When one thinks of Thailand one might think of elephants, golden temples, beautiful beaches, elegant dancing girls and the spicy food with its wonderfully fragrant, soft Jasmine rice.

The Pheu Thai government is doing its best to ruin one of these icons.

One of the government’s headline policies in the run up to the general election last year was to guarantee to buy Hom Mali (Jasmine) rice at 20,000 Baht/tonne, and other white rices at 15,000 Baht/tonne – about 40% above the then current market price. This sounded great to the farmers, and was yet another great way to buy votes. The subsequent election was like turkeys voting for Christmas.

The scheme works with local millers storing the rice, and the government then trying to sell the rice on the open market. What could possibly go wrong?

Well, the price of Thai rice is now about $170/tonne above similar rices from Vietnam and India, so overseas sales have fallen dramatically. (Sales fell 41% in the first two months of this year.)

Vast amounts of rice are being stored and going stale. In a year or two they’ll only be fit for the pigs. And storage doesn’t come cheap.

Millers have been mixing the Jasmine rice with cheaper rices. Initially they started by mixing the Jasmine rice with Patum Thani rice, which is also fragrant. Now Patum Thani is in such short supply that they’ve switched to non-fragrant long grain rices, including rices smuggled from neighbouring countries. This adulteration has already badly damaged the reputation of Thailand’s premium rice.

So, sales have been slashed, and the international reputation of Jasmine rice has been trashed, but still, the farmers are better off, right? Uh, no.

Some farmers are receiving only 9,000 Baht/tonne because they don’t have a truck to transport the rice to the rice mill, and have to take whatever price they’re offered by the miller.

Most farmers don’t have the equipment to dry the rice to the necessary level of moistness, so are offered low prices by the millers, who do have the necessary drying equipment.

Farmers depend upon the millers to weight the rice, and the scales can be rigged.

And there are other forms of corruption.

Millers can sell off the mortgaged rice, yet still continue to receive money from the government for storing the rice. They then buy rice to replenish their stores when the government calls the rice in. The inspectors who are supposed to monitor the rice in storage are, shall we say, not incorruptible. Or they may simply be shown a token storage amount of good rice.

Another scam is to take already mortgaged rice and then resubmit it as newly mortgaged rice, thus receiving double payment.

This scheme was always designed to benefit a select band of middlemen – not the farmers. And the cost so far is estimated at 260,000,000,000 Baht ($8.2 billion) – $188 for every man, woman and child in the country. (The cost estimate is from the Commerce Ministry.)

The Thai government is committed to continuing the scheme.

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