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Special Report: Rice smugglers hitch ride on Thai pledge-price profiteering

Legacy Phuket Gazette

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Rice smugglers hitching ride on pledge-price profiteering
Reuters / Phuket Gazette
PHUKET: Hidden in 18-wheeler trucks, carts and pickup vans, hundreds of thousands of tonnes of rice are being smuggled from Cambodia and Myanmar into Thailand, although the country holds enough stocks to meet half the world’s annual trade in the commodity.

A populist programme to support prices has led to the Thai government paying its farmers almost double prevailing prices in Cambodia and Myanmar. Farmers and traders in the neighbouring countries are trying to take advantage, sending their grain across the border to be sold into the Thai intervention scheme.

The equivalent of 750,000 tonnes of milled rice is being smuggled into Thailand a year, mainly from Cambodia and Myanmar, according to estimates of analysts and traders who have studied the illicit shipments.

“No one can differentiate which one is Thai rice and which one is Cambodian rice. That makes it easy to smuggle rice in and make a profit by selling it to the government,” said Kiattisak Kalayasirivat, managing director at Thai trader Novel Agritrade.

The extent of the smuggling adds to a headache for Thai Prime Minister Yingluck Shinawatra, who increased the support price for unmilled rice to 15,000 baht ($480) per tonne after she took power in 2011, to please her farmer vote-bank.

Yingluck’s support base is mostly in rural districts, and her government mistakenly bet that Thailand could corner the world rice market by building up stocks.

Instead, the government, already running a budget deficit of 300 billion baht $9.59 billion (6.33 billion pounds) this fiscal year, is struggling to fund the multibillion-dollar programme and find buyers for the grain. Ratings agency Moody’s warned in June that “populist measures” were a risk to financial discipline.

The government said last month that losses from the scheme amounted to $4.4 billion in the crop year that ended in September 2012.

Thailand now sits on rice stockpiles of 18 million tonnes, almost double a normal year’s exports and nearly half of annual global trade of 38 million.

It is mostly holding on to the stocks since it will make a huge loss if the rice is sold. The intervention price of $480 per tonne of unmilled rice translates to $750 a tonne for milled rice. Milled rice is quoted around $475 a tonne in Thailand’s open market and around $400 a tonne in Vietnam, traders said.

From No. 1, Thailand has dropped to the world’s No. 3 rice exporter behind India and Vietnam.

The quality of the rice in its warehouses has also dropped because most of the smuggled grain is broken rice, which is then blended with full-grain Thai rice.

Because of that, the spread between 5 percent and 100 percent broken rice available in Thailand has narrowed to just $30 a tonne currently from $60 a tonne in June last year and $85 in 2011. “The spread has tightened up very dramatically,” said Ben Savage, managing director of London-based Jackson Son and Co, a rice broker since 1860.

Cat and mouse

Thailand’s porous border with Cambodia, to the east, has no natural barriers like rivers and villagers easily cross between the two countries. Smuggling of rice appears to be rampant.

“As long as our prices are high and they can make a profit, we won’t stop them,” Pakkarathorn Teainchai, the governor of Sa Kaeo province on the border with Cambodia, told Reuters. “It’s like a cat running after a mouse,”

“Recently we confiscated 60 tonnes of rice. There’s bound to be more that we can’t prevent.”

Noppadol Thetprasit, head of a customs post in the Aranyaprathet district of Sa Kaeo, said he recently intercepted 30 tonnes of rice being smuggled from Cambodia, but he knows more must be getting through at smaller crossing points that lack his facilities.

“The rice is being carried into Thailand on villagers’ small carts, and is then reloaded onto bigger trucks and moved on to other provinces in Thailand to be resold,” Noppadol said.

The smuggling is happening on a far bigger scale than the talk of villagers and carts would suggest. Thai officials say some smugglers use 18-wheel trucks to bring rice into the country.

Small-scale smuggling had occurred previously but volumes have jumped with the advent of the high intervention price.

