1st May 2012
The Cambodia Daily reports that police on both sides of the Thai border are acting in unison to stop nearly thirty trucks carrying 2,000 unmilled rice headed to Thailand through border crossings in Banteay Meanchey. Instead, commercial traffic is being restricted to just two entry points, the Poipet and Boeng Trakon checkpoints.
Meanwhile The Bangkok Post reports that the Thai government’s high benchmark prices under its populist rice mortgage scheme is resulting in widespread corruption by the mills participating in the programme. Colluding rice mills are reportedly taking cheaper varieties and mixing them with more expensive Jasmine (called “Hom Mali” in Thai) rice stored on behalf of the government, then passing off the rice as 100% Hom Mali.
This is because, under the rice mortgage scheme, Hom Mali fetches 20,000 baht (approximately $US700) per tonne of paddy rice, which is intentionally structured to pay above-market rates under a government policy aimed at boosting farm income. A rice mill holding Hom Mali rice for the government may also sell the rice off and later purchase lower-grade rice to return to storage, thus pocketing the difference.
“The mortgage programme has resulted in massive corruption,” one rice industry executive told the Post privately.
Monitoring government rice stocks and catching fraud is a difficult task, as rice mills can always present quality rice during inspection times but manipulate inventories as soon as official inspectors leave.
Under the rice mortgage system, The Post explains, farmers may borrow funds from the Thai Bank for Agriculture and Agricultural Cooperatives by pledging their rice harvest as collateral at the benchmark price. Repayments are then made in cash, or more commonly by essentially allowing the government to claim the rice to clear the debt.
Economists have criticized the scheme for distorting market prices. The government regularly sells off rice stocks to private exporters and packagers, a process that experts say lacks transparency and is open to abuse.
Another perverse effect appears to be the smuggling of Cambodian rice into Thailand to also participate in the Thai mortgage scheme.
Thailand is projected to export 6.5 million tonnes of rice this year, according to the latest US Department of Agriculture estimates, with Vietnam and India set to pass the country as the world’s top rice exporters at about 7 million tonnes each. Rice exports by Vietnam in the first quarter totalled 4.2 million tonnes, up 24% from a year earlier.
One of the problems Cambodia faces in developing its agriculture is that so much unprocessed harvest is spirited across the borders into either Thailand or Vietnam and then gets counted as part of these countries’ annual output.