also expressed doubt'.

Bangkok Post (Sep. 19):

'After much-publicised reluctance, Commerce Minister Apiradi Tantraporn on Monday signed an order demanding 20 billion baht in compensation from former commerce minister Boonsong Teriyapirom and five ex-ministerial officials for false government-to-government (G2G) rice deals. Two people signed the order but neither of them did it in their capacities. Mrs Apiradi signed it on behalf of Prime Minister Prayut Chan-o-cha while commerce permanent secretary Chutima Bunyapraphasara signed it on Mrs Apiradi's behalf'.

Bangkok Post (Sep. 19):

'Government debt worth 510 billion baht, borrowed from the Bank for Agriculture and Agricultural Cooperatives (BAAC) to fund the last administration's loss-making rice-pledging scheme, will take an estimated 16 years to be paid off. Luck Wajananawat, president of the state-backed bank, said if the loan repayment amount remains unchanged, the government will take around 16 years to pay off the debt'.

Bangkok Post (Sep. 24):

'A government committee has concluded that Yingluck Shinawatra must pay 35.7 billion baht in compensation for losses from her rice-pledging programme from 2012-14'.

The Bangkok Post (Sep. 25):

'Former prime minister Yingluck Shinawatra has asked Prime Minister Prayut Chan-o-cha to treat her as fairly as he does with his younger brother and permanent secretary for defence Preecha Chan-o-cha.

...

Ms Yingluck's comment was a reference to insinuations made against Gen Prayut's brother Pol Gen Preecha. A company, of which Gen Preecha's son was a shareholder, is suspected of having been awarded seven projects from the 3rd Army Region between December 2014 and April this year worth a combined 97 million baht'.

Bangkok Post (Oct. 2):

'The Public Sector Anti-Corruption Commission aims to start its investigation into allegations of state graft under the Yingluck Shinawatra government's rice-pledging scheme this week. PACC secretary-general
Prayong Priyajit said the agency has received 853 complaints of malfeasance perpetrated by officials at the Marketing Organisation for Farmers, the Public Warehouse Organisation and the Bank for Agriculture  and Agricultural Cooperatives'.

So basically all shit is being shoved in the same direction.
Stats
Let's see what else is there to report? It's mostly data crunching
The Bangkok Post (Sep. 30):

'Thailand remained the world's second-largest rice exporter after India in the first eight months of this year, with exports down almost 11% last month, according to exporters. From January to August, Thailand shipped 6.06 million tonnes of rice worth 96.23 billion, up 2.9% year-on-year by volume and 1.4% by value'.

Most exports were destined for Africa. 

In other rice news from Thailand, the Bangkok Post (Sep. 8):

'The government yesterday approved the sale of 755,000 tonnes of rice stocks to 11 winning bidders for a combined 7.2 billion baht. According to Duangporn Rodphaya, director-general of the Foreign TradeTrade Department, Prime Minister Prayut Chan-o-cha approved the amount in his capacity as chairman of the National Rice Policy and Management Committee'. 

Bangkok Post (Sep. 9):

'Authorities are speeding up measures to keep rice prices steady after forecasting 83% of all paddy in the main crop will be harvested between October and December this year. The Agriculture and Agricultural Cooperative Ministry has projected a total of 24 million tonnes of paddy from the 2016/17 main crop, which runs from around April this year to February next year. Of the total, 20 million tonnes will be harvested in the last three months of this year'.

Sticky

The Bangkok Post (Sep. 12) reports on the sugar sector:

'Last week, the government announced a policy to expand the sugar industry. The strategy, initially, sounds good, because it will catapult the Thai agriculture sector from a raw material supplier to a high value industry. FarmVille version 4.0, if you will. 

In the upgraded version, the Office of the Cane and Sugar Board (OCSB) reportedly has approved licences for investors to develop 25 more sugar factories, , adding to the existing 54 plants, over the next five years. That means the country's sugar cane industry aims to raise sugar plantations from 10 million to 16 million rai by 2026. Six million rai of of plantations will involve crop-switching as the government encourages rice farmers to switch to more lucrative and higher value crops such as sugar cane. 

...

Personally, I like this policy. Yet, I cannot help but worry it might worsen pollution caused by sugar harvesting.
...

Everything seems to be going well, except the worsening air pollution and environmental degradation caused by pre-harvest sugarcane burning, which precedes cutting.
...
Such a practice takes place in other sugar-harvesting nations. In the US state of Florida, the law still permits pre-harvest burning (which the Sierra Club, a conservation group, has tried to stop).Brazil and Australia have passed laws to ban sugarcane burning. Now Thailand needs to tackle the problem. 

...

But the practice has changed due to the growth of the industry. Thailand has become a major sugar exporter. Plantations have been expanded to meet higher demand. Yet skilled harvesters have diminished in number, either retiring or shifting to lighter work.
...

The sugar industry upgrade might sound appealing. But if pre-harvest burning rages on, we might find the taste of sugar not so sweet after all'. 

This preludes calls to upgrade. The Bangkok Post (Sep. 19):

'Thailand, the world's second largest sugar exporter after Brazil, is to overhaul its sugar production and distribution systems for the first time in more than three decades in order to avoid being challenged by Brazil at the World Trade Organization (WTO). 

...

According to the Office of Cane and Sugar Board (OCSB), Thailand will have to revoke its current 70:30 profit-sharing system, in place since 1984, which will require cancelling its quota system and floating domestic sugar prices.
...

Brazil is challenging Thailand over "subsidies" for sugar producers that it says have dragged down global prices and allow Thailand to win a larger market share at the expense of Brazilian producers, conduct that is not in line with international trade agreements. 

...

To keep food prices and inflation rate under control, the government has been maintaining a price ceiling for sugar, with the retail price fixed at 23.50 baht per kilogramme by the Commerce Ministry. 

The price ceiling occasionally results in sugar shortages as profiteers normally smuggle domestic sugar to sell in neighbouring countries, especially when global sugar prices rise above the fixed domestic retail price'.