The International Grains Council in London estimated the equivalent of 750,000 tonnes of milled rice a year was coming into Thailand, senior economist Darren Cooper said. That would be about 900,000 tonnes of unmilled rice, or paddy.

“Clearly shipments (to Thailand) started going up since the intervention scheme started,” Cooper said. “It is highly attractive for the neighbouring countries to try and get as much rice across to Thailand as possible and supply into the scheme.”

The United States Department of Agriculture put Thai rice imports at 600,000 tonnes a year in the first two years of the scheme, jumping from 200,000 tonnes in 2010/11.

Intentional ignorance

In Cambodia, the authorities intentionally ignore the smuggling. Khung Vun, president of the Rice Millers Association in Banteay Meanchey province on the border, says customs and police officials will wave grain through as long as a general export permit can be produced.

In 2012, legal rice exports to all countries by Cambodia amounted to 205,717 tonnes, according to its official data.

Thon Virak, director of Cambodian state-owned rice exporter Green Trade, estimated up to 300,000 tonnes of paddy rice was smuggled into Thailand in 2012 and a similar amount in 2011.

“This year, the number will decline because crossing points have been closed,” he said in Phnom Penh, referring to stepped-up border policing on the Thai side.

In Myanmar, a shortage of good-quality mills restricts demand for legal exports and encourages smuggling out.

Aung Kyaw Htoo, agribusiness manager at cargo surveyor SGS in Yangon, estimated around 120,000 tonnes of rice was smuggled into Thailand in 2012, most of it lower-quality broken grain.

He said he understood the rice was sold into the intervention scheme, although other analysts said some of it could have been bought by noodle makers and feedstuff producers who, because of state buying, find Thai grain scarce or costly.

Commerce minister sacked

Thailand announced it would cut the intervention price to 12,000 baht per tonne last month, but reversed the decision on the day it took effect, giving in to farmers who had threatened protests.

Before rowing back on the cut, Yingluck sacked Commerce Minister Boonsong Teriyapirom, after public criticism that he had failed to be credible or transparent about the costs of the scheme.

New commerce minister Niwatthamrong Bunsongphaisan says the government will sell up to 1.5 million tonnes of rice a month for the rest of year through tenders and will also try to sell to other governments.

It is unclear how he will do that without offering grain at cut-rate prices to exporters or governments, and that may lead to charges of dumping. The United States and others have already sounded warning noises at the World Trade Organisation because of Thailand’s lack of transparency on sales and stocks.

— Phuket Gazette Editors

 

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Coronavirus (Covid-19)

Illegal border crossings bringing in new Covid-19 infections

Neill Fronde

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PHOTO: Covid-19 infected border hoppers cross borders like this one betwen Malaysia and Thailand (via Wikimedia)

Authorities are worried about illegal border crossings into Thailand bringing in the Coronavirus after 5 recent Covid-19 infections from such crossings. Bypassing all health and security checkpoints along the border, 5 Thai nationals were identified today as being positive for Covid-19 after they snuck into the country, according to the Centre for Covid-19 Situation Administration.

Authorities nabbed 2 after border crossings from Malaysia illegally on April 28 and May 3rd, while another snuck across the Burmese border into Tak on May 2. The last 2 came from Cambodia on Thursday across the Sa Kaeo border. All 5 illegal border crossers are now in state hospitals for Covid-19 treatment.

According to CCSA data in the first four months of 2021 a total of 15,378 people were arrested by Thai authorities while sneaking across borders. Even after security forces increased patrolling along the borders, people managed to sneak in from Myanmar, Malaysia, Laos, and Cambodia. 6,700 of those who crossed the border were Burmese citizens, while another 1,700 of them were Thai nationals.

With nearly 400 lives lost to Covid-19 and over 83,000 people having been infected in the pandemic, the CCSA declared that Prime Minister Prayut Chan-o-cha and National Security Council Secretary-General Natthapol Nakpanich agree that these illegal border crossers without Covid-19 screening are a serious problem.

