WSJ 01/16/14 page A11 Rice Opens Rift in Thailand 1. What is a subsidy !. What is being subsidi"ed #.

#. Wh$ is paying f$% this subsidy 4. &ecause $f this %ice subsidy' (h$ else is n$( as)ing f$% subsidies t$$ *. Why is the g$+e%n,ent d$ing this subsidy t$ %ice p%$duce%s -$% ec$n$,ic $% p$litical %eas$ns

.iscussi$n in class discuss the subsidy f$% ethan$l

World News

Thai Farmers Begin Deserting Government Over Late Rice Payments

Thailand's Flagship Rice !"sidy #s R!nning O!t O$ %ash
By Jake Maxwell Watts, Isabella Steger and Wilawan Watcharasakwet Updated Jan. 16, 2 1! 12"2# a.$. %&

'ntig()ern$ent pr(testers in Bangk(k wa)ed &hai *lags (n Wednesday in their c(ntin+ing ca$paign t( *(rce the pri$e $inister *r($ (**ice. 'ss(ciated ,ress
&hailand-s *lagship rice s+bsidy is r+nning (+t (* cash and back*iring at a critical ti$e *(r ,ri$e Minister .ingl+ck Shinawatra, wh(se p(litical *+t+re hinges (n s+pp(rt *r($ *ar$ers and (ther r+ral )(ters as her ri)als intensi*y their ca$paign t( re$()e her *r($ (**ice. &he g()ern$ent has been b+ying +p rice *r($ *ar$ers at ab(+t / 0 ab()e $arket prices t( b((st r+ral inc($es since Ms. .ingl+ck-s ,he+ &hai ,arty t((k (**ice in 2 11. 1(w, it can-t sell the rice *ast en(+gh t( *+nd the s+bsidy. 2i)al exp(rters s+ch as India and 3ietna$ ha)e ra$ped +p pr(d+cti(n, selling rice cheaper and kn(cking &hailand (** its perch as the 1(. 1 exp(rter. 45ar$ers are )ery angry,4 said 1ip(n ,(ap(ngsak(rn, a r+ral de)el(p$ent specialist at &hailand 6e)el(p$ent 2esearch Instit+te, a think tank. 4It is the *irst ti$e in (+r hist(ry that *ar$ers didn-t get $(ney *(r the rice that they already s(ld t( the g()ern$ent,--

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'ttac(s on Protesters )scalate Thai %risis

&he state7(wned bank tasked with *+nding the p(licy, the Bank (* 'gric+lt+re and 'gric+lt+ral 8((perati)es, is seeking t( raise 2 billi(n baht 9:61 $illi(n; in a b(nd a+cti(n &h+rsday it h(pes will $ake +p the sh(rt*all *r($ a #/ billi(n baht a+cti(n in 1()e$ber, when (nly hal* (* the iss+e was p+rchased. &he *+nds will g( t(ward paying rice *ar$ers, s($e (* wh($ ha)en-t been paid in $(nths. &he g()ern$ent (n Wednesday extend a deadline *(r the pay$ent (* <ct(ber-s har)est, while l(cal $edia said that in (ne n(rthern pr()ince, (nly a s$all *racti(n (* its nearly / , rice *ar$ers recei)ed $(ney *r($ the g()ern$ent. &hailand-s r+ral p(p+lati(n c($prises the p(litical base *(r Ms. .ingl+ck and her elder br(ther &haksin Shinawatra, a p(lari=ing *(r$er pre$ier wh( was (+sted in a $ilitary c(+p in 2 6. &he s+bsidy is (ne (* a ra*t (* p(licies ai$ed at bene*iting r+ral )(ters that has ann(yed the $(stly $iddle7class pr(testers in Bangk(k wh(se taxes pay *(r it.

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6ari( ,ignatelli>Bl(($berg 1ews Bang(o( h!tdown

<pp(nents (* the Shinawatra p(litical e$pire ha)e t+rned (+t by the tens (* th(+sands this week t( de$and Ms. .ingl+ck-s resignati(n. &he pr(testers say Ms. .ingl+ck and her br(ther-s p(p+list p(licies a$(+nt t( )(te7b+ying, while the g()ern$ent $aintains its p(licy bene*its *ar$ers, wh( are a$(ng &hai s(ciety-s p((rest citi=ens. &he expectati(ns raised by the s+bsidy pr(gra$ ha)e n(w bec($e a liability *(r the g()ern$ent, which has als( had t( *ace d(wn pr(tests *r($ r+bber *ar$ers and (ther gr(+ps de$anding e?+al treat$ent. &he delay in pay$ents highlights h(w the s+bsidy pr(gra$ has le*t the agric+lt+re bank@and the g()ern$ent@in a *inancially precari(+s sit+ati(n. 'nalysts at 8IMB Sec+rities said the &hai state inc+rs c(sts (* ab(+t A billi(n baht 9:B.2 billi(n; a year t( s+pp(rt rice prices, a$(+nting t( ab(+t 2./0 (* C6,. 8h((kiat <phasw(ngse, president (* the &hai 2ice %xp(rters 'ss(ciati(n, said appr(xi$ately 1 $illi(n t(ns (* paddy@+npr(cessed rice@ha)en-t been paid *(r by the g()ern$ent, w(rth ab(+t 1# billi(n baht. &he b(nd a+cti(n &h+rsday $ay g( s($e way t( alle)iating the press+re. 8h+t &rak((lnga$, a dealer at Dasik(rnbank, said he w(+ld take part in the a+cti(n and was *airly (pti$istic the b(nd will sell beca+se it (**ers an attracti)e yield (* ab(+t A.20, b+t added that the agric+lt+re bank-s debt le)el is 4n(t s+stainable.4

&he Internati(nal M(netary 5+nd has warned that the debt has er(ded the credibility (* &hailand-s p+blic *inances and rec($$ended in 1()e$ber that the s+bsidies be scrapped. S($e *ar$ers ha)e e)en t+rned (+t in Bangk(k t( E(in in the antig()ern$ent pr(tests. Wasana .ingph(n, a !/7year7(ld rice *ar$er, dr()e *r($ the ancient capital (* 'y+tthaya, a str(ngh(ld (* s+pp(rt *(r Ms. .ingl+ck, t( the capital in 6ece$ber t( c($plain ab(+t $issing pay$ents. Ms. Wasana said $any rice *ar$ers are ha)ing t( g( t( n(nbank lenders and pay high interest rates s( they can a**(rd t( plant new cr(ps. With s+ch large (+tstanding pay$ents, Mr. 8h((kiat (* the rice exp(rters ass(ciati(n said he w(rries h(w the g()ern$ent will settle its bills l(ng7ter$. 4I s+spect that the sit+ati(n will get w(rse i* the g()ern$ent delays their pay$ents any *+rther,4 he said. Write to Isabella Steger at isabella.stegerFwsE.c($

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