Controversy

Desire

Allow Golden Rice Now so is the name of the organisation which explicitly wants Greenpeace to stop their protests against GM rice.

'Campaign spokesman Dr. Patrick Moore is a Phd ecologist, award-winning scientist, author and educator. He believes the opponents of Golden Rice have no evidence to justify a ban on researching and developing it, as it is a food that could end untold human suffering and the death of millions of people'.

Hmm, but it is not a Trojan horse, opening the rice seed sector to privatised GM companies? If Golden Rice is so good why has it not already persuaded opponents? And is everyone waiting for GM rice that hardly contributes to the solution? Why not add vit-A to f.i. beer and ask everybody to drink more beer? I stand by the argument that Golden Rice hardly results in a solution, but in the meantime will rob a great deal of rice growing communities worldwide the ability to take their own decisions on what (and what not) to plant and the acceptance will result inless desirous business practices to expand worldwide.

See also the September update and October update the pro's and cons of Golden Rice.

One practice from yesteryears is assisting poor communties with strings attached help. The Philippine Star reports (Jan. 22) that Bayer CropScience are helping cyclone victims. By giving farmers hybrid rice seeds.

'This is our way of helping out our farmers in Leyte and Samar to get back up on their feet after the devastation to their lives and livelihood.”

"We believe that the faster they can start planting rice, the better for them as it will help take their minds away from the disaster and start rebuilding their lives," explained Bayer CropScience Managing Director Hans-Joachim Wegfarht'.

Take care

If we had any hopes of the Thai situation taking a upswing, we'll have to make a rethink. 

As for news on the rice pledging, this is also degenerating. With possible elections forthcoming is the current government able to authorise budget expenditures on rice-pledging? The Nation (Jan. 8) reports on the doubts. Can the government pay farmers who have already pledged. Can the government sell pledged rice? No one knows, so nothing will happen ... 

But no, so the Bangkok Post reports (Jan. 22): 

'The caretaker government has decided to proceed with plans to borrow 130 billion baht to fund its controversial rice-pledging scheme. The Election Commission (EC) has resolved it lacks the authority to approve the loan'. 

The Nation reports similar.

With the government weakened the national Anti-Corruption Committee feels safe enough to start a probe into the PM's role in the rice pledge scheme (Jan. 17, Bangkok Post). Basically they are accusing the PM in her role as overseer of the rice pledge programme of negligence, which just shows how politicized the committee is. Surely there is enough corruption to keep the committee busy without seeking out negligence as an excuse to charge a weakened PM.

From the other side there is mounting pressure from farmers (Nation, Jan. 18), especially those who have yet to see their money returned. I suppose they can assume that they won't get their money ... 

A day later the same newspaper is still milking the same story. Then a few days later (Jan. 22) the Nation notes that the disastified will join all the protesters on the streets of Bangkok ...

Export

The Cambodian Daily (Jan. 3) reports on strong export figures from Cambodia:

'Rice exports increased from 205,717 tons in 2012 to 378,856 tons in 2013 as a result of high demand from the European Union as well as countries in Asia, according to figures released Thursday by the Ministry of Agriculture'.

Oryzae.com notes that Cambodiia still believes the 1 million export is still attainable by 2015. 

A Korean company hopes to import Cambodian rice, a possible break through in this part of the world (Phnom Penh Post, Jan. 22).

Furthermore one should notice that now the ANZ bank is under fire for supporting alocal sugar company. Exporting rice is in this regard is a lot 'cleaner'. 

Wonder

The Business Insider reports (Dec. 3) on a wonder-gene which could boost rice production by as much as 30%. Again the age-old saying seeing is believing. And we would need to know the economics behind this and the potentail availability. If indeed available with conventional breeding techniques, our hybrid rice companies will loose another argument to promote their offspring ...

Quite satisfied

Pluses and minus

With the heat shifting in the Thai rice pledging scheme let's focus on Cambodia.

The pluses:

+ Cambodia has set it's hopes on China. The PPP (Sep. 16) notes that 

'State-owned Green Trade Company has signed an agreement with China’s Shandong Meijing Rice Co Ltd to export 100,000 tonnes of Cambodia’s milled rice'.

+ Cambodia's rice exports still increasing. The Cambodian Daily (Sep. 24):

'Cambodia exported 221,027 tons of milled rice in the first seven months of the year, an increase of 103 percent compared to the same period last year, according to figures from the Ministry of Commerce'.

+ Not only are overall exports up considerably, organic rice exports from Cambodia have already doubled compared to last year (PPP, Sep. 10).

 

The minus:

- The government though does note that this years rice planting has fallen short by 5%, but as productivity would increase, expectations are that crops would be similar or higher than previous years (PPP, Sep. 4). But this was before the heavy rains of this month ....

And then a big threat? 

The no. 1 and 2 markets for Cambodian rice are EU's Poland and France. Exports are facilitated by the EU EBA programme which ensures low tariffs on imports of agricultural produce from Cambodia. 

However opponents of the scheme are gradually gaining influence to change the policy so as to include basic human rights as a rule against which importing nations can be measured so as to benefit from the EBA. 

Inclusive Development International has just published a report on how especially in Cambodia's sugar sector the EBA is subsidizing and is condoning of amongst others child labour, forced displacement, government sanctioned violence and arbitrary detentions. 

Let's hope the report manages to wake up those in the EU concerned with acting on behalf on the unnamed victims in this (source).

 

Skirmishes

Problems elsewhere in Thailand's agricultural hinterland have detracted the ever-changing media seeking for a new story to ditch the rice pledging scheme for newer frontiers. 

Capturing the public eye are those farmers who are losing the possibility to sell rubber at guaranteed prices to their government. As farmers block major highways in Southern Thailand and pitch battles taking place with riot police, it illustrates just what handing out subsidies entails: the impossibility to roll back the policy. 

The only way forward is to hope that either inflationary pressures catch up or world market prices render price guarantees redundant.

Especially in Nakhon Si Thammarat the overall sphere is grim (f.i. Nation, Sep. 4) as tens of thousands of protesters have taken to the streets. The government have tried to divide the growers by offering hand-outs which were accepted by those (rice-dependent) farmers in the north and central areas of Thailand but not in the stronghold of the opposition, the south, where farmers are more dependent on rubber output. 

The Bangkok Post has reported that the government want cave in (Sep. 9).

