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Rice import restrictions a ‘hanging issue,’ says De Lima
Panel Files Charges Against Thai Prime Minister Over Rice Subsidy
NACC to press charge against Yingluck over rice-pledging scheme
Multilayered control fails to prevent misuse of rice imports
Do we need to produce so much rice?
Agri Buzz: ASSOCHAM Expects Eastern India Rice Output May Reach 670 Lakh MT By 2017
Four killed in Thai clashes; PM to face charges over rice scheme
Run on Thai Bank Linked to Rice Subsidy Points to Strain on Economy
What do Thai farmers think of rice pledging – Part 1

NEWS DETAILS:
Rice import restrictions a ‘hanging issue,’ says De Lima
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By Edu Punay (The Philippine Star) | Updated February 18, 2014 - 12:00am
MANILA, Philippines - Justice Secretary Leila de
Lima believes the National Food Authority (NFA)
might have some problem in imposing the quantitative
restrictions on rice importation if the expiration of
government‘s commitment to the World Trade
Organization-General Agreement on Tariffs and Trade
(WTO-GATT) is strictly read.In an interview, De Lima
said a legal team from the Department of Justice (DOJ)
has come up with an initial position, although her legal
opinion has yet to be released.―If we go by the strict
legal sense of the issue, I‘m afraid we have some
problem there,‖ she said.―Because as we very well
know, the WTO-GATT is a commitment. That forms
part of the law, the maxim pacta sunt servanda
(agreements must be kept).‖ However, De Lima said the DOJ is considering views contrary to this
interpretation.―The international law was ratified by the President and concurred by the Senate, and has since
become part of our body of laws,‖ she said. ―What should be answered now is the question: which should
prevail, the WTO agreement or the domestic law?‖
De Lima said this is a ―hanging issue‖ emanating from the varying interpretations on the rice import quota that
the government has imposed.―We are currently studying the matter and we are looking at varying
interpretations,‖ she said.De Lima said the DOJ and the Office of the Solicitor General would still have to
weigh the conflicting views before issuing a definitive legal opinion.
―I have also ordered a thorough study into the legislative intent of the Agriculture Tariffication Law,‖ she
said.Stakeholders in the rice industry have been waiting for the DOJ legal opinion to guide the courts in
resolving petitions for injunction filed by rice importers.The GATT has allowed WTO member-countries to
restrict the importation of sensitive agricultural products.
However, the agreement expired in June 2012.While renegotiating with member-countries on the extension of
the pact, the government has continued to impose the quantitative restrictions.In questioning the policy, rice
importers said their importations should be allowed even without import permits as long as the corresponding
taxes are paid, now that the WTO-GATT has already expired. BOC dealing with smuggling.At the Bureau of
Customs, public information officer Charo Logarta-Lagamon said they have initiated a multi-pronged approach
to deal with the problem of smuggling of agricultural commodities. ―I think everybody knows that we are not
denying that smuggling is still a concern even for the new leadership of the bureau... (But) we are doing a multipronged approach to keep smuggling to a minimum,‖ she said.The smuggling of agricultural commodities
cannot be stopped overnight, Lagamon said.New Customs Commissioner John Sevilla has given priority to
transparency in transactions at the BOC. Details of every importation could now be seen through the BOC‘s

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website.Stringent measures have also been imposed to prevent unscrupulous people from entering BOC
premises and acting as fixers for firms transacting business.
Lagamon said since assuming office last Dec. 9, Sevilla has initiated systemic reforms at the BOC because
smugglers would just change company name and resume their activities if authorities would only concentrate on
running after them.―The commissioner is now addressing the problem... at the core of the system to mitigate
and eventually eradicate smuggling,‖ she said.The BOC has issued several alert orders for shipments, and some
smugglers have reportedly stopped operating.Lagamon said the BOC has tied up with the Bureau of Internal
Revenue (BIR) to check the registration of importers.―The BIR checks if they have a record of the importer, and
if proper taxes were paid,‖ she said.―By doing so they weed out the fictitious companies and identifies those
that have the capacity and legitimacy to import.‖Many of the cargoes passing through the ―green lane‖ belong
to multinational companies, Lagamon said in response to allegations that it is being used as an avenue for
smuggling.Even if smugglers manage to slip their shipment through the green lane, they would still be caught
by the Post Entry Audit Group under the Department of Finance-Fiscal Intelligence Unit, she added.
– With
Evelyn Macairan

Panel Files Charges Against Thai Prime Minister Over Rice Subsidy
National Anti-Corruption Commission Says Prime Minister Could Have Stopped Rice Subsidy Losses
By WARANGKANA CHOMCHUEN
Feb. 18, 2014 5:07 a.m. ET

BANGKOK—Thailand's anticorruption agency said
Tuesday it will press charges against embattled Prime
Minister Yingluck Shinawatra for alleged negligence of
duty in her management of the government's multibilliondollar rice subsidy program.The National Anti-Corruption
Commission said in a statement that Ms. Yingluck had
ignored warnings of irregularities and corruption linked to
the rice subsidy, which resulted in massive financial
losses to the state. If it finds Ms. Yingluck guilty, the
panel said it would launch an impeachment trial against
Ms. Yingluck, adding yet more pressure on the leader
amid ongoing street protests to try to force her from office.

