Cablegate: Diesel Up, Cabbage Down, Thai Protests All Around

DE RUEHBK #1833/01 1650904
R 130904Z JUN 08



E.O. 12958: N/A

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

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

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

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.


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