Not being able to quell the protests, the government now believes the protesters are actually all stooges of traders who have been stockpiling rubber hoping for the government to acquiesce and raise prices (Nation, Sep. 19). Behind the stockpiles would of course be opposition traders.

Not only are rubber farmers been upset without the possibility of getting their hands of a share of the government loot, corn farmers seek the same. The Bangkok Post (Sep. 26) reports on road blocks in the north of the country, farmers wanting an extention of current purchasing programmes by the government.

Back on rice

Even cautious downgrades in the pledge scheme are unacceptable to farmers (Bangkok Post, Sep. 6).

A few days later (Sep. 9) the Nation chimes in:

'Vichian Phuanglamjiak, president of the Thai Farmers Association, said farmers were still poor and wanted a high price to deal with their high production and living costs. Although the government plans to cut the price to Bt13,000 a tonne, he said farmers were expected soon to call for a rate of Bt14,000 a tonne.
"The government will face never-ending subsidies if it does not help farmers reduce the cost of production or help them increase yield in the long run," he said'.

Transparency? Even the Thai government is secretive on the deals it has made (Nation, Sep. 15). So says the opposition.

Then, presto, 2 days later it is confirmed that Thailand will sell 1.2 million tonnes to China (Nation, Sep. 17):

'The government yesterday insisted it had secured a rice sale to China, with a Thai official in Beijing confirming the 1.2-million-tonne contract, which is part of Thailand's plan to export 4 million-5 million tonnes of rice to that country this year.
While Commerce Minister Niwattumrong Boonsongpaisan flatly dismissed the Democrat Party's speculation that his ministry is faking the rice deal with China, Phaichit Viboontanasarn, the commercial attache at the Thai Embassy in Beijing, confirmed the deal with a Chinese state enterprise, saying the price is close to the Bt15,000-per-tonne pledging price but lower than US$600 (about Bt19,020)'. 

The Thai government have exonerated themselves. Rotting rice dates to 2008, well before current policy (Bangkok Post, Sep. 18):

'A probe by the Marketing Organisation for Farmers (MOF) concluded that the rice was damaged during the 2011 floods, he said. It also ruled that the burned rice had spontaneously combusted
...
Democrat MP for Phitsanulok Warong Detkitvikrom said he would petition the National Anti-Corruption Commission next week to also investigate the matter. He questioned the MOF's spontaneous combustion conclusion, saying this explanation did not make sense. Mr Warong said he strongly believed the rice was intentionally destroyed to cover up irregularities that would point to corruption in the pledging scheme'.

The Thai government has vowed to continue the practice of rice-pledging (Bangkok Post, Sep. 28), nothing new there. 

Why? Because it raises farmers incomes. 

The same article also refers to a survey of farmers where most farmers responded as being quite satisfied with the governments rice-pledging scheme.

'"Although rice farmers said they had earned more because of the pledging project, the government needs to find an 'exit policy' [and to decide] whether to continue the project for long, as it has created huge losses for the country and damaged rice-sector development," said Thanavath Phonvichai, director-general of the UTCC's Economic and Business Forecasting Centre [organisation which conducted the survey].
The government should conduct research to weigh whether the pledging policy really benefits the country and the majority of people, he suggested.
Based on a survey of 1,228 rice farmers, a poll showed that most were "quite satisfied" with the pledging project, as it had enabled them to earn more. On average, each farmer had earned an additional Bt58,314 a year since the scheme was launched.
But despite farmers' satisfaction with the programme, the UTCC said the government would need to spend a huge amount each year on a never-ending subsidy if it did not come out with a clearer policy for the sustainable development of rice farming and trading'.

The Bank for Agriculture and Agricultural Cooperatives (BAAC) notes that it's not the amount of money involved in the rice pledge scheme but the lack of transparency leading to questions about whether or not the farmers were receiving their fare share (Nation, Sep. 25). 

Their suggestion: 

'A central unit such as the Office of the Prime Minister should monitor the programme's spending'.

Post session

Oryzae.com (Sep 27) reports that prices have dropped by 10% compared to the same date last year.

Releasing rice stocks from Thailand has a downward effect on Vietnamese rice prices and thus on returns to Vietnamese rice farmers (Global Times, Sep. 9). It also affects exports: 

'According to VFA, in the first eight months of this year, Vietnamese rice exporters had signed contracts for the export of over 7.2 million tons of rice. However, contracts worth 1.2 million tons were canceled, and only 4.7 million tons were shipped abroad during the period'.

Power to the peolple?

In all the discussions we tend to forget the essence of economics: the freedom for producers to produce, consumers to consume.

And here is just a small battle in this freedom. Alternet.org (13 August) provides us with a link on how a young girl seems to know her genetics and GM's well-enough to take on Monsanto and it's media friends over on Salon.net:

But on the ground, real things are happening. Take the case of the GM controversy in the Philippines. The Businessmonitor reports (Aug. 8) on GM developed / so-called Golden Rice. A research field has been uprooted by farmers:

'Claiming that the ongoing field trial of the genetically modified Golden Rice poses serious health risks to people and environment, militant farmers on Thursday stormed an experimental farm in Pili, Camarines Sur, and uprooted the palay'.

The trials being conducted by the IRRI and their Philippines local counterpart organisation are in no way going to be discontinued, so says IRRI's website statement (also of August 8). But they´ll need to restart their trials.

Two weeks later (24 August), international pick up of the story. The New York Times looks at all it's pro's and cons of GMO´s in general. 

Yes, Golden Rice seems to be a tool to favour the poor (blind). But is it the most efficient (you need to eat 15 portions a day!)? If this is allowed, will multinational GM seeds be to follow?

No one though seems to know whether the consumer wants this or not. And will producers be interested? And what are the long-term dimensions? And why are multinationals against labelling?

What the article does show is that IRRI's involvement and insistence seems at best pro-multinational. 
Btw, the article picks up 470 comments. That's going to be a long reaaad ... 
Interesting in these are the fact that some commentators insist that arguments pro/contra should be solely discussed in scientific quarters not by dumbing down the discourse by allowing all and sundry to voice their concern on internet fora! But science is only about what we know, not about what we will learn / nor does science allow for individual consumption: it's good or not.

