Friday, January 16, 2009

Thailand: Market swings and politics put rice farmers under siege

Flooding of Thailand's rice fields

Six months ago, the price of rice in Asia had tripled to more than one thousand dollars a ton, and farmers scrambled to grow more. Now, the price has fallen by 40 percent, and that is creating new hardships for farmers.

Thailand, is thought to be the world's biggest rice exporting nation. Farmers who are already trapped by a cycle of chronic borrowing are suffering from the market's swings and the country's politics.

Thaweewan, like 80 percent of Thai farmers, has borrowed money to pay rent for her land, and buy fertilizer, fuel and tools. But floods often destroy her crop.

"It is hard to pay all my debt," she said. "When the farmland is destroyed, the debt is still there. And I have to borrow again. I don't know what to do. I have to pay by installments. This is the reason why farmers are always in debt."

Thaweewan and other farmers in the village are now worried because of floods and falling rice prices.

Prasit Boonchey, head of the Thailand Rice Growers Association, has asked the government for help but got no response. "There's no budget to help improve farms," he said. "The government does not give importance to that at this point."

The government does spend millions of dollars to support farmers. Several years ago, former Prime Minister Thaksin Shinawatra started a policy of buying rice at a rate higher than the market price. The government then sells it in the market.

But last year the government failed to clear the accumulated stocks.

And even as stocks piled up, growers increased production to take advantage of high prices.

This led to an oversupply - pushing down prices.

Some economists blame the price slump on the farm policy, which built strong support for Mr. Thaksin and his allies among farmers.

But many Thais in the capital Bangkok are not happy about the situation. "The money he is using is our money," a protestor said. "Our tax money."

The farm policy is one of many controversies that helped toppled two pro-Thaksin governments last year.

Thailand Development and Research Institute director Nipon Poapongsakorn says the policy became a way to distribute taxpayers' money, and it ultimately damages the Thai rice industry. "So you can imagine that the competitiveness of the Thai rice industry in the future will be destroyed… In the next 10 years," Poapongsakorn said. "Thailand will lose its position as the largest exporter of rice."

But rice grower Prasit complains that the government changes too often - and so do policies. He hopes that Thai politics will stabilize so the government can improve farms and solve problems like the oversupply of rice.

Published with the permission of Voice of America
Published by Mike Hitchen, Mike Hitchen Consulting
Putting principles before profits