Zone restrictions on rice sales lifted
to ensure fair rice price for farmers
By Jon Fernquest |
When rice prices skyrocketed recently, it was hoped that come of this windfall profit would go to the rice farmers who actually produce that rice.
There were many reasons why rice farmers were not getting their fair share. Prices of inputs into rice production such as fertiliser, seed, and land also rose sharply in price. Water was scarce. Farmers often pledged their crop at fixed prices in order to get loans.
An article in today's Bangkok Post presents yet another reason.
Rice farmers in Isan and northern Thailand are restricted to selling their rice only to millers operating in their area.
The stated purpose of this regulation was to prevent mixing rice grown in different areas thus helping to control the quality of rice products.
However, cartels of rice millers are apparently controlling rice prices in some areas and have taken advantage of this government regulation. These cartels have been offering farmers artificially low prices, far below existing high market prices.
These low prices led to widespread protests in Chiang Rai which spurred quick government action on the matter and relaxation of the zoning regulation.
Meanwhile, the government has started selling rice from its own warehouses at discounted prices, 120 baht for a 5 kg. bag instead of the current 150 to 160 baht ber bag. (See photo of this rice being distributed on right).
Here is the article in full:
Zoning of rice sales to mills to be lifted
200,000 more bags to be sold from stockpile
POST REPORTERS
Tuesday May 13, 2008
The ban on rice farmers selling their grain across restricted zones will be lifted, to ensure they get a fair price for their harvest, Commerce Minister Mingkwan Sangsuwan said yesterday. His decision was announced after more than 5,000 farmers in Chiang Rai blocked roads in protest against local mill owners they said were buying their grain at unfair, low prices.
The farmers split in two groups. One group blockaded a major highway linking Phan district and Pha Yao's Mae Chai district. The other stopped traffic on a road heading to the Chiang Rai provincial hall.
The groups demanded that officials ensure the millers pay 9,000 baht a tonne for their sticky rice, not the 6,000 to 7,000 baht they were currently offering.
They asked to meet the commerce minister.
After negotiations, it was agreed about 2,000 farmers who had blocked the route to the provincial hall would disperse. But the group on the major highway did not move, leaving more than 100 e-taen farm vehicles and pick-up trucks blocking the road.
On Saturday, rice farmers in Kalasin also protested against rice millers they said were trying to form a cartel and control prices in the area.
The millers buy Kor Khor sticky rice grain at only 6,000 baht a tonne, even though the government earlier fixed the price at 12,000 baht a tonne. They also buy Hom Mali or jasmine paddy at 8,500 baht a tonne, below the market price in other areas of 17,000 baht.
Mr Mingkwan said the Commerce Ministry would lift the regulation prohibiting rice farmers from selling their grain outside of their own zone. This would enable them to a fair price.
The minister said a suitable price for Hom Mali paddy was 19,000 to 20,000 baht per tonne and regular-grade paddy should be between 12,000 and 14,000 baht per tonne.
"The government will intervene if rice millers buy at a lower price than the reference prices," he said.
The restrictions on rice trading zones were enforced by the previous government and were aimed at controlling the quality of rice products. Farmers in 19 provinces in the Northeast and three provinces in the North, including Chiang Rai, are not allowed to sell their rice outside set zones to prevent mixing with grain grown in different areas, which lessens quality and selling prices.
The Blue Flag Campaign: Cheap rice from government warehouses
The Internal Trade Department will also distribute an additional 200,000 five kilogramme packs of low-price rice on May 20 and 30. The first release of 100,000 packs sold out in only one hour.
The sale of low-price packed rice under the "blue flag" campaign began yesterday. It is aimed at helping consumers cope with the rising price, but each family is limited to buying two or three bags.
In Bangkok, about 73,000 bags offered in four spots, including the Commerce Ministry, quickly sold out at 120 baht a bag, compared with market prices between 150 and 160 baht.
"I'm very glad the ministry launched this campaign. My family has been struggling since the price has risen," said Jantana Suan-ngam, who had queued in a long line since early morning.
Some complained the government should allow each family to buy more.
In other provinces, including Udon Thani, Phitsanulok and Chiang Mai, people flocked to buy the cheaper rice at designated spots. They were told to show their identity cards and get queue tickets. In Chiang Mai, officials stamped their hands to prevent people returning to buy extra bags.
"People should not be so worried. The government still has a big enough enough rice stock to cater for domestic consumption," said one official.
(Source: Bangkok Post, general news, post reporters, 13-05-08, temp-link)
Vocabulary:
zoning - creating areas where activity is restricted and regulated
rice trading zones - areas where rice farmers have to use the mills in the same area
stockpile - large quantities stored for future use (See glossary)
windfall profit - money received unexpectedly, by luck (See glossary)
pledge - promise
the stated purpose - what was claimed as the purpose, may actually be an excuse for a cartel
a cartel - businesses grouped together to control prices and prevent competition
apparently - appears to be true (but without evidence and proof cannot say for sure)
take advantage of - use something unfairly for your own gain
spur - cause something to happen (See glossary)
relaxation of a regulation - no longer enforcing the regulation (or enforcing it less strictly)
a fair price - the reasonable, right, and just price under the circumstances
blockaded - stopping people and goods from reaching a place
blockaded a major highway - prevented vehicles from traveling along the highway
negotiations - formal discussions between people with different goals to reach an agreement
disperse - when a group splits up and people go in different directions
regulation prohibiting X - the goverment created a rule to prevent people from doing X
intervene, government intervenes - when the government takes action in a market, regulating the market or buying and selling in the market (usually governments stay out of markets and allow them to operate relatively freely and independently)
reference prices - a small set of prices that people to look at to see what the general price level is (there are many different prices, reference prices simplify the problem of finding the general price level)
aimed at Y - with the goal of achieving Y
release of 100,000 packs - make 100,000 packs available to the public
cope with - deal with a problem successfully
a campaign - a planned set of activities over a period of time to achieve a goal
the Blue Flag Campaign - the name of the government programme that sells rice to the public from government warehouses at low prices
launched a campaign - started a campaign
queued - waiting in line for something
queue tickets - the ticket you take at the bank or government agency, and wait until they call that number
flocked to buy - came in large numbers to buy (comes from "a flock of birds")
cater for - satisfy a need, provide things that people need or want (See glossary)