GRAIN's statement on Golden Rice (29 August). Excerpt: 

'The risks posed by field trials of Golden Rice may not mean much to IRRI, but they are enormous for farmers and consumers in the Philippines and throughout Asia. There is no way to ensure that a GMO field trial does not contaminate neighbouring fields. The recent case of an unapproved GM wheat found growing in a farmer's field in the US or the detection of unapproved GM traits in rice from China show how field trials lead to contamination and serious consequences for farmers, consumer and markets. In this case, IRRI, Syngenta and the other Golden Rice promoters are putting the region's most important cultural, food and agricultural crop at risk with 800 square meter open field tests of a variety not approved for human consumption and in an area home to many traditional varieties cultivated by local farmers'.

A lot of explaining to do?

Does hybrid rice fare any better then? Just a short item from the Deltafarmpress  (Aug. 30). It reports on how Central American importers are getting fed up with the quality of US rice imports, mostly of hybrid origin. Ergo, hybrid rice while good for the wallets of US farmers they aren't what consumers want:

'“While rice producers in the United States make a higher profit by producing hybrid rice, this has had a negative impact on traditional markets for its high chalkiness and white belly, and this rice is rejected by the consumer for its cooking and uniformity issues. It is also the opinion of this federation [Central America Rice Federation] that producers who get this benefit will not be willing to change varieties with better features for the customer'.

Future prices
Voice of America (July 29) takes time out to see what the possible consequences of the inability of the Thai government to drive the costs of it's pledge scheme down:

'The Thailand government is pressing ahead with a rice price support scheme despite criticism over financial losses, concerns over rice quality and falling rice export sales.  The scheme is possibly helping rival exporters, especially Vietnam and Burma.

...

Cooper said international traders are now concerned over when Thai authorities plan to release their massive rice stocks onto the market. This, he said, will have a “significant downward pressure” on prices.
But Sam Mohanty, an economist at the International Rice Research Institute (IRRI), said the program appears to have the unintended effect of helping other exporters boost production.  “I’m arguing that if the Thai program continues for the next few years in fact it’s going to help Myanmar [Burma] to establish themselves as exporters," said Mohanty. "It will give them some of the market sales where Thai is going to lose out. So it’s definitely better for other competing exporters.”
India’s return to the global market pushed global rice prices lower while traditional rice importers such as Indonesia and the Philippines have also enjoyed good crops, further keeping prices low. The cheap prices have meant good news for consumers, but additional challenges for the Thai government, which must figure out a way to unload its growing stockpile of rice before it spoils'. 

When pledging there are leaders and followers? Vietnam's government meddling in it's domestic market could play into the hands of upcoming exporting nations (Oryzae.com, 20 Aug.):

'However, foreign buyers cancelled several contracts to buy rice from Vietnam due to the price increase. VFA says that rice importers, mostly in China, have cancelled contracts amounting to a total of 938,000 tons this year, with contracts to import 180,000 tons of rice cancelled in July alone.

 Local traders say that Vietnam may not meet the export target of around 7.5 million tons in 2013 due to increasing competitiveness of Myanmar, Cambodia and Pakistan rice'.

Pledge

A good place to start is with what are we actually talking about?  

The BBC has a good short video (Aug. 29, 2013) of how the Thai rice pledging scheme works and it's many pitfalls. Note, the Finance Minister himself says it's not a very efficient way of wealth redistribution.

More background. Bangkok Post (Aug. 5) has an interesting exposé on Thailand's rice subsidies programmes through the decades. 

Noteworthy is that 53% of Thai farmers hardly produce above subsistence levels meaning that they are not taking part in the gains of the current rice-pledging scheme. So much for re-distributing wealth.

Meanwhile in the day-to-day of rice-pledge scheming and politics we were confronted with the usual. 

The Nation (8 August) notes that the Thai government is committed to maintaining current price of rice-pledging.

If the Thai government thought buying up most of Thailand's rice was difficult, selling it is proving to be even more difficult (Nation, 21 August):

'Pranee Siriphand, director-general of the Foreign Trade Department, said that bidding for 201,000 tonnes of rice opened on Monday but only 30,000 tonnes of 5-per-cent white rice was sold to two exporters, Asia Golden Rice and Chaiyaporn'.

The Thai government is finding out what the real price of extravagant price subsidies: rolling back is politically impossible. After announcing rice prices to drop, it quickly reversed the policy after some announcements of public protest. Instead prices for rubber and maize are to be dropped. The results have been street protests, especially in the south by very focal rubber tappers. As the southern farmers already vote for the opposition their protests are falling on deaf ears. The Bangkok Post (19 August) reports on an upcoming maize farmers protest in the province of Phetchabun, possibly they will have more succes.

And in real terms, how much does a rice pledging scheme cost? The Nation quotes (Aug. 14) Thailand's Finance Ministry:

'The commerce minister yesterday insisted that the cumulative cost to the country of the government's rice-pledging scheme over its first two years had not exceeded Bt650 billion [US$ 20 billion!], and said the government would be able to bring the figure down to Bt500 billion this year through stepped-up selling of rice stocks'.

But we have already seen that selling is not so easy. It's apparently unclear how much rice is in stock. Oddly, the Thai police have been called upon to take stock of Thailand's rice pile (Bangkok Post, 13 August). The report however is secret ....

And how much will Thailand export? The government says 8.5 million tonnes, exporters think differently: 6.5 million tonnes (Nation, August 1).

 

What are the alternatives to rice pledging? Bangkok Post (August 13) thinks it knows one or two, but all-in-all it's just lip service. Unfortunately the downfall has been the high price, the high level of rent-seeking, poor administration and haste in implementing without consulting involved business sector. The answers provided are to cut out the large farms, to focus on sustainability. But if graft is a major detriment to rice-pledging, expect this to increase with the alternatives.

Bits news

Half way through the year and Cambodia has already surpassed last years exported amounts. So reports the Phnom Penh Post (5 August). Also picked up by the Bangkok Post. 

Exports are now being shifted by rail to Sihanoukville (PPP, 9 August):

'Rice exporters, however, are not yet ready to jump on board with the new mode of transport. They believe that rail cargo has its benefits, but for now there are logistical procedures that need work to make it cost-effective.

Kim Savuth, managing director of rice exporting company Khmer Food, explained that trucks were still required to haul rice to meet the train at Phnom Penh’s dry port, and then again to meet the train at Sihanoukville to ferry rice through customs before leaving Cambodia'.