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Ms. Yingluck defends her handling of the rice subsidy. She said in a televised statement before the panel's
announcement that the financial management of the rice subsidy was in line with monetary and fiscal
discipline."I must reaffirm the rice pledging scheme is the right policy and there was no conspiracy to corrupt,"
Ms. Yingluck said, adding that she welcomed investigations by the antigraft agency.The panel determined that
Ms. Yingluck, who chaired the national rice policy committee, insisted on continuing the rice subsidy, which
showed her intention to neglect her duties to prevent damages to the state. Her negligence violated criminal
laws and the constitution, the antigraft agency said in its statement. The agency's mandate includes launching
criminal investigations and impeachment trials against politicians.The agency said it would summon Ms.
Yingluck to defend herself next week, on Feb. 27.
It wasn't immediately clear how long it would take the agency to reach its final verdict, which it would then
forward to the Senate for an impeachment trial and the office of public prosecutors for relevant legal
proceedings. Her party enjoyed a comfortable majority in the lower house, which she dissolved in December to
defuse the street tensions. But Ms. Yingluck is expected to face stronger opposition in the Senate.Ms.
Yingluck's administration launched the controversial rice subsidy program after she took office in 2011 to
improve the livelihood of Thai farmers, a key support base for her Pheu Thai Party. The government bought
paddy from local farmers at as much as 50% above market rates, but the program has run into funding
shortages.Many rice farmers have protested in the past few weeks to demand payment promised for their rice,
worth about $3.7 billion in total. The farmers' fury has also added pressure on Ms. Yingluck.The government
now sits on about 18 million tons of rice that it is struggling to sell, while prices continue to decline due to a
spike in global supply.
The massive stockpiles cost Thailand its spot as the No. 1 rice exporter, surpassed by India and Vietnam.The
anticorruption agency last month charged two of Ms. Yingluck's former ministers together with 13 others for
their alleged involvement in fraudulent rice deals.The rice subsidy has cost the government about 670 billion
baht ($20.79 billion) since it began in October 2011. The program expires at the end of this month.
Write to Warangkana Chomchuen at warangkana.chomchuen@wsj.com
Image: Thai Prime Minister Yingluck Shinawatra speaks during a news conference in Bangkok in this Jan. 17
file photo. Thailand's anticorruption agency says it will press charges against Ms. Yingluck. Reuters

NACC to press charge against Yingluck over rice-pledging scheme
February 18, 2014 2:50 pm

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The National Anti-Corruption Commission on Tuesday decided to press charge against caretaker Prime
MinisterYingluck Shinawatra for allegedly negligence in the controversial rice -pledging scheme.The agency
summoned Yingluck to acknowledge the charge on February 27.The agency will investigate if Yingluck
neglected to prevent financial damages from the scheme.Earlier the agency charged two former ministers
together with 13 others for their alleged involvement in fraudulent rice deal.

Multilayered control fails to prevent misuse of rice imports
Vincent Lingga, Jakarta | Opinion | Tue, February 18 2014, 11:00 AM

Since rice is classified as one of the nation‘s strategic commodities, its import is severely restricted and subject to
multiple layers of control under the regulations of several ministries.The import of medium-quality rice for domestic
price stabilization can be made only by the state-owned State Logistics Agency (Bulog) and the imports are based on
the volume set annually by an inter-ministerial rice task force chaired by the chief economics minister. Only rice of
premium quality and for special purposes can be imported by private companies (non-Bulog). But imports of both
medium-quality and premium-quality rice can be made only by companies that have both general import licenses
and special rice-importer licenses.
Imports should be endorsed by a letter of recommendation from the Agriculture Ministry which clearly stipulates
details on the quantity and the quality of rice, the countries of origin and the seaports of unloading in Indonesia.The
Trade Ministry (directorate general of foreign trade) can issue import licenses only on the basis of the letter of
recommendation from the Agriculture Ministry and the import specifications must also conform to those stipulated
by the latter.Copies of rice-import licenses are sent to 11 parties, including senior officials at the customs offices at
the designated seaports of unloading in Indonesia (mainly Tanjung Priok, Tanjung Perak, Tanjung Emas and
Belawan), to the Agriculture Ministry, the Office of the Coordinating Economic Minister and the trade office of the
Jakarta municipal administration.Before imports can be realized, importers must notify state-owned surveyor
companies, either PT Sucofindo or PT Surveyor Indonesia, in Jakarta about their import plans, complete with
technical specifications. This surveyor company will inspect the technical specifications of the rice at the seaports of
loading overseas or the warehouses of the rice suppliers overseas.
Rice imports can be cleared by the customs service in Indonesia only if they are supported by a surveyor‘s
verification report certifying that the imported rice fully conforms to the specifications as stipulated in the import
license. Importers also must have a Rice Import Control Card which must be filled out by the local customs service
each time imports are realized stipulating such details as the volume and classification of imported rice. And
importers must report to the Trade Ministry the import realization, supplemented with the Rice Import Control Card
bearing the signature and stamp of the local customs service.The question is then why after all this elaborate
bureaucratic procedure and multilayer supervision, misuse of rice import license still takes place? Furor broke out

