From: anuchit@Xenon.Stanford.EDU (Anuchit Anuchitanukul)
Subject: Re: Suggestions for the new government
Organization: Computer Science Department, Stanford University.
Date: Mon, 28 Sep 1992 20:45:14 GMT


It seems to me that only a few people have suggestions for the new
government.  So, let me present two problems which affect a large 
number of people in Thailand: rice and sugar ... 


RICE
====
   40% of the population are farmers but agricultural products constitute
only 12% of GDP.  We have 20 million farmers who produce about 20 million
tons of rice a year.  The farmers keep a half of that (~10 Mtons) for their 
own consumption and for next year cultivation.  A half of the remaining 10 Mtons
is sold to consumers in the country.  The rest which is 5 Mtons is exported
into the world market.  The USA, in contrary, has only 16,000 families that 
grow rice.  With chemical fertilizer and high-tech devices, these 16,000 
families harvest 5 Mtons of rice a year.  Almost all of 5 Mtons is exported to 
the world market.  Because of expensive fertilizer, equipment and high wage,
the cost of producing a "Kwian" of rice is more than 4300 baths for US farmers
while the price in the international market is only around 3000 baths.
Each year, the US government directly subsidizes hundreds million of dollars 
to these farmers because of this difference between producing cost and price 
in the world market.  These farmers are fortunate to have good lobbyists in 
the Congress and therefore never have any problem receiving subsidy from
the government.  While this kind of subsidy makes 16,000 US families live
comfortably, it hurts the price of rice in the world market and thus hurts
20 million farmers in Thailand.  A low price of rice in the world market
doesn't benefit 200 million US population because rice is not the main
food in the US.  So, why does the US government spend hundreds million of
dollars in subsidizing only 16,000 families?  (Do they know that they make
life miserable for millions of people in a developing country?  
Do they know that they indirectly make Thai farmers sell their daughters
to make enough money for living? ... Sorry, couldn't stop myself.)

   "40% of population contribute to 12% of GDP"  Think about this figure 
carefully.  These numbers show us a big problem with the income distribution.  
We must either increase price or yield to improve the percentage in GDP
otherwise people in this sector will be forced to move to other sectors,
such as manufacturing, construction, etc.  This creates the problem of
migration into big cities (or more precisely .. into Bangkok) and that 
creates other problems.  If this migration of work force continues along with 
loss of cultivated land (due to land speculating fad), Thailand may lose its
ability to produce enough food for the nation's consumption and have to
rely on imported agricultural products. 

   Thai rice farmers have, among other problems, the problem of low yield. 
There are two factors which determine the yield: the breed and the fertility
of the land.  The widely used breeds of rice in Thailand yield only 
200 Kg a Rai compared to 600 Kg a Rai in the US and certain areas of Vietnam 
(the Mae Kong Delta is an area with rich deposits carried by Mae Kong river).  
We can't do anything much about the fertility which will be getting worse
as the land is repeatedly cultivated.  We can, however, improve the breed
if we encourage research in this area.  (Unfortunately, the Thai government
always gives funding research lower priority than buying F15.)


SUGAR & SUGAR CANE
==================
    Another large potion of Thai farmers grow sugar canes.  These farmers
are lucky to have many active MPs representing their voice and successfully
pressuring the government to intervene the market and thus keeping the
price of sugar canes high.   High sugar cane price means high cost for
producing sugar.  In fact, the cost of producing sugar (around 7-8 baths/kg
if I remember correctly)  is higher than the price of sugar in the world 
market (which is about 5 baths/kg).  Since Thailand ranks third in exporting 
sugar, "someone" must subsidize the sugar industry for them to be profitable 
...  and "someone" is Thai consumers, you and me.  We pay 15 baths for a 
kilogram of sugar giving enough (big) profit to the sugar industry to 
compensate the loss from the export.  (However, this indirect subsidy is 
still better than direct subsidy from the goverment.)

    A substantial cause of low sugar price in the world market is the EEC
market.  European countries receive a large amount of free sugar from 
their colonial ivory coast countries (as an exchange or payment, I guess).
Less than a half of that is consumed in the EEC and the rest is dumped at 
a very low price (2-3 baths/kg which is lower than the production cost of 
sugar in ivory coast countries!!!   but from the EEC's point of view, their 
cost of getting sugar is almost zero). 

    We should reconsider our policy about sugar and sugar cane.  Should
we let Thai consumers continue paying high price of sugar to support 
sugar cane farmers?  Many MPs who stands for sugar cane farmers should
think about their position carefully.  The sugar cane production keeps
going up every year even the price in the world market sores and the
demand stays still.  Let's be reasonable.  We should not let the sugar
cane farms expand indefinitely while the sugar price in the country is 
still high (and perhaps going up).  Mr. MP, you must look at the big
picture.  Don't concern only to please a certain interest group (at the
expense of the others) so that they will vote for you. 

    I believe that a good policy for any government is to be selective
in subsidizing, i.e.  the government should encourage or subsidize only 
those industries which are beneficial to a large number of people and 
which the country is good at. Since we are not good at producing sugar 
canes (with a lower production cost), the government shouldn't intervene 
the market, so that the sugar cane production will stop increasing.  
It is impossible for the goverment to keep the sugar cane price high if 
the production keeps rising. 

---------------------------------------------------------------
The numbers and statistics in this article came from the memory
of my poor natural neuron-nets (my brain) and therefore may not be 
very accurate.