Thai farmers threaten protest in defiance of martial law

Bloomberg

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Workers inspect and trim smoked rubber sheets at a factory in Thailand Workers inspect and trim smoked rubber sheets at a factory in Thailand
Thai junta leader Prayuth Chan-Ocha is bracing for the country’s biggest public protests since a coup four months ago, as farmers frustrated by falling prices threaten to take to the streets in defiance of martial law.
Prayuth, the 60-year-old army chief who also took the post of prime minister, told farmers last week that they may have to sell their rubber “on Mars” amid a global glut and urged them not to stage protests or demand hand outs from the government. He has pledged to quicken state spending, promote investment and create jobs to spur economic growth.
“We have suffered with falling prices and lower income for so many years without much help,” Perk Lertwangpong, head of the Rubber Holders Cooperatives Federation of Thailand, said by phone from Chanthaburi province, 245 kilometers (152 miles) southeast of Bangkok. “With prices at this level, we aren’t afraid of martial law. We’ll gather to fight.”
Prayuth’s refusal to support prices risks angering the thousands of farmers who played a pivotal role in toppling the government of Yingluck Shinawatra when they left their farms in the nation’s southern provinces late last year to join protests in Bangkok. More than 10,000 rubber farmers may attempt to cut export supply by shutting down processing plants, after prices fell to the lowest level since 2008, Perk said.
“They indirectly paved the way for the military to take over,” said Ambika Ahuja, a London-based analyst at Eurasia Group. “Now, they feel they did not get any share of power or even an ability to negotiate with the current regime.”
Rural voters
While agriculture accounts for about 8 percent of Thailand’s gross domestic product, rural residents make up almost 87 percent of Thailand’s 67 million population. Yingluck won a parliamentary majority in 2011 after pledging to buy rice directly from farmers to lift rural incomes.
Prayuth has said he was forced to seize power to avoid violent clashes between supporters of Yingluck and opponents who accused her of corruption and buying the support of rural voters with economically damaging subsidies.
Yingluck’s government spent about 900 billion baht ($28 billion) buying rice and rubber at above-market rates, a strategy that was also used by her brother, Thaksin Shinawatra, before he was ousted as prime minister by the military in 2006. The opposition Democrat Party, which took power through a parliamentary vote after the 2006 coup, gave about 115 billion baht to rice farmers in the two years before Yingluck’s election victory.
‘On Mars’
A day after seizing power on May 22, Prayuth pledged to pay 800,000 rice farmers about 92 billion baht owed under the previous government’s program. He’s since ruled out further direct crop subsidies, and rejected demands to guarantee rubber prices at 100 baht per kilogram.
“Who on Earth can we sell it to?,” he said in a policy speech Sept. 15. “We have lots of supply in the country and plantations keep expanding. We might have to sell it on Mars, because there isn’t enough demand in the world.”
Export prices of Thai rubber have dropped 39 percent this year to 51 baht per kilogram, the lowest level since December 2008. Prices, which have tumbled 74 percent from a record in 2011, have fallen for three straight years as production expanded, adding to a global glut. Thailand is the world’s largest producer and exporter, accounting for about 34 percent of global output, according to rubber industry data.
Bangkok blockade
Yingluck’s government tried to resist similar demands last August. Perk was among the more than 12,000 rubber farmers who responded by blocking roads and railways for two weeks, stranding thousands of passengers and disrupting traffic in the southern provinces that account for 71 percent of the nation’s rubber output.
In the months that followed, thousands of rural families from southern Thailand joined protests in Bangkok, helping to blockade parts of the capital as part of an anti-government group’s push to force Yingluck to resign and encourage the army to stage a coup.
Thailand’s south has historically been the political stronghold of the Democrat Party, which was in opposition to Yingluck’s government and backed the street protests calling for her ouster. Yingluck’s policies were often aimed at rice farmers in the more populous north and northeast, home to the supporters who powered the political machine created by her brother Thaksin.
While Prayuth has said an election can’t be held until late next year at the earliest, alienating rural voters will increase the likelihood that parties linked to Yingluck and Thaksin will return to power, Eurasia Group’s Ambika said.
‘Biggest test’
“This government is now facing its biggest test: how to keep everyone, whose support they need to successfully reconfigure the political landscape, happy,” she said. “The government is not going to like what they have to do, but populism is going to be unavoidable to some extent.”
Thailand avoided a technical recession last quarter after GDP grew 0.9 percent from the previous three months when it shrank 1.9 percent.
Prayuth’s government, which has 12 military officers in the 32-member cabinet, has vowed to increase economic stimulus, restore fiscal discipline, provide loans to farmers and implement long-term measures to help them cut costs and increase productivity.
His government has no need to use populist policies because it doesn’t need to pander to voters, he said last week. Officials will hold further talks with farmers to “create understanding,” he said yesterday.
Surplus rubber
The government will encourage farmers to cut down trees to trim production and use stockpiled rubber for road and flood-prevention projects to run down its surplus, Petipong Puengbun Na Ayudhya, minister of agriculture, said last week.
The National Rubber Policy Committee last week approved a budget of 30 billion baht to provide low-interest loans to farmer cooperatives and companies to buy rubber and increase processing. The government will also help defray production costs, a policy borrowed from Yingluck’s administration.
Output from the country may drop as much as 30 percent because of falling prices, fewer tapping days, labor shortages and heavy rains disrupting plantation work, said Perk, adding that farmers will meet on Oct. 8 to discuss the planned protest.
Provincial officials have been assigned to hold talks with farmers, and will urge them not to stage a protest in Bangkok, government spokesman Yongyuth Mayalarp said yesterday.
“Populist policies, we have to forget about it,” as they’re not sustainable, Finance Minister Sommai Phasee said in an interview last week. “But we still have to spend money, especially for the farmers. We can’t ignore farmers. But the mechanism is something else that we have to be careful. We have to come up with a very effective one.”

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