Farmers hurt by zero-tariff wheat for big business
Import tariffs on wheat ended in 2013 to help big food & animal feed companies, but farmers hurt by falling maize & cassava prices.
Import tariffs on wheat ended in 2013 to help big food & animal feed companies, but farmers hurt by falling maize & cassava prices.
AGRICULTURE
Farmers hurt by zero-tariff wheat for big business
25/07/2016
Phusadee Arunmas
Tariff-free imports of wheat have resulted in falling prices for maize and tapioca (cassava) thus reducing farmers incomes.
A farmers' group has filed complaints that nearly 1 million maize and tapioca growers and their families are feeling the pinch from the wheat liberalisation policy, according to a Commerce Ministry source.
They are also concerned about the rising amount of wheat being imported.
Automated threshing makes for cheaper wheat. The thresher or "combine" crushes the chaff and blows it across the field. (Source: Wikipedia)
2015 BOOM IN WHEAT IMPORTS
In 2014, Thailand imported only 593,000 tonnes of wheat.
The figure rose to 3.46 million tonnes in 2015 and will reach an estimated 5 million tonnes this year.
Higher imports have affected domestic prices of maize and tapioca chip in recent years.
Maize prices are now quoted at 8.50-9 baht per kilogramme compared with 9.39 baht in the 2014-15 season.
Tapioca chip prices now fetch about 6.40 baht per kg, down from 7.49 baht in the 2014-15 season.
Thailand has about 450,000 families of maize growers and 520,000 families of tapioca farmers.
Tapioca farmer harvesting crop.
WHEAT IMPORT TARIFFS WAIVED TO MAKE ANIMAL FEED PRODUCERS HAPPY
Thailand waived import tariffs on wheat in 2013 at the request of animal feed producers.
Ahead of 2013, wheat prices were about 1-2 baht higher than maize prices.
With higher imports, wheat prices have been 1-2 baht lower than maize prices since 2014.
According to the source, the imports of corn DDGS (distiller's dried grains with solubles) were also found to have risen over the past three years.
They increased to 462,000 tonnes in 2015 and 226,000 tonnes in 2014.
The imports had resulted in lower purchases of domestic maize, affecting farmers' income, the source said.
Tapioca farmer harvesting their crop.
IMPORTED WHEAT USED FOR ANIMAL FOOD & HUMAN FOOD
There are five leading wheat importers.
Four firms imported wheat mainly to make animal feed including Bangkok Produce Merchandising of Charoen Pokphand Group, Betagro Group, Laemthong Corporation Group and Sunfeed.
United Flour Mill imports wheat for human's food production.
The source warned that local maize and tapioca prices would definitely be lowered if wheat imports were freely allowed without any buffer measures.
Animal feed producers no longer wanting to buy local produces, they claim.
Pile of tapioca after harvest.
WHY WOULD PRICE OF MAIZE & CASSAVA FALL WITH FALL IN WHEAT IMPORT TARIFF?
For use as animal feed, wheat, maize and cassava are all substitute goods, according to economics (see here).
Being "substitute goods" means all can be used as animal feed.
This also means that changes in the prices or taxes on of any of these goods has an effect on the other goods.
When the price of wheat falls because import taxes (tariffs) on wheat fall, the demand for wheat increases because it is cheaper and the demand for maize and cassava falls because it becomes more expensive, which means the price of maize and cassava falls, assuming all things remaining equal.
PRICE CONTROL LIST DID NOT REDUCE WHEAT IMPORTS
Although the government early the year put wheat flour among the 41 items on the price control list, it has done little to dampen imports.
Businesses making or selling products on the list are required to inform the authorities of their production costs and seek approval before any price increase.
The price control list covers essential items for daily use such as food, consumer products, farm-related products (fertilisers, pesticides, animal feed, tractors, rice harvesters), construction materials, paper, petroleum and medicines.
Listed foods include garlic, paddy, milled rice, corn, eggs, cassava, wheat flour, yoghurt, powdered/fresh milk, sugar, vegetable/animal oils and pork.
Consumer products include detergents, sanitary napkins and toilet paper.
http://www.bangkokpost.com/business/news/1043753/farmers-irked-by-no-tariff-wheat-imports
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