MLBA 10: August / September 2009

 

 

 

 

Few Thais eat goat meat. But you can have a thriving goat busi­ness in Thailand even if there's little demand for it. All you have to do is threaten the government with pro­tests and roadblocks and it will buy all the goats you can raise. If you insist, it will even buy each goat at a price much higher than in the Middle East where goat meat is a staple.

 

It's preposterous. Yet, in essence, that's what the Thai government is doing with shrimp and other key crops like corn, rice, cassava, palm oil, rubber and longan – buying what can't be sold to mop up oversupply and keep prices up.

 

Since 2007, the government has been pouring in good money in so-called mortgage or price intervention programmes to keep the Thai shrimp industry from going belly up. Under the scheme, the government buys shrimp harvests at prices higher than those in the market to help farmers survive during a price slump.

 

At first glance, the strategy looks sound. Shrimp is kept at public ware­houses to be sold later when prices had improved. The problem is, since the start of the shrimp crisis in 2007, prices have never come back, leaving the government holding the prover­bial empty bag.

 

As this was being written, the government had in its stockpile 2,508 tonnes of shrimp from last year's buying programme. The Commerce Ministry bought 10,000 tonnes of shrimp last year at THB105-160 a kilogramme. Of these, only 7,492 tonnes have been sold and the gov­ernment anticipates a loss of THB494 million if it fails to clear the remain­ing stocks.

 

From the 70s, when Thailand ac­cidentally discovered shrimp farm­ing as a byproduct of salt fields, the industry grew by leaps and bounds – from a yearly output of 90,000 tonnes in 1989 to a peak of 530,000 tonnes in 2007.