Phnom Penh Post reports (27 August) on a loan windfall for the rice sector: US$ 70 million! Care of the ADB.

The Vietnamese province of Nghe An launches herbal rice (Saigon Times, 15 August):

'This rice variety has many micronutrients, vitamin A, B, lipid, calcium, iron, cellulose and especially omega (6, 9) which can help prevent cancer. It is rich in vegetable fat that does not contain cholesterol and is suitable for those on a diet or with heart diseases'. 

An interesting example as it combines conventional breeding techniques with smart marketing and sales through a chain of restaurants. Who would prefer normal rice if you can have herbal rice?

Contamination

Are changes near to the current stable global rice market? 

It could be. Three factors: Thai stored rice coming onto the market, possible Vietnamese stockpiling and China's change in taste: no cadmium please! What?

The Wall Street Journal (May 21) has an article of recent unrest in Guangzhou:

'A government test indicated that nearly half the rice sold in the southern Chinese city of Guangzhou was contaminated with cadmium, triggering anger from consumers that China's staple food hasn't escaped the widespread pollution tainting its air, water and soil.

...

According to the Guangzhou authorities, the contaminated samples were found to have 0.21 milligram to 0.4 milligram of cadmium in each kilogram of rice. The Chinese government allows a maximum 0.2 mg of cadmium in each kilogram of rice'. 

As the rice originates from Chinese province of Hunan, consumers are advised to seek alternative sources; as with milk powder this may well wet China's appetite for foreign rice (yeah Thailand!). Note the 100+ comments ...

The Bangkok Post (May 27) chimes in: 

'Consumers in China are turning to well-known brands from northern provinces and Thai imports after high traces of cadmium were found in some long-grain rice in the country's South, a commodities analyst said.

Demand for Thai rice, which can cost as much as nine times local grain, is rising, said Wang Shutong, an analyst at commodity information provider Sublime China Information Co (SCI). The price of rice from northeast Heilongjiang province, which produces the short-grain japonica variety, has risen as much as 2.6% this month, according to data tracked by SCI.

...

Sales from mills in Hunan province, the first reported origin of the tainted rice, are stalling and 70% of processing plants have halted operations'. One of the comments: 'Thai rice is also tainted - patents or not, organic or not. It's not as dangerous as China's rice, but, it is loaded with arsenic and pesticide residues. Because the ground water has been tainted by farmers using pesticides. So even farmers growing rice 'organically' are growing it in water tainted with arsenic and pesticide residues, which end up in the rice we are eating'.

International Business Times also (May 28) looks at the cadmium story. It notes: 

'China's imports of Thai rice or grains is expected to surge in the following weeks after the recent discovery of cadmium metal contamination in the grains marketed by Hunan, China's largest rice-producing province.

...

Rice wholesalers in China have stopped selling rice from Hunan, buying from elsewhere in China, and even from Vietnam and Pakistan. In fact, rice grains prices from northeast Heilongjiang province has jumped to as much as 2.6 percent in May, according to data Bloomberg gathered from SCI'.

The other factors: to stockpile or not?

Despite a plethora of articles and comments, Thailands Nation (May 13) reports that officials want to 

'convene to evaluate the [rice pledge revolving] fund's status'. 

Is the bucket of gold (nearly) empty?

An opinion ventilated by Rakesh Sodhia on May 21 in the Nation:

'The government says Thailand will export 8.5 million tonnes in 2013, an increase of 20 per cent over 2012. The Thai Rice Exporters' Association says the figure is 6.5 million tonnes.
I have been in the rice-export business in Thailand for over 30 years and will place my money on the lower figure from the association. The government has no clue how to solve the problems facing the industry and reduce the huge stocks it is holding. If it discounts prices to be competitive against those of Vietnam, India, Pakistan and Myanmar, it will end up losing US$200-$250 per tonne. Meanwhile, the government's storage costs increase daily, since it is paying for space, inspections, fumigation and insurance, in addition to a deterioration in rice quality over time. The government is caught between a rock and a hard place and has nowhere to go'.

Opinion from Bangkok Post (May 23): the day of reckoning is near. For the rice-pledge scheme so it seems. Losses are yet to be accounted for, but once that happens, the free-hand in rice subsidies will quickly disappear so believes Thailand's no. 1 English print.

With virtually all of Thailands' rice tied up in government schemes, it's no surprise that the Nation (May 28) forecasts a bleak future for Thai rice exporters, the real victims of the rice pledge scheme. Not only are competitors eating into the Thai pie, increasingly importing countruies are seeking to establish their own rice self-sufficiency.

As if the Thai government aren't troubled enough domestically, now the foreigners are breathing down the Thai necks. AsiaOne (June 4) notes that ratings agencies (remember, those agencies that failed to see the recent banking crisis) are warning Thailand that their financial goals (and thuis their improved ratings) may well not be reached if the rice pledging scheme continues.

'Thailand - rated "Baa1" with stable outlook - had hoped to win a credit upgrade, to an "A" rating once assigned before the financial crisis in 1997.

But in a statement, Moody's said implied losses of Bt200 billion in the harvest year were much higher than the World Bank's estimate of Bt115 billion (S$4.7 billion) and the Finance Ministry's forecast loss of Bt70-Bt100 billion'.

The knee-jerk reaction. Bangkok Post (June 4): 

'Moody's Investors Service's credit-negative report on the rice pledging scheme is wrong, Prime Minister Yingluck Shinawatra said on Tuesday, and the government will issue a report explaining why'. 

Yawn. The Thai government are even losing the plot: 

'During the debate, Boonsong [Commerce Minister] said that the Bt260 billion loss, reportedly cited in an unofficial Finance Ministry report, associated with the scheme was groundless. But he did not produce any proof to support his claim.

...

When asked repeatedly, the PM said: "I told you, that those responsible for finding out the [actual] figures associated with the scheme will make them public later." Asked if the scheme losing such a huge amount would affect her as prime minister, she said "Enough!", and walked off'.

More empty pockets. The Nation (June 5): 

'The Bank for Agriculture and Agricultural Cooperatives says it has an adequate budget to continue the rice-pledging scheme until the end of the latest project, but beyond that, the government will either have to borrow more or accelerate its stockpile releases to earn some rice-sales revenue as soon as possible'.