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over the past two weeks after it was discovered that more than 17,000 tons of medium-quality rice had been brought
in by private (non-Bulog) importers by manipulating their quality and their harmonized-system (HS) tariff codes.
Deputy Trade Minister Bayu Krisnamurthi cried foul, pointing out that if the rice was medium-quality it would have
entered the country illegally, because his ministry issued import licenses to private importers only for premiumquality rice and only on the basis of letters of recommendation from the Agriculture Ministry.This started a heated
blame game. The Agriculture Ministry vehemently defended its position, stressing it never recommended imports of
medium-quality rice to private importers. Likewise, the customs service, seemingly ―burned‖ by Krisnamurthi‘s
tirade, said it only cleared rice imports supported with approved documents from the ministries of trade and
agriculture.The Supreme Audit Agency (BPK), the customs service and the ministries of trade and agriculture are
still digging into the alleged rice-import scandal.The manipulation of the quality of the imported rice did not cause
any state losses because all grades of rice are subject to a fixed, specific import duty of Rp 450 (4 US cents) per
kilogram and the impact was negligible as the volume involved was a mere 0.0005 percent of the national rice
production. But the controversy conveyed a strong warning.
These rather blurred tariff classifications seem to open loopholes for manipulation by importers.
The government is acutely short of adequate technical competence and integrity in managing such trade-protectionist
measures through the distribution of import quotas of basic commodities. Just look at the recent wave of sugar- and
beef-import scandals. Such import irregularities never happened between 1985-1997 when Indonesian imports were
subjected by then president Soeharto to pre-shipment inspection at the countries of origin by the global surveyor
company, Geneva-based Société Générale de Surveillance (SGS).
Part of the problem should be blamed on the vague HS classification of tariff codes for rice in place since 2012. First
of all, the import-tariff book does not mention such terms as medium or premium quality for rice but classifies this
commodity only using 10-digit codes for its specific characteristics.When the government changed the import-tariff
book in 2012, medium-quality rice, which under the old tariff regime had been under a separate HS tariff code
(1006.30.90.00), was classified in the same tariff code (1006.30.99.00) together with such premium-quality rice as
Basmati and Japonica. Thai Hom Mali rice was moved from the 1006.30.15.00 to the 1006.30.40.00 code.Futher
complicating the matter, such rice trademarks as Japonica (formerly Japan), Basmati (India) and Thai Hom Mali
(Thailand) can currently be imported from anywhere, as these rice varieties are now grown outside their native
countries. Just like Thailand‘s Munthong durian, which is now planted in Bogor. These rather blurred tariff
classifications seem to open loopholes for manipulation by importers who exploit the inadequate technical
competence of officials or in collusion with corrupt officials.
The clearest and loudest warning from this controversy is that the government should improve its institutional
capacity and the internal control of officials directly involved in managing import-restrictive measures, especially as
regard to such basic commodities as rice, sugar, beef and horticultural products.The future challenges are even
tougher because the new Trade Law which was enacted last week vests ever broader authority in the government to

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control the import or export of certain commodities considered vitally important to the basic needs of the people.This
means the government will be involved directly in the trading of many more commodities through the distribution of
quotas, special import licenses and other restrictive measures. A corrupt bureaucratic and political system crowded
by greedy businesspeople could ―creatively‖ exploit and turn such import-restrictive measures into cash cows.
_________________
The writer is senior editor at The Jakarta Post.

Do we need to produce so much rice?
Sandip Das | Updated: Feb 19 2014, 02:45 IST

Knowned agricultural scientist and vice-chancellor of Punjab Agricultural University, Baldev Singh Dhillon
wants farmers in other parts of the country to learn from Punjab and Haryana experience and judiciously use
groundwater and fertiliser, to avoid problems faced by these two states today. Dhillon spoke to Sandip Das on
the challenges faced by Punjab farmers and stressed on the need for a region-based policy for developing Indian
agriculture.Punjab has initiated a crop diversification programme to tackle with the problem of depleting water
tables. How is it going?Diversification is the need of the hour for both Punjab and Haryana.
The agriculture in these two states is demand-driven and there is more demand for rice and wheat. The central
government has increased the Minimum.Support Price (MSP) relatively fast in the recent years compared to
what was happening earlier. There is a market for rice and wheat in Punjab and Haryana—so it is difficult for
other crops to compete. Another advantage of growing rice here is if there is drought, farmers utilise irrigation
facilities and if there is adequate rainfall, there is no need of irrigation. But in case of alternate crops such as
cotton and maize, if there is heavy rain, the crop gets adversely impacted. Punjab has received R250 crore for
crop diversification in the current year. It will take some more time before diversification becomes a
reality.Other states, including Andhra Pradesh, Orissa, Chhattisgarh, are now producing substantial quantity of
rice thus contributing to central pool.
So, Punjab can diversify a chunk of area under paddy to other crop.There are many layers to this crisis. Unless
we can provide an alternate crop which provides a profit similar to that from paddy, it would be very difficult
for Punjab farmers to adopt any other crop. We have identified maize and cotton as alternate crops. We are
moving in that direction. It needs to be kept in mind, however, that the production of key foodgrains like rice
and wheat may fluctuate at the national level, but the contribution of
Punjab and Haryana have been stable. It is only in the last few

