Thai Rice Mortgage Policy:
Nice Dream or Nightmare?
Thailand is considered as a developing country, an emerging economy and a newly industrialized country which national income mainly comes from agricultural products, especially exporting rice. According to the Bureau of Agricultural Economic Research of Thailand (OAE), in 2008 agricultural population is accounted for 35 percents of the total population of the country.
While Thailand is the number one rice export country compared to other countries in the world, including China, India and Vietnam which are also the world's leader rice producers and exporters, Thai farmers are still earning a very low level of income and still, living in a very poor level of living standard. Not that increasing in exports does not benefit Thai farmers; it, more or less, does improve farmers' welfare, but there are some reasons behind farmers' poor standard of living, some that might relate to the government's policies, which we will discuss further.
Nowadays, Thai Government plays a very important role in agricultural sector activities. They are not only trying to improve Thai rice market, but also trying to find the way to help Thai farmers to earn more income and to have a better standard of living. Recently, Thai government proposed a rice mortgage program in order to help Thai farmers especially in harvest season. While some people support this program, some argue that it is not an appropriate one.
This paper will give some point of views about Thai rice market while mainly focus on the government intervention of rice mortgage policy on Thai rice market and its effects on Thai farmers' well-being which measured by using the data of price of rice per tons received by Thai farmers in the period before the mortgage program was introduced (1991-1999) and after the government intervened in the Thai domestic rice market (2001-2007) compare to the consumer price index to see if it is an appropriate, sustainable policy for Thai farmers' well-being and whether the government should intervene in the domestic rice market or not.
The purpose of this paper is to show the effect of the government's Thai rice policy; especially on the rice mortgage policy, whether it is a policy of sustainability development on farmer's welfare. And a brief discussion of what should be done to help Thai farmers improve their welfare.
1.2 Method and Data
We have got the information mainly from the IRRI and USDA. We measure farmer's welfare by using price of rice received by farmer's compare with Consumer Price Index (CPI).
In this paper, we will mainly focus on the mortgage policy, even though there is a new policy; pledge income payment introduced by the Prime Minister Abhisit's government. Also, there is no exact information and data about Thai farmer's welfare; we use the price of rice per tons received by Thai farmers as a measurement of Thai farmer's welfare since Thai farmer's income mainly comes from selling agricultural products, especially rice.