Rice crisis : gvt renounces to sell its stock at cheap prices

Is that a sign that the situation is getting out of control ?

The Commerce Ministry yesterday decided against imposing measures to cushion soaring rice prices for both local consumers and rice exporters.

Mr Mingkwan said the meeting agreed that the state’s 2.1-million-tonne rice stockpile should be kept as ”safety stock” as rice production would be volatile due to the weather in the next six months.

Earlier, the government planned to set aside a portion of the 2.1-million-tonne rice stockpile to sell at cost price to ease the burden on consumers caused by soaring rice prices.

To see the Samak’s government backing off from a populist decision that could have -really- helped the poors (read my previous article about the rice crisis, here and here)… is from my point of view a bad sign.

I think the keyword is “safety stock“… They know that the situation could worsen in the future, therefore it would be a waste of precious ressources to sell the stockpile now. We would certainly see people buying all they can, cheating, hoarding etc.

According to Mr Mingkwan, yields from the second rice crop, about 4.29 million tonnes, would ensure that there would be enough rice for domestic consumption.

”The meeting has agreed that this might lower the rice prices, so the government will not impose any measures and let the market mechanism do its work,” he said.

On one hand they acknowledge that the rice production for the next 6 months could be “volatile“.. on the other they say that the new crop will lower the prices… It’s totally stupid !

Even more if exports continue at strong pace (let’s not forget that the demand from other countries is very high, and will continue to be because other countries have already banned exports) !

Furthermore : no way the authorities can pretend now to be “free market” lovers ! I mean it’s laughable when you know how they like to subsidize diesel, forbid and postpone prices increases for many products, etc…

He said the ministry would not issue measures to regulate rice export volumes either, despite calls by some exporters for minimum export prices to control export volumes. (Bangkok Post)

You bet, they can’t ! Thailand is the first exporter of rice in the world… If Thailand announces a ban on exports, like other countries already did… it would be catastrophic ! the world market would explode in total panic.

To summarize : their explanations are totally confused. They try very hard to show that they are in control. Actually, they aren’t.

It shows that in reality they start to be afraid.

However, they took a good decision. Better to keep the stockpile… In case the situation is getting uglier…

[“The World Bank in Washington says 33 nations from Mexico to Yemen may face “social unrest” after food and energy costs increased for six straight years. (Bloomberg)”

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Thailand Crisis

Coup, Economic slowdown, Terror In the South... The situation is worsening in Thailand. Bumpy road like often before.

But this time, it's different.

The key to understand the present turmoil is the inevitable... succession of King Bhumibol.


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