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Agri Buzz: ASSOCHAM Expects Eastern India Rice Output May Reach 670 Lakh MT
By 2017
Capital Market/ 14:30 , Feb 18, 2014
Rice production in eastern India can reach about 670 lakh MT by 2017-18 fromthe current level of over 580
lakh MT as the region holds tremendous potentialto emerge as 'Rice Bowl of India,' as every quintal increase in
yield would pushrice production by over two million tonnes, apex industry body ASSOCHAM
saidtoday."Eastern India contributes almost 55 per cent area under rice i.e. over23 million hectares, besides, this
part of the country is also blessed withabundant natural resources including land, water and bio-diversity, thus
anintegrated holistic approach coupled with a well-planned strategy is imperativeto realize targeted average
agricultural growth rate of about four per cent inthe eastern region," said a study titled, 'Towards Second Green
Revolutionin Eastern India:
A Road Map,' conducted by The Associated Chambers of Commerceand Industry of India (ASSOCHAM).West
Bengal spearheads eastern India in paddy production to the tune of about150 lakh MT followed by parts eastern
UP (140 lakh MT), Odisha (70 lakh MT),Bihar (68 lakh MT), Chhattisgarh (63 lakh MT), Assam (47 lakh MT)
and Jharkhand(34 lakh MT). If India is able to bridge the gap between potential yield andactual yield in rice, the
eastern region can achieve a compounded annual growthrate (CAGR) of about 10 per cent in rice production,
highlighted the ASSOCHAMstudy.

"Rice and fish production needs to be scaled up in eastern region as itplays a significant role in socio-economic
structure of farmers in the region,besides increased production of rice and fisheries resources will also lead
togrowth in marketing infrastructure and spur job creation in post-harvest,marketing and other related spheres,"
said Mr D.S. Rawat, nationalsecretary general of ASSOCHAM while releasing the study."Greater dependence
on unpredictable monsoon, recurring drought andfloods, low intensity during Kharif season, poor growth in
spread of highyielding varieties, injudicious use of fertilizers and other agri inputs, lowseed replacement rate
coupled with weak extension machinery and poor creditfacilities are major challenges faced by the region as it
grapples with sluggishproductivity and production growth rate," said Mr Rawat.In its study, ASSOCHAM has
suggested for using hybrids, inter-cropping,increased mechanization, use of micro nutrients, extension support
anddemonstration centres that are key to raise productivity."Apart from rice (paddy) suitable evaluation of
promoting other cropslike maize, pulses and oilseeds should be undertaken for optimum utilization ofland and
local needs in the region," said Mr Rawat.
"There is alsourgent need for efficient management of water resources as Eastern India isprone to rampant
drought and floods."ASSOCHAM has recommended that focused research in evolving hybrid seeds
indeveloping transgenic rice should be undertaken to address problem of nutrients,pests, diseases, drought and
floods.Besides, objective evaluation of bio-products together with extension ofnecessary subsidy is imperative
to make them cost-effective and favorable forfarmers as they are environment friendly and help in reducing
toxicity andcarcinogens.Market linkages is yet another important factor highlighted in the ASSOCHAMstudy as
increased production should be supported by remunerative price to thefarmers, accompanied by suitable
mechanism for procurement in identified easternstates.Infrastructure is a pre-requisite to achieve the second

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green revolution inIndia, as such ASSOCHAM has suggested for conservation and conversion of
waterresources in the rural sector, timely and efficient flood control systems,production of low-cost biopesticides and farm equipment and centers foragro-machinery services and agri-inputs.ASSOCHAM has also
suggested for creating a scientific storage, grading andcleaning centre as over 20 per cent of agricultural goods
are wasted at variouspoints when farm products move from farm till consumers' door-step.A cluster
development approach is required to create modern marketinginfrastructure for better realization for farmers
with value addition andreduced agri wastage. There is also a need to develop farmer friendly valueaddition
process for better price realization, stabilization and consistency inquality, highlighted the ASSOCHAM study.
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Four killed in Thai clashes; PM to face charges over rice scheme
BY ATHIT PERAWONGMETHA AND DAMIR SAGOLJ
BANGKOK Tue Feb 18, 2014 9:52am EST

1 OF 10. Thai riot police officers take a rest during clashes with anti-government protesters near the Government House in Bangkok February 18, 2014.
CREDIT: REUTERS/ATHIT PERAWONGMETHA

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Reuters) - Gun battles erupted between Thai police and anti-government protesters in Bangkok on Tuesday and
four people were killed and dozens wounded as authorities made their most determined effort yet to clear
demonstrators from the streets.In a day of tangled developments in Thailand's long-running political crisis, the
country's anti-corruption body announced it was filing charges against Prime Minister Yingluck Shinawatra
relating to a rice subsidy scheme that has fuelled middle-class opposition to her government.The troubled rice
scheme, already near collapse, suffered another blow when the Government Savings Bank (GSB) said it was
scrapping a loan to a state farm bank that could have been used to prop the scheme up in the face of a revolt by
depositors.The clashes were some of most intense between protesters and security forces since the campaign to
unseat Yingluck began in November.
The military, which has said it would intervene if police are unable to control security in the capital, has not
publicly commented on the violence.The protests are the latest installment of an eight-year political battle
broadly pitting the Bangkok middle class and royalist establishment against the poorer, mostly rural supporters
of Yingluck and her billionaire brother, former premier Thaksin Shinawatra.Reuters witnesses heard gunfire
and saw police firing weapons in the Phan Fa Bridge area in the old quarter of the city. Police said they had
come under fire from a sniper on a rooftop and M-79 grenades were also fired.A policeman was killed by a
gunshot and several were wounded by a grenade, security officials said.
The Erawan Medical Center, which monitors hospitals, said on its website that three protesters had also been
killed by gunfire. The centre said 64 people had been wounded but did not say how many were police and how
many were civilians.Security officials said earlier that 15,000 officers were involved in the operation, "Peace
for Bangkok Mission", to reclaim protest sites around central Bangkok's Government House and other
government offices in the north of the capital.Yingluck has been forced to abandon her offices in Government
House by the protesters, led by a former deputy premier, Suthep Thaugsuban, who have also blocked major
intersections since mid-January.Suthep told supporters at an evening rally in Bangkok's central business district
that protesters would gather on Wednesday outside Yingluck's temporary offices at a Defence Ministry facility
in north Bangkok."We are not afraid anymore. Tomorrow we will go to the Defence Ministry office... we will
chase them (Yingluck and her ministers) out. No matter where Yingluck is, we will follow."
MILITARY ROLE?
Police said they had arrested 183 people at two protest sites at the Energy Ministry, which had been cleared of
protesters, and Phan Fa Bridge, and were detaining them for violating a state of emergency declared last
month.Trouble started with clouds of teargas near Government House and soon police were crouching behind

