DIESEL UP, CABBAGE DOWN, THAI PROTESTS ALL AROUND

UNCLAS SECTION 01 OF 02 BANGKOK 001833 SIPDIS E.O. 12958: N/A TAGS: EAGR ECON ELAB ENRG EPET PGOV SOCI TH SUBJECT: DIESEL UP, CABBAGE DOWN, THAI PROTESTS ALL AROUND BANGKOK 00001833 001.2 OF 002 ¶1. (U) Summary. This week in Thailand, farmers, fishermen, laborers and truckers staged demonstrations around the country to protest high fuel prices and low crop prices. The protests appear neither coordinated nor partisan but rather are a reaction to record high diesel prices and downward price pressures from Chinese and Lao vegetable imports. It is unclear whether these expressions of dissatisfaction on the part of a core People's Power Party (PPP) constituency reflect a decline in support for PPP that would affect the party's standing in the event of new elections. Having acquiesced to the rice and garlic farmers, the government is under pressure to widen subsidies or risk undermining its rural, agrarian base. If the government does not give in to the protesters' demands, the farmers have threatened to converge on Government House in Bangkok and the truckers have threatened to block highways. End summary. -------------- Cabbage and garlic prices are down -------------- ¶2. (U) Garlic farmers in Mae Hong Son province in northern Thailand blocked the Mae Sariang-Chiang Mai highway and demanded that the government guarantee a higher price of THB 25 per kilogram. Thai garlic producers in northern Thailand often complain about how they cannot compete against a flood of cheap Chinese garlic imports. The farmers agreed to unblock the road after the government decided to set aside THB 300 million to buy garlic at THB 22 per kilogram from farmers in five Northern provinces. This follows the June 4 decision to set an intervention price on white rice paddy of THB 14,000 per ton, which is 20 percent higher than world market prices. ¶3. (U) Cabbage farmers in Petchabun province, also in Northern Thailand, blocked traffic to protest cabbage prices that have plummeted to 50 satang per kilogram (100 satang=1 baht),down from THB 7 per kilogram. Thai press reports that farmers blame the drop on a flood of cheap imports from Laos. If the government does not give in to the cabbage farmers within seven days, they plan to stage a protest at Government House in Bangkok. ¶4. (U) In April, the Cabinet approved a two-year farmers' debt moratorium, to run until March 2010. The president of the Bank for Agriculture and Agriculture Cooperatives Thirapong Thangthirasunan said the plan would cover 334,535 farmers with debts of THB 17.8 billion. Farmers are complaining that they have yet to receive debt moratorium payments. This combined with drastically rising fuel prices (and falling prices in the case of a few crops) has created a tense political situation. Because the government acquiesced to the demands of the rice farmers (and now this week the garlic farmers), the sense in the agricultural sector is that other farmers are following the lead of the rice farmers, hoping to get their share of the government pie. ¶5. (U) Although Thailand is the world's largest rice exporter, agriculture in Thailand is more about people than money and hence very political. Agriculture in the first quarter of 2008 accounted for only 8.7 percent of Thai GDP, but nearly half of overall employment. -------------- The price of diesel hits a record high -------------- ¶6. (U) Several hundred ten-wheel truck drivers protested in Khon Kaen, Nakhon Ratchasima, and Nakhon Sawan provinces in Northeastern and north-central Thailand to protest the high price of diesel. The truckers' demands include a government subsidy to cut the price of diesel by THB 5 per liter. Around 100 18-wheel truck drivers gathered on a highway in Bangkok, and up to 1000 container trucks blocked a road near the port of Laem Chabang to protest the high price of diesel. Truckers have threatened to strike and block Thailand's highways next week. ¶7. (U) The high price of fuel is hitting farmers, fishermen, truckers, and taxi drivers hard. In Thailand, as of June 13, the average price of diesel (which accounts for the majority of fuel consumption in Thailand and the overwhelming majority in the sectors that are protesting) was THB 41.74 per liter, a record high. Translated into dollars (at the June 13 rate of THB 33.14 per USD) and gallons, this works out to USD 4.768 per gallon, compared to an average price in the U.S. of USD 4.692. Thai per capita GDP in 2007 was USD 3,727, compared to U.S. per capita GDP of USD 45,845. Thus, filling a truck or tractor with 100 gallons of diesel costs 13 percent of per capita GDP in Thailand, compared to 1 percent in the U.S. Regular unleaded in Thailand works out to USD 4.654 per gallon, compared to an average of USD 4.039 in the U.S. The Thai government has many plans for alternative energy, including biodiesel made from palm and used cooking oil, but such plans are over the longer term and by most estimates will account for only a minuscule share of the fuel supply. In the case of palm oil, the price of crude palm oil is presently higher than the price of BANGKOK 00001833 002.2 OF 002 refined diesel at the pump. -------------- And labor unions are uneasy -------------- ¶8. (U) Meanwhile, there have been rumors of a strike targeted against state-owned enterprises (SOEs). Savit Kaewwan, Secretary-General of the State Enterprise Workers' Relation Confederation (SEWRC) told us that there will only be a strike if the government uses force to shut down the ongoing People's Alliance for Democracy (PAD) protests in Bangkok. Savit also cited concerns about corruption in SOE projects. The SEWRC will convene a meeting of 43 SOE unions on June 17 to discuss the political, economic, and social situation in Thailand and will decide whether or not to join the PAD protest. ¶9. (SBU) Comment: Every indication is that the protests have erupted spontaneously and are neither well-coordinated nor politically partisan. However, it should concern Prime Minister Samak's government that rural farmers, normally a strong base of support for the ruling People's Power Party (PPP),are voicing displeasure with economic conditions at a time when protests continue from other government opponents such as the PAD, whose grievances are decidedly separate from the farmers'. The government acquiescence on rice and garlic subsidies, and the continued tolerance of the PAD demonstrators, may be emboldening Thais to express their dissatisfaction in a more public manner. It is currently unclear how these farmers' protests will affect the political climate in Bangkok, where the PAD has organized demonstrations against constitutional amendment. Under current circumstances, the farmers' protests do not appear to increase the likelihood of early elections, but they increase pressure on the Thai government to subsidize other crops and fuel. While the RTG currently has the budgetary capacity to increase subsidies, the underlying economic wisdom is another matter. John