What is to be done?
Global downturn threatens livelihood of Thailand's rural hinterland

Bangkok Post business news features an interview with economists at the Thailand Development Research Institute (TDRI) today.

"Government measures to prop up crop prices remain necessary." One key question is by how much? (See previous article).

Investment to create "self-reliance" in rural areas would have greater long-run benefits than mere handouts that just boost consumption in the short-run, according to the interview.

Here is the article in full:

Farmers may feel sting in 2009

PARISTA YUTHAMANOP
Monday November 03, 2008

Agricultural price spike saved Thai economy this year

The dramatic rise in world farm prices was a major factor in helping keep the economy afloat this year amid political chaos and sluggish domestic investment.

But with the US "Hamburger Crisis" threatening to spread like a grease fire into a global recession in 2009, prices for key farm crops such as rice and rubber have since reversed sharply.

Prime Minister Somchai Wongsawat hopes to head off fears of a sharp rise in unemployment and slowing economic growth with a 100-billion-baht supplementary budget, to be spent largely on rural job programmes.

In 2008, the agricultural sector reaped sharp gains thanks to the rise in energy crops as a counter to soaring crude oil prices. Natural disasters also resulted in supply constraints, pushing prices upward to Thailand's benefit.

Rice and tapioca enjoyed price gains of 50% in the first half of 2008, while rubber and corn prices jumped by 30%.

(Picture on right of "small-scale farmers...back in Bangkok, rallying at the temporary Government House at Don Mueang airport for help with debtsand financial problem")

Vocabulary:
What is to be done? - the famous question asked by Vladimir Lenin in a pamphlet he wrote in 1901 (See Wikipedia)
livelihood - a source of money and income such as a job that allows you to buy your family the things that they need
the rural hinterland -  the area of a country or region far from the centre (for example, the mountainous hinterlands of Chiang Rai)
Thailand Development Research Institute (TDRI) - think tank established in 1984 to conduct policy research and disseminate results to the public and private sectors, provides technical and policy analysis that supports the formulation of policies with long-term implications for sustaining social and economic development in Thailand (See website)
handouts - free things received from government or charities without the need to work 
feel sting - feel hurt and injured (like a bee sting)
US "Hamburger Crisis" -  the name used by some Thai people for the current global financial crisis that originated in the US (supposedly because some westerners called the 1997 Asian Financial Crisis the "Tom Yam Kung" Crisis, blaming it on Thailand)
spread like a grease fire - when the fat used to cook fried food suddenly catches on fire
head off - stop, prevent from moving further or growing greater
head off fears - prevent fears, reduce fears
a supplementary budget - additional budget
rural job programmes - government programmes that create jobs in rural areas for farmers
reaped sharp gains - gained a lot quickly
X a counter to Y - X reduces the effect of Y, X works in the opposite direction from Y
supply constraints, pushing prices upward - factors that prevent crop supplies from rising, low supply with fixed demand makes prices rise

Global recession, depressed prices erase farmers' gains

But now the gains have reversed sharply. Yongyuth Chalamwong, a labour expert at the Thailand Development Research Institute, said the global economic slowdown, led by the United States, Europe and Japan, had already erased the gains of earlier this year.

Cutbacks in consumer spending will almost certainly result in job losses for labour-intensive industries such as jewellery and furniture.

The unemployment problem will be more pronounced because around two million labourers out of 13 million in the farm sector typically migrate to Bangkok between January and April to supplement their incomes during the non-harvest season. These workers in turn compete with the 800,000 new graduates who enter the labour force each year.

"Prices of farm products are higher than in 1997, but government measures to prop up crop prices remain necessary," Dr Yongyuth said. "The farm sector is the last resort for many job-seekers."

He said the scenario of a decline in farm prices causing farmers to face massive losses was unlikely because they had adopted more careful business expansion and cost-reduction measures, such as the use of organic fertilisers and multiple crop plantations.

"While a spending programme to lift consumption in rural areas is unavoidable, the funds should be spent to create self-reliance rather than false demand for consumption. One example is to find markets for Otop products that will be affected from drops in tourism," he said.

Vocabulary:
erased the gains of earlier this year - eliminated the gains, reduced the gains
labour-intensive industries such as jewellery and furniture
pronounced - very noticeable
migrate to - move to and live in another place for a period of time
supplement their incomes - add to their income
the labour force - all the workers in an economy (who receive salaries or hourly wages)
prop up crop prices - prevent crop prices from falling (around harvest time when their is an oversupply, for instance)
prop up the economy - support and help the economy when it fails
a last resort - a final attempt to solve a problem, if all else fails (often desperate and extreme measures)
a scenario - a possible situation in the future
organic fertilisers - food for plants that does not use chemicals to make plants grow faster (but also have negative side-effects)
a plantation - one crop, one planting of crops during the year, one harvest (note: this word usually means "a large farm")
multiple crop plantations - planting crops many times (two or three) during the year
self-reliance - relying on your own resources, not the resources of others

Intense competition between agricultural exporters on the horizon

Analysts expect domestic demand to fall substantially in 2009 due to external factors and domestic political tensions. Phatra Securities offered one of the darkest forecasts for 2009 with economic growth of 3.3%, saying political uncertainty will severely affect consumption.

Pisarn Manoleehakul, the president of Kasikorn Research Center, said that competition among agricultural exporters would intensify because countries whose farm plantations were disrupted in 2008 would increase production. The decline in farm commodity prices will affect overall exports because high crop prices had helped to drive much of the growth in 2008.

"Every country has to face falling world market prices. Therefore, the outlook on exports depends how competitive each country is," Mr Pisarn said.

The government's rescue plan is necessary to prop up the economy as domestic consumption looks set to decline markedly in 2009, he said.

Kamol Ieosriwikul, president of the listed leasing firm Mida Assets, said the purchasing power of rural residents was likely to decrease because it was the middlemen who benefited from windfall price increases in the past.

"Income in the farm sector looked better in the past, but farmers did not really benefit from it," he said.

"There have been no clear signs of a decline in rural consumption, but we have to expect it."

Vocabulary:
on the horizon - event likely to happen in the near future
false demand for consumption - a temporary jump in consumption from government handouts looks like sustainable economic growth but isn't
farm plantations were disrupted -  something interfered with and made the planting of crops difficult
competition among agricultural exporters would intensify - competition among agricultural exporters would grow stronger
drive much of the growth - cause a lot of the growth
lease Y - rent from a company for a period of time instead of buying (lease a car, lease equipment, lease a building, for example)
a leasing firm -  a company that leases equipment or vehicles to individuals or businesses
purchasing power - how much goods and services a consumer or group of consumers can buy with their income
middlemen - people who buy and resell goods between the factory and the final consumer

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