Is Vietnam following suit? Read this: 

'Vietnam may stockpile 1 million tonnes of milled rice, about a fifth of the current Mekong Delta harvest, in a bid to support prices that have dropped to their lowest in nearly 26 months'.

The above from Pakistan's Business Recorder  (June 2). It also notes that it's mainly businesses that are stockpiling in the short term, are gambling on prices holding or even going up ...

Risk averse

The Cambodia Daily (May 22) reports on efforts by the UN and China to raise cassava exports and enhancing quality at the same time. As with rice, cassava production and exports of raw products are booming.

The Phnom Penh Post (May 23) reports on rising rice regional exports: 

'Kim Savuth, president of the Federation of Cambodian Rice Exporters, told the Post yesterday that milled rice exports to European countries, Cambodia’s traditional market, is still increasing, but its percentage share is gradually decreasing. He said the trend of exports to Asian market is on the rise'.

A cryptic article from the Phnom Penh Post (May 22): 

'Officials are seeking expert firms to implement projects on so-called contract farming and the enhancement of the involvement of farmers’ organisations in paddy collecting and processing, officials said'. 

Some how I don't seem to understand the content of whatever they are hoping to do. Are Agence Francaise de Developpement (AFD) and the government in the market for establishing contracts? The only catch I saw was that it was to be financed by AFD for €6 million! Fail to find any additional info on the AFD website ...

The answer to Cambodia's agriculture are loans and irrigation. So say experts as reported by the Phnom Penh Post (May 20): 

'In a meeting on the private sector development in the rice sector, Lim Heng, vice president of the Cambodia Chamber of Commerce, suggested that the government should supply more irrigation systems for better rice output.
“If we do not have enough water systems and still depend on the rainfall, the risk can be very high,” Lim Heng told participants in the meeting. “Therefore financial institutions will be hesitant to give us loans as they think it is too risky.”
He added that if farmers had enough water, crop yields will be better, and the costs of production would be lower.
Irrigation systems in Cambodia are said to be on the rise, but experts in the sector said this is not reflected in day-to-day practices.

...

Experts have long said that the shortage of loan activity in Cambodian agriculture hinders the sector’s development'.

Oryza.com (May 28) shares the thrill of Cambodian rice exporters at being part of the THAIFEX – the World Food of Asia food trade fair.

Giants and more risks

A sleeping giant has awakened. Radio Free Asia reports (May 9) that Burma hopes to export double last years figures of more than 1.5 million tonnes:

'Soe Tun [Myanmar Rice Industry Association central executive member] said Burma had recently set new records in rice exports, referring to a state media report which said the country had exceeded its target of 1.5 million tons in the last fiscal year by about 600,000 tons, marking “the highest amount of rice exported from Burma in the last 46 years.”
“Burma is now fifth in terms of rice exports around the world,” he said, and is poised to grow.
The Southeast Asian nation was the world’s biggest rice exporter for much of the first half of the 20th century until it was overtaken by Thailand after an army coup in 1962 set up nearly five decades of junta rule.
Since taking power in 2011, Thein Sein’s reformist government has quickly revamped Burma’s rice production and reputation as an exporter'.

Vietnamnet reports (May 20) on the problems it faces when exporting to China:

'However, high risks have been existing. The importers from China, the vast market which consumes 1/3 of Vietnam’s total rice exports, have been trying to force the prices down, or threaten to cancel contracts.

...

The director of a rice export company complained he has tasted a bitterness when doing business with a Chinese enterprise.

The Chinese partner ordered 10,000 tons or rice, with the payment to be made after deliveries. When the products docked at the destination ports, the partner, complaining about the quality, insisted on lowering the prices. The rice exporter, who fell into dilemma, had to sell the consignment of goods at a loss'.

Going, going ...

As South-east Asia heats up, so does the discussion concerning Thailand's rice pledge scheme. More and more the near bankrupt scheme looms above the market and will ultimately decide the fate of the rice price in the next few years and thus the direction in which rice growing will move. Lower prices will force investors out and dissuade farmers from pursuing higher efficiency.

Meddling?

So where are we now?

International scrutiny is increasing. Case 1: 

Chicago Tribune (Mar. 27) takes time to look at Thailand's rice pledging scheme:

'Thailand is set to sell half-a-million tonnes of rice on world markets at a loss, as it scrambles to offload a record stockpile deteriorating in quality in warehouses filled with grain bought under a government scheme.

The two-year old policy to pay farmers more for rice than it is worth on international markets is straining the country's finances, has cost Thailand its spot as world's top exporter and provoked concern at the World Trade Organization.

While officials publicly deny the politically sensitive scheme is in crisis, the government is looking at measures to stem ballooning losses so far estimated at $6 billion

...

That leaves the government in a bind: it is committed to buying yet more rice, which it has no room to store and which it is unable to sell without suffering a huge loss'.

The New York Times follows (Mar. 28): 

'Thailand is set to sell 500,000 metric tons of rice on world markets at a loss as it scrambles to offload a record stockpile deteriorating in warehouses filled with grain bought under a government program'.

Both above articles resemble each other and come after Thailand was issued a warning by the WTO and it's cronies. Also the World Bank mentions the possible future negatives on rice prices in it's update on grain prices. Despite the stocks hovering above the market, the Bangkok Post (Mar. 28) notes that prices have nudged upwards slightly in the past months (Source: World Bank). The article that speculates on whether Thailand may off-load and what that would do to the price, which is not following prices of other grains.

More of the same
More bad news for sellers in general. Bangkok Post (Mar. 26) has an article on the positive growing conditions experienced in India: more supply into an already poor market. 

'Rice exports from India, the world's second-largest producer, are poised to set a record for the second year with the harvest expected to rebound on normal monsoon rain, potentially widening a global surplus.

Shipments will climb 5% to 10.5 million metric tonnes in the year beginning April, according to the median of estimates from six exporters, a government official and an industry executive compiled by Bloomberg.

Output may jump to an all-time high of 110 million tonnes in the season beginning July, according to Vijay Setia, a former president of the All India Rice Exporters Association.

Surging exports from India may add to global food supplies as farmers from Vietnam to China are preparing to plant a record rice crop. Stockpiles in Thailand have surged to an all-time high as the government buys supplies from farmers, while exports from Myanmar and Cambodia have expanded. The glut may further curb world food costs which tumbled for five straight months through February'. 

With the exception of rice.

