Nueva Ecija Can Learn From Thai Palay Buying Scheme

Drying palay on concrete pavement to lower moisture content to 14%.

We heard on radio that Gov. Umali of Nueva Ecija has allotted P150 million for buying the palay of beleaguered rice farmers whose palay is being bought at 10 pesos or less per kilo. The LGU, we heard, will buy the palay at P15 per kilo.

Maybe, the local government of Nueva Ecija can take a lesson from the experience in Thailand where a similar subsidy was undertaken when palay in that country was being bought from the farmers at as low as 4 bhat per kilo.

The Thai government decided to buy all the palay it can at 12 bhat a kilo. Of course the farmers were happy but the government found out the scheme was a big mistake. Why? The scheme required a huge amount of funding to pay for the palay. The government had to have huge warehouses to store the palay and a lot of employees to take care of managing the huge volumes of stocks. They needed trucks and drivers to transport the palay.

BETTER SCHEME – Finally, they came up with a better scheme that was much simpler, did not require many employees and that did not need warehouses that have to be maintained by government. How? Well, they told the farmers to sell their palay at the going price bought by traders. If the traders are buying at 8 bhat per kilo, for instance, the farmer will sell his palay at that price. What the government would then do was to give to the farmer the difference of 4 bhat. The scheme is much better because the government did not have to do the buying which would require huge funding. There would be no need for a lot of employees. No warehouses to maintain.

Maybe the Nueva Ecija goverment should adopt the scheme that the Thai government implemented after realizing its mistake.

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One thought on “Nueva Ecija Can Learn From Thai Palay Buying Scheme

  1. Your blog concerning subsidies and how they can be mismanaged was welcomed by me since I studied development economics and the University of California. Now, the Philippines is my adopted home and I want to see it develop sensibly to benefit Filipinos. Subsidies are necessary despite what “Laissez Faire” market economists would say. These economists would site the failures of subsidization without siting its successes. Thailand learned from it’s mistake and, fortunately, found a solution which works!
    Since moving here, one aspect of the Philippines that I’ve grown very concerned with is the consumption of junk food. The consumption of junk food has tremendous cost to the health care system and the solid waste management system among others just as smoking does. The Philippine government has taken very positive action with smoking and, in my opinion, they need to take an equally harsh stance on the topic of Junk food. But how to do it is the million dollar question. Taking the position that most of every peso spent in the Philippines stays in the Philippines, heavy taxation of junk food is a start since many junk foods are produced out of the country. Since high quality vegetables are out of the budget range for many Filipinos, subsidizing organic farmers heavily would be the next subsidy I would initiate if I were in charge of the situation. I specify “organic farmers ” because farmers that aren’t organic farmers are generally larger more capital intensive farmers who use pesiticides, most of which originate out of the country and mechanical capital (tractors, harvesters, etc.) which also originates out of country. Organic farming is more labor intensive and utilizes local labor.

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