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riot shields as officers clashed with protesters. It was not clear who had fired the teargas and the authorities
blamed protesters.By the afternoon, police had largely withdrawn from protest sites and the streets were quiet.
National police chief Adul Saengsingkaew told Reuters there were no plans to continue the operation on
Wednesday.There has been no move against the biggest protest sites in the city's commercial and shopping
districts.
The protesters are trying to oust Yingluck, whom they view as a proxy for her elder brother Thaksin, a former
telecoms tycoon-turned-premier, toppled by the army in a 2006 coup.The military has remained aloof from the
latest crisis, but has a long history of intervening in politics, generally in support of the Bangkok establishment
that includes the top brass, royal advisers and old-money families."If enough people are killed then the archroyalist grouping might pressure Yingluck to retreat from her pro-active approach towards Suthep," said Paul
Chambers, director of research at the Institute for South East Asian Studies in Chiang Mai."I don't think the
military would carry out a coup, but they would ask Yingluck to back off from Suthep."Among the protesters'
grievances is the rice subsidy scheme, a populist move to pay farmers an above-market price that has proved
hugely expensive and run into funding problems.
The National Anti-Corruption Commission announced an investigation last month and on Tuesday said it was
summoning Yingluck to hear charges against her on February 27."Although she knew that many people had
warned about corruption in the scheme, she still continued with it. That shows her intention to cause losses to
the government so we have unanimously agreed to charge her," Vicha Mahakhun, a member of the commission,
said in a statement.
BANK WITHDRAWALS
The GSB had said on Sunday it had lent 5 billion baht ($155 million) to the Bank for Agriculture and
Agricultural Cooperatives, which manages the rice program and has all but run out of money to pay
farmers.Some GSB depositors, either worried that the loan could destabilize the bank or unwilling to see their
money used to help the government, have been taking out their cash. On Monday, 30 billion baht ($930 million)
was withdrawn.In a response to the withdrawals, Thaksin's son, Panthongtae Shinawatra, posted a picture
on Facebook showing he had deposited just over 11 million baht in a GSB account.The protests have taken a
toll on the economy and data published on Monday showed growth slowed sharply in the fourth quarter of
2013. The baht currency weakened after Tuesday's violence.

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Yingluck called a snap election in December and has since led a caretaker administration with only limited
powers.The main opposition party boycotted the February 2 election and protesters disrupted it in parts of
Bangkok and the south, the powerbase of the opposition. It may be many months before there is a quorum in
parliament to elect a new prime minister.Demonstrators accuse Yingluck's brother Thaksin of nepotism and
corruption and say he used taxpayers' money for populist subsidies and easy loans that have bought him the
loyalty of millions in the populous north and northeast.They want to suspend what they say is a fragile
democracy under Thaksin's control and eradicate his influence by altering electoral arrangements.The
government, haunted by memories of a bloody 2010 crackdown by a previous administration that killed dozens
of pro-Thaksin "red shirt" activists, has until now largely tried to avoid confrontation.Tuesday's fatalities
brought to 15 the number of people killed in sporadic violence between protesters, security forces and
government supporters since the demonstrations began. Hundreds have been hurt. ($1 = 32.2700 baht)
(Additional reporting by Apornrath Phoonphongphiphat, Amy Sawitta Lefevre, Prapan Chankaew, Panarat
Thepgumpanat, Orathai Sriring and Pairat Temphairojana; Writing byAlex Richardson; Editing by Alan
Raybould and Jon Boyle)

Run on Thai Bank Linked to Rice Subsidy Points to Strain on
Economy
WARANGKANA CHOMCHUEN and
NOPPARAT CHAICHALEARMMONGKOL
Updated Feb. 17, 2014 12:03 p.m. ET

Thai farmers battle with soldiers in a protest over rice-subsidy payments. Agence

France-Presse/Getty Images

BANGKOK—Depositors have withdrawn nearly $1
billion from a bank linked to a foundering rice-subsidy
program, the bank said Monday, in one of the first signs
that Thailand's months-old political stalemate is starting
to affect the economy.Adding to the pressure on Prime
Minister Yingluck Shinawatra, a government agency
Monday forecast economic growth rates would slow in
the months to come because of the unrest. The prime
minister has faced street protests since November calling