Sydney Morning Herald (Mar. 27) also notes the Indian expectations:

'Rice exports from India, the world's second-largest grower, are poised to reach a record for a second year as the harvest may rebound on normal monsoon rain, potentially widening a global surplus.

Shipments will climb 5 per cent to 10.5 million tonnes in the year beginning April, according to estimates compiled by Bloomberg'.

Bangladesh will help Thailand off-load 1 million tonnes (Bangkok Post, Mar. 29). Looks like a lot, but it is spread over 4 years ...

Despite the misgivings the immediate future of the scheme has been spelt out.

The Sunday is the day for decisions, according to a newsreport by the Bangkok Post (Mar. 30):

'The proposal will be tabled at Sunday's mobile cabinet meeting in Chachoengsao.

Finance Minister Kittiratt Na-Ranong said the budget for the pledging scheme for the off-season crop is about 74.2 billion baht, raising the total expenditure for the pledging scheme in the 2012-2013 crop year to 224.2 billion baht.

The government has maintained the pledging price at 15,000 baht maximum per tonne.

According to Mr Kittiratt, the second crop would produce nine million tonnes but only seven million was expected to be consigned under the rice-pledging scheme.

Mr Kittiratt said the National Rice Committee has added a condition to ensure high quality rice.

He said the proposal is in line with the cabinet's earlier decision allowing the ministry to grant credit guarantees to the Bank for Agriculture and Agricultural Cooperatives (BAAC) to finance the price subsidy scheme.

He said the expenditure is covered by the government's 410 billion baht framework for rice pledging approved in 2011'.

And then the surprise on Sunday (not). The Thai government has formally approved the purchase of more stock.The Nation (1 Apr):

'The mobile Cabinet yesterday approved the rice pledging scheme for the 2012/2013 fiscal year, worth Bt105 billion in total, proposed by the Commerce Ministry.

Under the scheme, about seven million tonnes of rice will be bought from farmers, down from 9.2 million tonnes previously anticipated by the Ministry of Agriculture and Cooperatives, as yields have been hit by drought in some areas'.

One world, one price?

Confused by the different prices? So am I. If Thailand isn't the leading exporter anymore why use an index based on their export prices?

Oryza.com (Mar. 21) tries an alternative, the Oryza White Rice Index (WRI) : 'The index represents the weighted average of white long grain rice fob export quotes from markets across the globe

...

Oryza’s price quote assessments are based on real market quotes and the Oryza WRI reflects what Oryza believes to be a true and accurate aggregate reflection of rice market prices.   Rice prices are traditionally very hard to source and compare due to the complexity of the rice industry – the numerous types of rice, processing methods, varieties, grades, and origins'.

What do we learn? Prices are nudging forwards ...:

Domestic affairs (or not)

Malaysia openly solicits (Phnom Penh Post, Mar. 29) Cambodian agriculture: 

'Malaysia-BASED agricult-ural and commodities company Felda Global Ventures Holdings is considering investing in palm oil, sugar and rubber crops in Cambodia'.

The Phnom Penh Post (Mar. 26) reports on pinning future hopes on rubber:

'Cambodian officials say they will focus on nine different sectors in a bid to diversify and ensure continued national economic growth.

Among the nine priorities, rubber will play a crucial role in Cambodia’s trade integration strategy.

...

Though the Cambodian economy is still largely dependent on the garment sector, officials say they hope agricultural production can also boost the economy.

“Besides the garment sector, the next priority among the nine is rubber, followed by cassava, which also plays an important role in poverty reduction,” he [Minister of Commerce Cham Prasidh] explained'. 

Alas, the future of rubber is much dependent on the success of recent plantings. With economic doldrums in most of the world, it's dependent on the demand and in this case with the peace talks in South Thailand ...

Other ways of earning money. Cambodia has zero tariffs export to Europe, so Thailand assumes that they will be doing a favour for Cambodia by buying their produce and reselling it to Europe. Oryza.com (Mar. 23): 

'The Deputy DG also said that re-export of Cambodia rice may help Thailand boost its competitiveness in the EU and other markets, and also reduce smuggling of rice from Cambodia into the Thai rice mortgage program. Thailand may begin the project with around 100 to 1,000 tons of rice from Cambodia, he added'.

Official reaction as recorded by the Phnom Penh Post (Mar. 26): 

'Kong Putheara, director of the Ministry of Commerce statistics department, said he welcomes the plans of the new Thai strategy to potentially buy paddy from Cambodia, saying that most of the problems of the Cambodian agricultural sector stem from markets, rather than production'.

Though not directly related to the Thai plans to market Cambodian rice to  Europe a Thai co-operative delegation came to visit Phnom Penh (Phnom Penh Post, Mar. 27). Asked about exactly those plans we hear this:

'Hun Lak, general director of milled-rice trading company Mekong Oryza, told the Post he foresees that the open markets would translate to higher demand, which will eventually benefit farmers.

“In my opinion, more demand will make the price higher and gives farmers and incentive to increase their productivity for more profit,” he said'. 

Most produce already disappears across the border following higher prices and better post-harvest  ... 

Oh, and the company mentioned has nothing to do with the Thai co-op ...

Do note the company's website has alot of up to date info on rice trading related issues.

Gamble
Bayer's gamble with rice seed continues. Gmanetwork reports (Mar. 24) that 

'Bayer CropScience Inc. (Philippines) will invest P40 million this year to expand the production capacity of its hybrid rice seeds station in Calauan, Laguna'.

You do research and find out that a pineapple canning company isn't completely upfront with following the labour laws. You publish and then the company sues you. Well in Thailand that is. Bangkok Post (Apr. 2):

'He [vice president of canned-pineapple and juice-concentrate producer Natural Fruit] called on Hall [a former researcher at Mahidol University] to show up and fight the case to prove his innocence, adding that Natural Fruit is ready to negotiate.
"If you are really innocent, then face the judicial process and things will be over. If you want to negotiate, do contact us," he said.
Kachin, meanwhile, acknowledged that the latest statement could negatively affect the company, which is Thailand's 12th- or 13th-largest tinned-pineapple exporter.
He refused to speculate why Hall had made such serious allegations against the company'.

Fancy

China a compass nation? Well, read this (China Post, Mar. 8): 

'China has delayed the introduction of genetically modified rice and corn as it tries to head off public fears, leading government scientists said on Thursday.'

