Streetwise: "Rice for oil" better than farming approval

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The Nation (Bangkok ) | 27 July 2009

By Achara Deboonme

In a country like Thailand where agriculture is the main livelihood for millions, nothing can be more sensitive than the issue of land.

So farmers were justified when they told television news they did not agree with the proposal of letting the Gulf Investment Corporation (GIC) start its own farms in Thailand.

"Thais have been growing rice for ages, and the profession should be reserved for them," one said.

Every government has protected farming, which makes this proposal all the more surprising. Many attributed this move to the recent energy crisis, which has sparked concerns about a scarcity of food.

The corporation is a regional financial institution established under the auspices of the Gulf Cooperation Council and is equally owned by the six member countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. Perhaps these oil-producing countries already know about a future spike in oil prices and hence a renewed spike in food prices.

Given that the corporation has an authorised capital of US$2.1 billion (Bt71.42 billion), its proposal should not simply be turned down.

Nobody knows the details of the proposal, for instance the size of the proposed investment. Indeed, the government can divert the incoming capital to needy projects, like the ones included in the "Strong Thailand" package or the mass-transit system. Then, in return, it could guarantee a supply of rice for the investor, based on the market price.

This should be a win-win situation. The government should not be condemned as a traitor, because it will not be allowing foreigners to grow rice on Thai soil. Besides, GIC would be receiving a supply of rice at a higher price. In fact, an agreement similar to the one the six Middle East countries make to sell oil could be struck. In other words, buyers pay whatever price the product is offered at.

In economics, land is one of the four production factors, the others being capital, raw materials and labour. In a world where the population is booming despite limited space on Earth, it should be possible for different countries to combine their production factors for the benefit of their citizens.
Original source: The Nation
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