Many Thai people work in Malaysia and as the pandemic drags on they are sneaking across the border, desperate to make it home to their family. Another recent case found illegal Burmese border hoppers in a taxi en route to Hat Yai after they crossed into Thailand from the Malaysian border. They were trying to travel incognito across Thailand in order to cross the border again back into their home country of Myanmar.

The dilemma is even worse at the Burmese border as the often violent protests following the February 1 military coup has been pushing much of the country into poverty, and creating refugees who are flocking to the border in hopes of crossing over to safety. Many are seeking to escape the conflict and find work in Thailand.

SOURCE: Bangkok Post

 

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Economy

Thailand Consumer Confidence Index hits record low

Neill Fronde

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PHOTO: Thailand's Consumer Confidence index slips again to below the pre-pandemic record. (via CNN)

The University of the Thai Chamber of Commerce has reported that the Consumer Confidence Index has hit another new record low of 46.0 in April. The Covid-19 global pandemic has had a devastating effect on the economy and consumer confidence has fallen frequently to the lowest points that it has seen since 1998.

The president of the UTTC believes that consumers generally don’t feel like there has been much of a recovery for the economy since the global pandemic began and without a stimulating event to motivate economic growth, the index is expected to continue to fall further. The university estimated that if the third wave of Covid-19 continues past the end of May the economy can expect to lose 400 to 600 billion baht.

The UTTC president stressed that the government should hasten to step up relief measures and make sure they continue relief and economic stimulus throughout the pandemic to avoid economic catastrophe. He predicted that the economy and the Consumer Confidence Index will continue on a downward slope without any hope of improvement until the vaccine rollout gets well underway towards herd immunity, and new Covid-19 infections are decreased dramatically.

Today saw another 2,101 new Covid-19 infections and 17 deaths in Thailand. Vaccination efforts are continually being stepped up, but still remain woefully slow.

The Consumer Confidence Index first started falling last year, with a drop below the previous record low in 1998 in April of 2020, when it fell to 47.2. A few months later, by July of last year, it had recovered significantly, climbing back over 50. But by March of this year, the index had fallen again to 48.5. With April’s tumble of 2.5 points, the Consumer Confidence Index pushes once again to a new record low.

SOURCE: Thai Business News

 

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Thailand

Thailand searches for cow vaccine for lumpy skin disease

Neill Fronde

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PHOTO: An example of a cow with Lumpy Skin Disease. (via newindianexpress)

Move over Covid-19 there’s a new disease sweeping the country as Thailand’s cow population is afflicted with a lumpy skin disease. The Department of Livestock Development is now working on procuring vaccines from overseas manufacturers to import and treat the cattle population in Thailand. The lumpy skin is caused by pustules that are the most visible symptom, perhaps more detectable than other bovine signs such as drooling, loss of appetite and drowsiness.

The cow disease is spreading in the North, Northeast, and Central Plains area of Thailand and has been found in 18 provinces total. First identified in Roi Et, it has now spread in Chiang Rai, Kalasin, Kanchanaburi, Khon Kaen, Maha Sarakham, Nakhon Pathom, and Nakhon Phanom. The first case of the lumpy skin disease was reported in Don Daeng village last month and on April 9th officials reported it to the World Organisation for Animal Health.

The lumpy skin disease is found in cow pens and spread through flies, ticks, and mosquitoes, but the DLD says not to panic, it is not transmissible to humans. The department is distributing important information about symptoms and how the disease spreads to breeders and farmers in the area. They’re requiring the breeders to monitor their cattle closely and have imposed measures to control the disease in heavy hit areas.

To prevent the spread of disease in livestock, traders are being requested to not buy and sell cattle within 50 km from disease-stricken regions. And for farmers caring for cattle, the DLD recommends spraying insecticide in all areas to prevent transmission via insects. Finally, in case the cattle were jealous of traveling humans, the DLD is advising farmers to prevent disease spread by isolating any new cow that comes into their farms with a 28-day bovine quarantine where they should be kept under nets to keep insects away.

SOURCE: Bangkok Post

 

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