Caving in to public demand? Fancy that. Oh, do note this is a Taiwanese publication ...

Rice pledge price

Will the pledge price drop? Bangkok Post (Feb. 28): 

'The Ministry of Commerce will propose to the National Rice Policy Committee that the pledging price of non-glutinous unmilled rice be lowered, permanent secretary Watcharee Wimuktayon said.

The rice panel, chaired by Commerce Minister Boonsong Teriyapirom, is scheduled to meet on Friday, March 1.

Mrs Watcharee said her ministry will propose three price levels for non-glutinous paddy to the committee for consideration - the same 15,000 baht per tonne, 14,000 baht and 13,000 baht per tonne'. 

So the ministry is so wise they can't even come up with 1 recommendation? More government logic: 

'If the pledging price of the paddy is lowered, rice exporters would be able to export more and foreign exchange revenue would rise and the rice industry would expand, while farmers would not be affected, she said'. 

If the pledge price drops, farmers will not be affected? 

On the same proposal the Nation clarifies: 

'Vatchari [same as Watcharee above] said farmers should be able to accept the price change because the government will continue to support them and help with reducing the costs of production.
Although the price pledging is the result of the government's policy, it could be adjusted if it will create a better outcome for the rice industry, Vatchari said. Farmers should not suffer from lower incomes as most have relieved themselves of debts during the past two years of high prices, she added'. 

No proof though ...

The response of farmers: predictable? Bangkok Post (Mar. 1): 

'The Commerce Ministry's proposal to slash the rice pledging price has infuriated paddy farmers, who are threatening to hold a mass rally if it goes ahead.

Kittisak Ratanawaraha, head of a network of rice growers in 17 northern provinces, said any move by the government to go back on its promise to pay 15,000 baht for each tonne of pledged rice would be completely unacceptable'.

It also notes

'Mr Kittisak said farmers rarely receive the full 15,000-baht rate under the present rice pledging scheme, because moisture and contamination are often cited as excuses to cut the price.

Even with the best rice, farmers are often paid only up to 11,000 baht a tonne.

The government has delayed payments for four months, forcing farmers to depend on loan sharks who charge interest rates of 20% a month.

He said if the government cut the pledging price to 13,000 baht a tonne, farmers could end up being paid only 8,000-9,000 baht a tonne.

The Phichit farmer said the pledging scheme was ripe for abuse and does not really benefit farmers.

"If the government wants to really help farmers, it should freeze the prices of fertilisers and farm chemicals, cut interest rates for us and end the delays in payments for pledged rice," Mr Kittisak said'.  

Pandora´s box, once opened it will never ever close .... 

The article garners nearly 50 comments!

Anyway the Nation (Mar 1) reports that even the notion that prices might drop has been ... dropped:

'Commerce Minister Boonsong Teriyapirom yesterday said the NRPC [National Rice Policy Committee] would not convene today, as earlier announced by the ministry's permanent secretary Vatchari Vimooktayon.

...

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said that to keep its promises to farmers, the government might maintain the pledging price. But because of fiscal constraints, it may put a lid on the amount each farmer can get from the programme.
"Officers involved with the scheme admitted that the pledging scheme had created many problems, including excessive budgets, limited warehousing space, and a drop in export volume," he said'. 

Inevitable?

But the pledge system continues. Bangkok Post (Mar 11) reports 

'The pledging price for the 2012-2013 second crop of off-season rice will remain unchanged, Internal Trade Department director-general Wiboonlaksana Ruamraksa says'. 

Aha. Farmers win? Or the cleptocrats?

On the side

The Nation continues (Mar. 6)  with summing up the costs: 

'The government's rice-pledging scheme is taking a toll on Thailand's tightly squeezed budget, as some of the funds from fiscal years 2014-16 might be required to offset the Bt100-billion [US$3 billion!] loss'.

Sell-off on the cards? 

'The government will have to sell off its rice stockpile amassed under the rice pledging scheme at market prices, PM's Office Minister Nawatthamrong Boonsongpaisan admitted on Thursday.
...  
Jac Luyendijk, chief executive officer at Swiss Agri Trading SA, which handles 600,000 tonnes of rice annually, said the price outlook in the long run is bleak. "We have to keep in mind that with these increasing rice stocks in Thailand, the problem will become bigger and bigger," Mr Luyendijk said. "Once Thailand unloads its stockpile we will look to very depressed rice prices for years to come." "Thailand will have to get rid of the surplus in the next few months to be able to continue the programme and purchase rice again," said Samarendu Mohanty, a senior economist at the International Rice Research Institute, a group based in the Philippines. "Thailand cannot continue to hold these stocks for a long time due to quality issues and also the space."' 

The optimists view of the road ahead, as reported by the Bangkok Post (Mar. 7).

Extending the rice pledging scheme is bad news (nothing new there ...)? At least according to the Nation (Mar. 14): 

'The government's insistence on maintaining the rice-pledging price at Bt15,000 per tonne for another year will not only continue to dampen Thailand's export competitiveness and the rice-trading industry, but also lead to higher budgetary losses and a gloomy future for rice-farming development'.

'The government's rice pledging scheme appears to have created a new worry for consumers. Besides concerns over whether the government can manage its huge rice stockpile to prevent any severe impact on the country's budget, many people now wonder if is it safe to eat rice that has been kept in warehouses for years'. 

Well, such articles (Bangkok Post, Mar. 18) are undercutting the Thai governments ability to off-load on the local market, let alone as exports ...

More opposition as noted in the Bangkok Post (Mar. 19): 

'The government's costly rice pledging programme is again under fire, this time riling Virabongsa Ramangkura.

"I disagree with the government's plan to use taxpayers' money to subsidise the state's rice pledging scheme in the off-season harvest," said Mr Virabongsa, chairman of the Strategic Committee for Reconstruction and Future Development.

"The government had better shift its focus to promote high-value crops such as Hom Mali rice, organic rice, energy crops and fast-growing plants such as eucalyptus and the neem tree (Sadao). These will generate more benefits."'

There are some limitations set to the pledging. According to the Bangkok Post (Mar. 20), 18 varieties will be excluded. These short duration varieties are considered poor quality and thus fail to meet new quality requirements. do note that this is a proposal ...

