Rice agriculture uses over half the arable land and more than half of all its workers – around 16 million people. Thats more people than who live in Bangkok. And these rice farmers make a formidable voting block.
But the onset of modern agribusiness practices had left many of Thailand’s smallest rice producers on the economic fringes of this booming industry. The government of Thailand’s efforts to rectify this has redefined Thai politics.
In 2011, Thailand was the biggest rice exporter in the world, and Yingluck Sinawatra was campaigning to become Prime Minister of Thailand. Whether driven by the alleviation of rural poverty, or something more nefarious, she promised Thai farmers to buy their rice at prices about 50% above global market rates. The rice farmers voted her into power.
Her scheme was to buy the unprocessed grains, store them in vast quantities and prevent them from reaching the international market, and thereby push up international rice prices to beyond even the 50% markup before selling it all off with a healthy profit. Genius, right!
Well, she was counting on India – the world’s biggest producer of rice – maintaining its ban on rice exports.
But of course, one week after she won the election and plundered the national accounts to buy oodles of Thai rice, India lifted its ban, sending rice prices for a monumental dive. Ouch! Worst of all, the 18 million tons of Thai rice that had been stockpiled began to deteriorate! And then criminal gangs reportedly colluded with corrupt officials to steal it.
Altogether, the failed scheme cost Thailand 19 billion USD, money that could have gone towards – for example – providing basic services to the rural poor. But instead, the government’s funds dried up, leaving farmers unpaid, and protests agains the new government got so bad that the Thai military kicked Yingluck out of government and fined her over 1 billion USD for her role in the scheme. The Thai people were fed-up. They endorsed the military’s move, leaving the new junta no rush to return the country to a state of democracy. So thats where we stand today.