Corn price supports set
at 8.5 baht,
versus 4 baht on world markets,
corn imports to Thailand banned
By Jon Fernquest
Corn (maize) farmers in the
North and Northeast have been staging protests this
week demanding price supports for their crops.
This week the government simultaneously banned all corn imports into Thailand while setting aside 11.12 billion baht to buy Thai corn and tapioca to protect Thai farmers from declining world prices.
Farmers will be protected from having to compete with cheaper imported corn.
Who will pay for this government corn subsidy to farmers?
1. Thai consumers paying higher prices for their corn?
2. Taxpayers, if the government decides to absorb the cost itself?
Falling corn prices worldwide
World corn prices have fallen along with all commodity prices as a world recession kicks into gear.
Large volume corn (or maize) importers such as Malaysia, Indonesia and Vietnam have been switching to cheaper corn from Brazil and India.
This has been driving the price of corn down:
Domestic corn prices fell to 7.0 baht per kilogramme in October, down from 8.50 baht in September and a year-high of 12.50 baht per kg in August. Thai corn for export is being offered at around US$300 per tonne compared with $240 for Indian and Brazilian corn.
Current world market prices do not cover the production costs of Thai farmers:
The average production cost for corn is 5.83 baht per kilogram but the current market price of corn is slightly above 4 baht per kilogram (4.5 baht for livestock feed) (See previous article)
One third of the crop will be bought up for 8.5 baht per kilogramme, higher than both world prices and production costs:
[the government] plans to buy up to 500,000 tonnes out of the total 1.5-million-tonne output from corn farmers at 8.50 baht per kilogramme in a bid to support prices.Authorities expect to spend about 4.9 billion baht including 666 million for operating costs such as insurance and silo rentals in the intervention programme from Nov 1 to Dec 30.
Biofuels corn and tapioca influenced by oil prices
Corn and tapioca are both used as biofuels all over the world and therefore substitutes for oil.
Earlier this year, the prices of these biofuel crops, as well as the food products they are used in, were driven up by increased oil prices.
When the price of oil decreases as it has recently, the price of biofuels such as corn and tapioca would also be expected to decrease as they have
In the future the price of both corn and tapioca is likely to be highly dependent on the price of oil (See chart showing the influence of biofuel production and oil prices on crop prices).
In the long-run government energy policy will most likely have to be coordinated with agricultural policy.
Tapioca price supports
"According to Mr Yanyong, the pledging price for tapioca was set at 1.80 baht per kg, and would be raised by five satang per month during the intervention period from Nov 1 until April 30.
The government aims to buy five million tonnes of tapioca from total production of 27 million tonnes. About 6.2 billion baht would be spent on the tapioca intervention scheme.
The state-owned Bank for Agriculture and Agricultural Co-operatives (BAAC) will be asked to lend for both pledging schemes [price support programme], he said.
Pornsil Patcharintanakul, president of the Thai Feedmeal Manufacturers' Association, suggested that the pledging scheme ensure that it benefits farmers directly.
He said authorities had to come up with supervisory and inspection measures to prevent traders or farmers from exploiting the scheme by using produce imported from neighbouring countries."
(Source: Bangkok Post, business, 29-10-08, link)
Vocabulary:
maize
- corn (See Wikipedia)
ข้าวโพด
staging protests - gathering a lot of people in one
place to protest something, to express disagreement with something
เดินขบวนประท้วง
price supports - government policy to keep prices at
a certain level, to protect producers from decreasing prices
การประกันราคาสินค้า(ทางการเกษตร)
simultaneously - at the same time as
ในเวลาเดียวกัน เกิดขึ้นพร้อมกัน
set aside - keep for a special future use (See glossary)
จัดสรร (งปประมาณ) ไว้
a subsidy
- money given by the government to pay for part of the costs of
something เงินชดเชย เงินทดแทน
kicks into gear - really starts working (like a car
shifting into low gear to go up a hill) เริ่มส่งผลกระทบ
driving the price of corn down - causing the price
of corn to decrease ทำให้ราคาข้าโพดตกต่ำ
cover the
production costs - pay for the production costs คุ้มต้นทุน
livestock feed - food used to raise cows for meat
อาหารสัตว์
biofuels - agricultural crops such as corn, tapioca,
and sugar that are mixed with gasoline to create cheaper fuel for cars
(See Wikipedia) เชื้อเพลิงที่ผลิตจากการกลั่นน้ำมันจากข้าวโพด
มันสำปะหลัง เพื่อผสมกับน้ำมันทั่วๆ ไป
substitutes for oil - can be used instead of oil (to
do the same thing) ทดแทนน้ำมัน
driven up - caused to increase
เพิ่มขึ้น
coordinated with - work together in a
pre-planned way สอดคล้องกับ
Bank for Agriculture and
Agricultural Co-operatives (BAAC) - the Thai government
agricultural bank ธกส
exploit - use unfairly for one's own
gain (See glossary) ตักตวงผลประโยชน์
exploiting the scheme - using the scheme
(programme) unfairly for one's own gain
ตั้งโครงการไว้หาผลประโยชน์