The vote-winning subsidies of one politician eventually have to paid back by the politicians and taxpayers that come afterwards. Consumers are also impacted by higher prices.
The way that the sugar industry works in Thailand is very complicated (Read article).
In the past the government has borrowed money to keep the prices sugar farmers receive for their sugar high even when prices were falling worldwide.
This happened long ago in 1998-99 and 2008-09 but the money that was borrowed then has to paid back now (Read 2008 article).
Back when the price supports were offered, they helped some politicians gain some votes.
Now, these politicians are gone and an entirely different set of politicians has to take the difficult step of paying back the loans that paid for the price supports (Read article)
A similar situation exists for the 1997 crisis bailout debt, held by the FIDF, which remains to be paid off (Read articles #1 and #2).
The current adminstration has also replaced a system of agricultural subsidies with crop insurance with the potential to pay for itself in the future (See agricultural price supports vocabulary).
Read more about Thailand's sugar industry in the academic paper: Distortions to Agricultural Incentives in a Food Exporting Country: Thailand (2007) by Peter Warr and Archanun Kohpaiboon [page 9] (Read pdf article).
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Sugar industry reform scheduled for February, Tax to Cane and Sugar Fund to be assessed by Chatrudee Theparat
The government will decide by next February how the sugar industry should be restructured and how much it should contribute to the Cane and Sugar Fund.
Five baht a kilogramme from a previous price increase is contributed to the fund. The Joint Public Private Consultative Committee, chaired by Prime Minister Abhisit Vejjajiva, earlier agreed to scrap the contribution next Febuary.
The five-baht contribution was to help the fund pay off debt to the Bank for Agriculture and Agricultural Co-operatives. It borrowed from the bank to shore up sugar cane price to farmers for the 1998-99 and 2008-09 crops.
Tharadol Piempongsan, a deputy secretary to the premier, said a study showed if the contribution of five baht per kilogramme were ended in February, the fund would still need to pay off the rest of the debt, totalling 4 billion baht, but monthly inflows would amount to only 919 million baht.
The committee requested the National Economic and Social Development Board research appropriate figures for the contribution after February.
Mr Tharadol said ending the contribution would affect the whole industry and the fund's stability, and the fund should conduct research into improving productivity and security for sugar cane planters and price stability.
The industry has applied a benefit sharing system in which planters receive 70% of the price and factories the rest. This system has resulted in a high domestic sugar price, with consumers being forced to shoulder the burden while sugar factories and planters reap the benefits.
A suggestion was made to reduce the contribution to between 2.50 and 3.50 baht a kg, which would still provide the fund with capital of 7-8 billion baht to maintain the industry's security.
Sugar is one of several commodities for which the government wants to improve the system in a bid to bring fairer prices to consumers.
Another study showed the five-baht contribution created an additional financial burden of 2.49 billion baht for households and 5.05 billion for industries the first nine months of 2009. The contribution has increased costs by 5.4% for the dessert industry, 3% for non-alcoholic beverages and 2.5% for dairy products
(Source: Bangkok Post, Sugar industry reform scheduled for February, Tax to Cane and Sugar Fund to be assessed, 10/11/2010, Chatrudee Theparat, link)
reform - improve, a change that is intended to correct a situation that is wrong or unfair การแก้ไข การปฏิรูป
scheduled - planned to happen at a particular time or day ตามตารางเวลา
assessed - evaluated, checked and looked at closely to make a judgement about something
restructure industry - change the structure of the industry and how it works
cane, sugar cane - sugar plants before they are turned into sugar in a sugar mill (See Wikipedia)
Cane and Sugar Fund - the money used for sugar price supports to help farmers (See Website)
price supports - government policy to keep prices at a certain level, to protect producers from decreasing prices การประกันราคาสินค้า(ทางการเกษตร)
contribute (verb) - to make a regular payment
contribution (noun) - a regular payment การลงทุน
fund (noun) - money collected together for some speecial purpose เงินทุน กองทุน
scrap - to get rid of; to stop using or accepting เลิก, ทิ้ง
debt - an amount of money that you owe หนี้
bank - a raised area of land along the side of a river ริมฝั่งแม่น้ำ
deputy - a person whose rank is immediately below that of the leader of an organisation รอง
premier - prime minister
pay off - pay off debt, when borrower pays back part of a loan to lender
appropriate - the right thing for a situation, suitable, fit, proper เหมาะสม
figures - numbers or statistics describing the economy
stability - a situation in which things happen as they should and there are no harmful changes; when something is not likely to move or change ความมั่นคง, เสถียรภาพ
conduct - to do something in an organised way; to carry out
conduct research - do research
productivity - producing more with the same amount of inputs (labour, energy, etc) การผลิตสินค้า
security - the activity of protecting and providing safety from attack, harm or damage ความปลอดภัย
planters - farmers who plant and grow crows เกษตรกรผู้ปลูกพืชไร่
benefit - to get help or an advantage from something ผลประโยชน์
domestic - within the country ภายในประเทศ
consumers - people who buy things (individuals and families)
shoulder - to deal with or accept something difficult แบกรับภาระ หรือสถานการณ์
burden - a responsibility, a difficult thing that must be done, a heavy load to carry ภาระ (See glossary)
benefits - goods things that can happen from an activity ผลประโยชน์
reap benefits - gain the benefits
provide - to give someone something that they want or need
capital - money invested in a business (See glossary)
maintain - keep in good condition รักษา
commodities - a good bought in large quantities, with each unit the same, like rice or oil สินค้าที่ซื้อเป็นจำนวนมากๆ
improve - to make better ทำให้ดีขึ้น
bid - an attempt to do something ความพยายาม
households - families or groups of people living together (economics treats this as a unit that makes decisions)
beverages - drinks (milk, fruit juice, beer) เครื่องดื่ม
dairy - milk and foods made from milk such as butter, cream, and cheese
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