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on her to resign.Woravit Chailimpamontri, chief executive at Government Savings Bank, said that depositors
withdrew 30 billion baht, or $930 million, over the past three days after the bank extended a 5 billion-baht loan to a
financial cooperative involved in a state-subsidy program.
The cooperative, which buys rice from farmers at up to 50% above market prices, has been singled out by the
antigovernment protesters as representative of the kind of damaging populist policies pursued by the prime minister
to build rural support, which has translated into large parliamentary majorities.As the withdrawals at Government
Savings Bank worsened, Mr. Woravit said it wouldn't extend any further loans to the Bank for Agriculture and
Agricultural Cooperatives, which manages the rice subsidy program.In recent weeks, the Yingluck administration
has struggled to secure loans from commercial banks to pay the rice farmers, who are demanding payment for grain
they already handed over to the government.After dissolving parliament in December in a bid to ease tensions, Ms.
Yingluck now governs in a caretaker capacity without any power to make major spending decisions. Protests and
blockades of voting centers prevented Ms. Yingluck from forming a new government after national elections on Feb.
2, and a fresh round to complete the ballot isn't set until April.
The political pressure on Ms. Yingluck continues despite government efforts to clear protesters from some sites in
the capital. Protest leader Suthep Thaugsuban, a former deputy premier, on Monday urged his supporters to continue
a blockade at the main government office in downtown Bangkok."Yingluck Shinawatra will not have a chance to
return to work at the Government House, in this life or next," Mr. Suthep said. His supporters set up concrete barriers
in front of some of the gates and sealed them with cement in their latest bid to force Ms. Yingluck to step
down.Chalerm Yubamrung, chief of the government's special security center, said the police will launch another
operation to reclaim government buildings from the protesters on Tuesday.Thailand's economy has until recently
largely withstood the turmoil that followed the military's ouster of former leaderThaksin Shinawatra, the current
prime minister's brother, eight years ago.
While it has struggled, along with peers such as Malaysia and Indonesia, to regain the growth rates it saw in the
1980s and 1990s, Thailand largely has managed to continue attracting large amounts of foreign investment,
especially in the automotive industry.In the past few weeks, though, consumer confidence has sagged badly,
clouding the longer-term outlook for Southeast Asia's linchpin economy.The National Economic and Social
Development Board, a government agency, said Monday that the months of protests will limit growth in the first half
of this year. The board forecast growth in full-year GDP to tick back up to between 3% and 4%, as reviving Western
demand boosts exports. The figure also assumed the tourism industry, which grew at a record 20% last year, will
weather the political unrest.The unrest has dented consumer confidence, though, and affected spending, according to
the agency.

Cell # 92 321 369 2874

Private consumption contracted 4.5% in the fourth quarter, a level not seen since the Asian financial crisis in 1997,
according to Rahul Bajoria, a regional economist with Barclays."Overall, the domestic economy still remains a
matter of big concern," he said. "At this point, there is no end—it's hard to say when the political uncertainty will
disappear."Major investors such as Toyota Motor Corp. have warned that future investments could be jeopardized if
the economic effect of the monthslong protests against the government and Ms. Yingluck worsen.The board reported
that the country's gross domestic product expanded 0.6% on year in the fourth quarter compared with 2.7% growth in
the third quarter, with the economy growing 2.9% in 2013 compared with 6.5% in 2012.
Corrections & Amplifications
Suthep Thaugsuban is a former deputy prime minister of Thailand. An earlier version of this article incorrectly said
he was formerly a prime minister of the country.
Write to Warangkana Chomchuen at warangkana.chomchuen@wsj.com and Nopparat Chaichalearmmongkol
at nopparat.chaichalearmmongkol@wsj.com

By Bangkok Pundit Feb 17, 2014 10:00AM UTC

Workers unload rice from a truck in northeastern Thailand. Pic: AP.

University of Thai Chamber of Commerce did a very long survey (it is 56 pages long) of 1,228 farmers between
September 2-15, 2013.
This survey is a few
months old and it
doesn‘t take into
account the current
problems and
grievances, but BP
does think it is still
instructive of overall
view of farmers about
rice pledging and
policies for helping
farmers as well as the
state of rice farming.

Cell # 92 321 369 2874

1. Demographics
1A Gender:
Male: 53%
Female: 47%
1B Age:
20-29: .3%
30-39: 7.4%
40-49: 39.5%
50-59: 39.4%
60+: 13.3%

BP: Remember, we are not talking about farm workers, but about farm owners so the age is higher.
1C Education:
Lower than primary school: 11.5%
Primary School: 41.0%
High School: 27.2%
Vocational Cert/higher vocational certificate: 13.1%
Bachelor‘s Degree: 6.8%
Bachelor‘s or higher: .3%
BP: 80% high school or less….
1D Do you have an extra job?
Yes: 44.6%
No: 55.4%
1E Your location
North: 38.5%
Northeast: 38.8%
Central: 17.4%
South: 5.3%
1F No. of people in Household
1-2: 2.7%
3-4: 46.1%
5-6: 34.6%
7-8: 14%
More than 8: 2.5%
BP: See below

