Thursday, October 24, 2013

Fairy land

The mythical world
Prominent news the past few weeks is a nondescript article in IRRI's Rice Today.

IRRI is feeling the heat (Rice Today, Oct. 8) and responds to it's critics of the development of Golden Rice (GR). 

GR essentially implies adding genes to traditional varieties giving them higher vit. A traits. 
The myths of GR:  
'First is the notion that Golden Rice is some sort of unnatural, monster rice. 
...
Second is the idea that genetically modified organisms (GMOs) are unsafe, cause cancer or other major health risks, or pose serious environmental problems. 
... 
Finally, there is the idea that Golden Rice is being developed to be sold by big biotechnology companies to profit from poor farmers'.
But in reality it does nothing to allay these fears. See here:
- Approving GR is just a way to soften up resistance to hybrid and GM rice. 
- If GMOs are safe why is there so much public resistance? Why not approve labelling then, is this not a win-win solution?
- Well, big companies are all well versed in PR. Give a crumb here, reap the world there. Syngenta's involvement gives them some pay-back elsewhere with IRRI, for sure ...

Still, kudo's for IRRI facing the music.

Just an afternote: too close for comfort Bayer Cropscience has a big do in Delhi, India called ricefutureforum with IRRI as co-host and has also managed to get Germany's public development agency Giz on board ...
The future according to Bayer is a hybrid one. Yeah, right.

Oh and this. An interesting article from farmanddairy (Oct. 10) highlights recent research which focuses how herbicide resistance can pass from the GM crop to similar weeds: 
'Rice containing an overactive gene that makes it resistant to a common herbicide can pass that genetic trait to weedy rice, prompting powerful growth even without a weed-killer to trigger the modification benefit, new research shows'. 
Though this does not imply that it will happen obviously there may be more risks than we think.

Domestic and global affairs
There's surprisingly little to report on, in Cambodia.

Despite export figures up by 100%, it still falls way behind what the government would like to see (PPP, Oct. 9). Reality check.

Production will remain the same. Is this despite of the floods? Or because of the floods? Source is the Cambodian Herald (Oct. 4).

The Strait Times (Oct. 12) notes how India is becoming Singapore´s source of rice, leaving Thailand behind. No reasons given, is it the price? Consumer preference for Basmati? A miracle?

Some good news for Thai government. The Wall Street Journal (Oct. 14) highlights China's lower than expected rice production. Partly brought on by drought/heat conditions earlier this year it also delves up info on productivity which also is slipping: 
'Analysts cite a shift in land use toward industrial and residential by farmers in the humid southern regions where rice grows best. Production has increasingly moved to more arid northern regions where big yields are harder to get, said Rabobank agriculture analyst Chenjun Pan.
Ms. Pan and other analysts say the rice-yield plateau shows that affordable technological innovations to increase yields may have also reached their limits. Chinese academics have developed a strain of "super rice," capable of doubling the yield to 13.5 tons a hectare, but the hybrid grain remains financially out of reach for most farmers.
A trend of lower Chinese rice production, if sustained, would afford further opportunities to global rice exporters in what is becoming an increasingly attractive market. Overall grain imports are rising along with domestic wealth and worries over illegal levels of toxicity in many kinds of Chinese-produced food'.
More significant I found this snippet: 
'Grain imports in China are a politically sensitive issue. China's military has weighed in publicly against rising corn imports in recent months, with a major general from the People's Liberation Army publishing an essay in a popular newspaper in August arguing that genetically modified corn imports may be a way for the U.S. to threaten China's food security'. 
Well, if this is the view then the expansion of global hybrid rice fuelled in part by Chinese interests might well imply that the intentions need not be humanitarian, nor economic. But a way to strategically gain leverage? Hidden agenda?

The FAO put out another of their quarterly overviews of the world's cereal markets (Oct. 3). It notes the continuing fall of rice prices and the slow expansion of production. The immediate future sees prices going lower yet, not really encouraging for any producers.

And the saga continues
The Nation (Oct. 1) mentions that maybe the Thai rice pledge will continue indefinitely as losses are nowhere near what everybody thinks.

The institutionalizing of the programme has required a need for more storage capacity. The Bangkok Post (Oct. 1) reports on how the Thai state Public Warehousing Organisation hopes to be able to expand compensation. 
However they are up against fraud suspicions as in their previous attempt to expand, the bid winner was announced before the tender process started ...!

Even though exports have dropped since the start of the rice pledging scheme, the Thai government is still comfortable with the ability to export 8-10 million tonnes. So mentions the Nation (Oct. 9).
Funny, to date export volumes for 2013 are nearly 2.5 million tonnes, down more than 30% on the 2012 figures. Let's see where the 8 million come from.

Accounting for losses means that the government hopes to not include humanitarian assistance in it's books, i.e. this should be a write off at full purchase price, rather than the world market price. Who cares? The Nation, Oct. 10.

The accounting section was also at a loss to find out that they had actually bought more rice in the past 2012-2013 season than intended and need another 9 billion Thai Baht (nearly 0.3 billion $US), so reports the Bangkok Post (Oct. 10). Why not?

A blog entry by the Wall Street Journal. Posted on Oct. 7 it gives a good introduction to current issues on the rice pledging scheme. However it also mentions to instil it's own philosophies. For instance it mentions that continuation of current government policies is ill-advised and will lead to increased dissatisfaction with the government. Me thinks the opposite.