 
ASEAN wide

Neighbours of Thailand are becoming ripe for harvesting? CPF thinks so (Nation, Mar. 4) and is investing in Lao and Cambodia: 

'CP Laos and CP Cambodia are investing a combined Bt250 million to set up a new silo for maize in Cambodia and a new feed-meal plant in Laos to strengthen CPF's integrated agricultural-industrial business ...'.

Focus:

'Sakol [Sakol Cheewakoset, president of CP Laos and CP Cambodia] said the plant in Pailin province would ensure the company's distribution in western Cambodia, an important area for agricultural production. Having a plant there will reduce logistics costs. Initially, capacity is set at 10,000 tonnes per month.
The company is also considering investing in aquaculture in Cambodia in the near future.
"CP's business in Cambodia is doing well, as food business still has great opportunity. Our five-year business plan aims to double our total sales every year," Sakol said'.

Meanwhile in Burma, a sign of the rosy future? The Nation (Mar. 19) reports that Burmese rice is heading towards Japan for the first time.

 

Rice and more

Meanwhile Cambodia is experiencing a positive return on it's exports.  Phnom Penh Post (PPP, Mar. 5) reports:

'Cambodia milled rice exports reached 49,815 tonnes in the first two months of this year, an increase of 106 per cent from the same period last year. Jasmine rice was the biggest part of the exports, followed by long grain white rice, data from the Secretariat of the One Window service for rice exports showed'.

Exports for all agricultural products to Malaysia looking up according to the PPP (Mar. 4): 

'Cambodia’s exports of agricultural products to Malaysia rose sharply last year compared to a year earlier, according to a press release from the Malaysian embassy to Cambodia, with milled rice and crude rubber accounting for most of the total'.

The PPP (Mar. 3) cites a report by Cambodia Development Resource Institute (CDRI) which looks into the sales of fertilizer. Amongst it's finds: 

'Lim Chheng Lay, vice-chairman of Lim Bun Heng Trading Co, a fertiliser importer and distribution company, estimates 40 per cent of fertiliser currently on the market is fake. ...

CDRI conducted a small survey of 35 farmers in Takeo province and estimates that 10 per cent of farmers had bought fake fertilisers, causing yield losses worth between $285 and $350.

CDRI’s preliminary findings also question the government’s licensing conditions, suggesting that it constrains market potential and encourages “large scale” illegal fertiliser smuggling from Vietnam.

After many attempts to make contact, the Ministry of Agriculture, Forestry and Fisheries would not comment on the issue'. 

All involved want the government to take action as if the government is able to, willing and most preferred party to intervene. How about companies taking action? Or farmers identifying fake fertilizer traders?

Millers need cash. So the Asian Development Bank responds with the Climate Resilient Rice Commercialization Sector Development program. Newsworthy? PPP (Mar. 11): 

'The Ministry of Commerce and bank officials announced yesterday that they will hold a meeting next month aimed at better facilitating rice millers’ access to credit'. 

So not newsworthy.

New markets? Green Trade is betting on Libya, so reports the PPP (Mar. 14). They cite company officials sounding very upbeat. Note:

'Last August, Green Trade signed a deal with Indonesia’s state-owned DULOG to supply 100,000 tonnes of milled rice per year. However, the rice was never exported'.

The PPP (Mar. 13) notes that returns from rubber are dropping even though prices are going up (seasonally) year-on-year the prices are down. 

'In 2012, Cambodia exported 54,000 tonnes of dried rubber, up 16.6 per cent from 46,700 tonnes in 2011.
The total value of 2012 exports, however, dropped 21.2 per cent to $158 million from $201 million in 2011, according to figures from the Ministry of Commerce'.

An article in the PPP (Mar. 20) notes how the government would like to diversify it's exports by promoting exports of agricultural produce. Seems more wishful thinking than a sound strategy.

Something missing from Cambodia? Not in the national news but Radio Australia (Mar. 19) mentions that large-scale rice cultivation should be halted: 

'Environmental scientists are calling for a stop to commercial rice farms being granted huge swathes of land in Cambodia, as one way to protect tropical flooded grasslands and the species that depend on them'. 

It follows on the heels of a Bangkok Post (Mar. 18) report on the subject: 

'Scientists from England's University of East Anglia said big companies have swept into the region, blocked off local communities, and set up commercial rice farms.

"The loss of this entire ecosystem from Southeast Asia is imminent," they said bluntly.

Researchers around the Tonle Sap great lake in northwestern Cambodia called the loss "catastrophic". The area is a wildlife centre of biodiversity and, equally, "a vital fishing, grazing, and traditional rice farming resource for around 1.1 million people," the researchers said'.

Rice prices
Do note that Vietnamese prices are dropping in real terms as well as in comparison to Thai rice prices, according to recent price overview from the FAO:

Prices are set to drop though. Bloomberg (Mar. 5) reports global plantings up to a record high with demand flat or even dropping.

Odd

Odd going-ons in Vietnam. According to Saigon GP Daily (Mar. 19) hybrid rice is illegally being cultivated in Tien Giang. The charactter of the offence: 

'Since Man [Nguyen Duc Man, director general of Pioneer Hi-Bred Vietnam Co. Ltd] is growing hybrid rice on a non-appointed area and without a legal license from the government, the Tien Giang Department of Agriculture and Rural Development is now checking his documents and will hold a meeting with local authorities to resolve this issue'. 

Sometimes one can exaggerate the dangers. The article also mentions: 

'In related news, residents of Tan Loi Hamlet in Tan Tien Commune in Tri Ton District of An Giang Province, discovered suspicious looking strangers trying to lease 12 hectares of land to grow hybrid rice. Had they not been found out and reported to local authorities, these strangers would have organized an informal discussion to introduce growing techniques for this hybrid variety to farmers'.

Following on the succes of it's hybrid rice seeds, Longping Agriculture wants to expand (Chinadailyusa, Mar. 14) to become a global leader. It's next step: 

'Wu [Wu Yueshi, chairman of the board of Yuan Longping High-tech Agriculture] said that in its first step to achieve the company's goal, it has submitted a proposal to the current session of CPPCC National Committee to build an "International Rice City" in Changsha of Hunan province, under the leadership of agrarian scientist Yuan Longping, honored as the father of hybrid rice.

"If the proposal is approved, the city will serve as an international production base of hybrid rice to further secure the national grain supply and meet the world's food demand," said Wu, who is also a member of the CPPCC National Committee'.