Cell # 92 321 369 2874

1G Monthly income per household
Less than 5,000: .7%
5,000-10,000: 10.1%
10,001-25,000: 42%
25,000-50,000: 38.3%
50,001-100,000: 7.9%
More than 100,000: 1.1%
BP: Remember, we are not talking about farm workers, but about farm owners from small farms to bigger
farms. This contrasts with nationwide average monthly income per household of 25,403 Baht (as of Q2 of 2013
per NSO). On one hand, you can say that farming income is lower than the average – although not all of income
is from farming of course – but then on another, we are talking about larger-than-average households – am not
sure of the exact figure, but simple maths tells you it is larger than 4 whereas the national average is 3.2
(per NSO as of 2010). Nevertheless, many do clearly have income and the average is around the nationwide
income (52.8% of households earn less than 25,000 Baht a month which is below the national average).
1H Amount of farm land
Own land: 47.92% (avg 14.92 rai)
Rent: 4.8% (avg 25.72 rai)
State: .1% (2 rai)
Own land and rent: 45.9% (avg 19.12 rai)
Rent and from state: .1% (avg 70 rai)
Own and from state: .7% (avg 23.38)
Own, rent, and from state: .7% (avg 26.88 rai)
BP: It is a little unfortunate, this is not more precisely divided up on how much of the ‗own land and rent‘
category land is rented and how much is owned. As way of comparison according to National Statistics Office,
the amount of land owner per farmer (this includes all farmers although rice farming is just over 50% of total
land), the breakdown is:

Cell # 92 321 369 2874

BP: So no doubt land rental prices have gone up since the introduction of rice pledging and this is an increase
on the cost of production for many farmers, but the majority of land used by farmers is their own land with 5%
renting only although around 46% own and rent.
NOTE: More to come. The question order and numbers for question, e.g 1A, is per BP‘s order

By Bangkok Pundit Feb 18, 2014 10:30AM UTC
Part 1 was an introduction to University of Thai Chamber of Commerce‘s very long survey (56 pages long) of
1,228 farmers between September 2-15, 2013.
2. Rice production, expenses, and income
2A. Has your production level increased compared with previous year?
-Increased a lot, 1.3%

Cell # 92 321 369 2874

-Increased, 35.3%
-Same, 43.2%
-Decreased, 17.6%
-Decreased a lot, 2.2%
-Unsure, .4%
BP: Depending on how you define it as a blessing or a curse, this shows part of the problem for the government.
Quite rationally as farmers are getting more money, they are producing more rice, but greater production means
greater cost and also more rice for the government to sell. It becomes a problem that just increases. This is not a
problem inherent just to rice pledging, but any scheme where a subsidy is provided. The result will be greater
production – assuming things on the world market remain the same – and lower prices requiring a greater
subsidy. Hence, there is some importance in making sure that any subsidy scheme is limited in only subsidising
an xx amount of rice per household. Will get into more detail later, but this also ensures that a greater
proportion of the subsidy goes to those on lower incomes (assuming that those on lower incomes grow less
rice).
2B. How many harvests a year?
-1, 52.3%
-2, 41%
-3, 6.7%
BP: Relevance to the above is, if only one harvest which would normally be during October-February/main
harvest then there is no need to try to provide compensation during the off-season, but as you see we are talking
almost half who have more than one harvest. It is not a small minority.
2C. Are you in an irrigated area?
-yes, 37.8%
-no, 62.2%
BP: BP is unsure on the feasibility and costs of further irrigating vs the reduced costs for farmers of further
irrigation so won‘t comment too much, but it does seem a worthwhile long-term plan.
2D. What percentage of your rice is planted in what harvest/season?
-Main harvest, 64.3%
-Out-of-season harvest, 35.7%
BP: Connected with 2B. Main harvest is still key.
2E Have you had a drought problem before?

Cell # 92 321 369 2874

2EA. Main harvest
-No, 20.4%
-Yes, 79.6%
2EB. Out-of-season harvest
No, 18.4%
Yes, 81.6%
BP: For both, this is when have you had a drought problem which could refer to just once 20 years ago so not
that conclusive.
2F. Farming average over recent years

BP: See commentary below
2G. Farming this year

BP: The % is which household produced what quantity and it is not the amount pledged; just grown. BP will
point out now that for the main harvest the rice pledging price is 15,000 Baht a tonne and a maximum of
350,000 Baht per household, whereas for the out-of-season harvest, the price is 13,000 Baht a tonne and a
maximum of 300,000 Baht per household. These limits for the main harvest are for the just past harvest (before
this survey). In BP‘s view these were a little too late, but still necessary. As rice pledging was not helping to

Cell # 92 321 369 2874

raise the world price, there was no point to subsidise farmers beyond a certain pledging volume point. See also
2H and other comments below.
NOTE: By way of contrast under the Democrat‘s income guarantee scheme, the ‖guaranteed quantity of rice per
household of the income guarantee scheme of the year 2010/2011 in the second round was; 25 tons for Pathum
Thani 1 paddy rice, 25 tons for unhusked rice and 25 tons for unhusked glutinous rice‖ in 2010, but this was
later increased to 30 tonnes in 2011 after protests although farmers wanted 40 tonnes.
2H. How much money/income do you receive from pledging each harvest?

BP: The market price for rice has been around 8,000-10,000 Baht over the last few years so this money
received is not all subsidy, it includes actual rice, but it is also noticeable that for the main harvest over 85% get
less than 240,000. It shows as mentioned above, why limits should have been placed earlier on – and certainly
after the first year – on the maximum amount received per household.
BP is not saying that these limits would significantly decrease the losses, it is more of an equality issue and why
should farmers who earn higher-than-average household incomes continue to be subsidised beyond that level.
2I. How much extra money do you receive compared with before the pledging?