Spin doctoring at it's best. A Thai government official notes that food insecurity issues are driving those affected countries into Thai arms and will receive nice quantities of rice imports if they ask politely. 
Or so it seems. 
Reported in the Nation (Oct. 14) it implies that storing most of the globe's exports will result in positive paybacks for the service offered. But what if over-priced in a climate where prices are trending downwards?

The Bangkok Post provides us with news: rice pledging leads to lower global prices (Oct. 15). Nothing new. Stocks in Thailand will increase, by 24% so estimates the USDA. Global prices will drop by 10% by April next year. In the article it refers to Bloomberg's article of 15 Oct. 2013.

Thailand's BAAC needs another 140 billion bath ($4,.5 billion US$) to finance next years pledges, so reports Bangkok Post (Oct. 21). Hope somebody is adding all this up.
 
Bangkok Post (Oct. 11) repeats Thai government assertions that it will be able to sell 1 million tonnes of rice to China. Spread over 5 years ... And bought from private traders not the government. And the same article notes that previous government claims appear to be wishful thinking.

The deal with China is preliminary, concedes Thai PM (Bangkok Post, Oct. 16). Apparently it's just an intention. Salient detail: there might be swap, rice for high speed trains! 
The Nations mentions that exporters are in no mood for cheering (Oct. 15) despite announcements of deals with China. It also notes that the Thai PM is vague on details (Oct. 16). While a day later the Bangkok Post emphasizes the PM implied the agreement was an informal one, i.e. no deal at all. Opposition were making hay with implying the government were imagining deals.

At a loss
Coming from another corner, a former Deputy PM (Pridiyadhorn Devakula) advises the government to hand out the cash directly to the farmers rather than establishing an intricate and fraud-fraught system based on producing rice (Bangkok Post, Oct. 15). 
On the face of it, it does seem more just, but in the end the only thing that ties recipients into the slower growing areas is the production of rice. Fail to reward agricultural production would result in everyone moving into Bangkok and using proxies to earn their share of the pie. Now at least there is some multiplier effect and if the scheme had been introduced before the height of rice prices it would have produced quite an effect. However now the scheme is draining public funds, encouraging fraud while it may well be never-ending.
Bite:
'He [Pridiyadhorn Devakula] cited figures showing that in the two years since implementing the programme, with a total of 48 million tonnes of paddy involved, the government had lost at least 425 billion baht, but rice farmers gained benefits amounting to only 210 billion baht.
More importantly, those who were not farmers gained more than 115 billion baht in benefits, showing that the government had failed to prevent corruption in the rice scheme, he said'. 
High in pointing out current short-comings there seems to be little thought of over how an alternative plan would work, nor how fraud might be avoided. 
As always the Nation chimes in likewise. Or is it vice-versa?

Government refutes Pridiyadhorn Devakula claims. The Nation (Oct. 17) gives air to government rebuttals: nobody knows what the losses are! Not even the government!

Despite assurances to the contrary, former deputy PM / Finance minister (Pridiyadhorn Devakula) sees losses only going up (Bangkok Post, 22 Oct.). The neat sum of losses would be 466 billion baht or nearly 15 billion $US since it's induction.
'Last week, MR Pridiyathorn, also known by his nickname of Mom Oui, gave a press conference in which he called the government's rice-pledging scheme the biggest loss-incurring project ever conceived. At the time, he estimated that if the government could sell all of the pledged rice stockpiles by 2015, it would make losses of at least 425 billion baht _ 205 billion baht from the 2011/2012 crop and 220 billion from the 2012/2013 crop. MR Pridiyathorn's comments prompted government ministers to defend the project. Finance Minister Kittiratt Na-Ranong said MR Pridiyathorn, also a former governor of the Bank of Thailand, does not understand the programme's accounting system. Deputy Prime Minister Niwatthamrong Boonsongpaisan, who is also commerce minister, said actual losses from the scheme as of January were only about 100 billion baht. In response to MR Pridiyathorn's latest estimates, Deputy Commerce Minister Yanyong Phuangrach yesterday said it was impossible for the rice scheme to cause as much as 466 billion baht in losses. He said the government has spent about 600 billion baht on the project. It expected to earn 200 billion baht from rice sales by the end of this year. "That means there is a gap of 400 billion baht. But we have more than 10 million tonnes of rice in stock. Even if we sell the rice at half price, we would still earn about 200 billion baht," Mr Yanyong
insisted. He added that his calculation means the government will be only about 200 billion baht short, which amounts to a loss of about 100 billion baht a year. MR Pridiyathorn insisted yesterday that number was impossible based on the rice release information from the ministry itself. "It's clear the ministry's argument is completely wrong. The issue is whether the ministry understands the issue but conceals the loss figures, or if it does not understand anything," MR Pridiyathorn said'.
Alt
Some rice not going into the rice pledge scheme is organic rice. The Bangkok Post (Oct. 14) reports on how a Singaporean entrepreneur is importing into Singapore as well as exporting to other markets northern Thai organic rice priced at 10% above the governments pledging prices. Business is expanding by 10% per annum with current exported quantities heading towards the 1,000 tonnes. 
The Nation carries the same story.

The Nation (Oct. 21) concludes that organic rice is better than feeding off the national rice pledge scheme. Another feel good story about how organic rice has the potential to avoid pitfalls of the industrial lead rice schemes, i.e. by avoiding taking on debt. Pity the story from Thailand's Khon Kaen is scarce on economics.