Cell # 92 321 369 2874

BP: Technically, this is not just the subsidy, but it can also include monies received because of the higher prices
and the fact that farmers are harvesting more rice and so the profits they get from that. Nevertheless, the reality
is that because of pledging, the average rice farming household gets an average of 115,000 Baht per year. Yes,
there are some who earned a lot of money, but we are talking about 15% and even then they don‘t skew the
numbers up that much.Yes, farmers are unhappy about not getting paid. They were also unhappy with the
Democrats in 2011 although that got little coverage. TANN in 2011 on farmer protests:
Following yesterday’s National Rice Policy Board meeting which was presided over by Prime Minister Abhisit
Vejjajiva, the government has decided to raise the reference price and rice quantity for the farmer income
guarantee scheme for three types of rice, namely white rice which is now at 11,000 baht per ton, Pathum Thani
rice which was readjusted to 11,500 baht per ton and sticky rice at 10,000 baht per ton.
Meanwhile, the guaranteed quota has gone up from 25 tons to 30 tons per household. The decision has
sparked dissatisfaction among rice farmers across the country.
Farmers in the North have gathered in front of Naresuan University in Phitsanulok province while Ayutthaya
farmers are staging their protests in front of the provincial hall.
The farmers are demanding the government increase the reference price from 10,000 to 14,000 baht, raise
the quota from 25 to 40 tons per household and ensure that the price of paddy with 30-percent moisture be
raised to a minimum of 10,000 baht per ton.
Although many farmers strongly disagree with the National Rice Policy Board’s decision, a large number have
dispersed with the plan to send representatives from different provinces to discuss the issue with the panel.
Protest leaders said farmers will stage a rally again if the rice panel does not respond. Nonetheless, there are
still a number of disgruntled farmers at rally sites in Ayutthaya
BP: So Puea Thai essentially gave the farmers slightly more than what they wanted. This is a key point. Most
farmers were unhappy with what the Democrats were offering and wanted what Puea Thai was offering. Now,
BP doesn‘t doubt that Puea Thai will have lost support, but there is still no counter-offer from the opposition on
what their policy is. Remember in 2011, Puea Thai did provide a counter-offer. It would be very difficult for the
Democrats that are demonising the scheme to continue it, but BP isn‘t sure that offering 11,000 Baht a tonne (or
12,000 Baht a tonne which was the policy during the 2011 election) will be enough. Those who are disgruntled
farmers – and not Democrats – are more likely to go for third parties unless the Democrats offer a generous
alternative.
BP still views that a change is needed. As blogged in October:

Cell # 92 321 369 2874

If anything the current implementation shows is that the government should steer clear of trading and like
Pridiyathorn says just leave it to private rice trading firms. A direct subsidy scheme will still cost a lot.
Pridiyathorn talks about 2,500 Baht per tonne which BP is sure that farmers won’t go far given they receive far
more than under rice pledging. However, at around 4,000-4,500 Baht a tonne, it would make selling the change
to farmers much easier. Even then with a direct subsidy of 4,000-4,500 Baht a tonne at the time rice is sold and
set a maximum of how many tonnes per household per year (say 15-25 tonnes per household per year) then if
you have around 20 million tonnes** you are talking about 80-90 billion Baht a year. Remember the
Democrat’s rice income guarantee scheme cost 67 billion baht in its final year (see also USDA report for the
costs). There will be also be some costs for administering the scheme, but there will be such costs for any
scheme.
With a direct subsidy, the government can let the private sector deal with the rest so this avoids this all of the
messy complications and uncertain cost of the current scheme. Even now, the costs of the pledging scheme are
still unclear. It will also avoid misleading articles to the “cost” because now the cost will be clearer as there is
no need to deduct costs for money made from selling rice as well as storage and all other various costs. A direct
subsidy won’t stop many farmers being screwed, but the rice pledging scheme hasn’t done this either.
One reason for pledging is that farmers know the amount of money they will receive, but the reality is that
farmers don’t know how much they will receive under the pledging scheme. Under the pledging scheme,
the moisture content of rice must be lower than 15% to get the 15,000 Baht pledging price, but most farmers do
not pledge rice that has a moisture content of less than 15% so they don’t get the 15,000 Baht and instead get a
lower figure depending on the moisture content or quality of the rice. If necessary, the direct subsidy could be
adjusted by harvest to provide certainty.
BP: Would adjust slightly for political optics purposes and say a maximum of 100,000 Baht per household in a
direct subsidy. Either a maximum of 4,000 Baht a tonne* and maximum of 25 tonnes per household. This
would likely put the cost just over 100 Billion Baht a year, but not that much more with 21,000,000-22,000,000
tonnes pledged in recent years. One of the benefits of a direct subsidy is that there are fewer moving parts than rice
pledging. There aren‘t so many hoops to jump through as with the current scheme especially with the government
under attack from all corners. Something cleaner and easier to manage is needed.
NOTE: More to come. The question order and numbers for question, e.g 1A, is per BP‘s
order.

Contact: Advertising Department Mujahid Ali
mujahid.riceplus@gmail.com
+92 321 369 2874
Cell # 92 321 369 2874

18th feb.2014 daily global rice e newsletter by riceplus magazine

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