Amidst the vast green fields of Thailand, where the sun shines bright and the soil is rich, lies a challenge that has gripped the hearts of farmers and traders alike – the decline in rice prices. This crucial issue has taken center stage in the agricultural landscape, sparking discussions and calls for new strategies to address the evolving complexities of crop pricing.
The root cause of this decline in rice prices can be traced back to a global phenomenon, where higher supply and weaker demand have created a ripple effect across the market. Chookiat Ophaswongse, the esteemed honorary president of the Thai Rice Exporters Association, sheds light on this issue. He points out that while the dip in prices has primarily impacted white rice, the revered Thai hom mali rice has remained resilient so far. The reason behind this shift can be attributed to the global market dynamics following India’s decision to lift its export ban on white rice, a move that is expected to drive down prices compared to the previous year.
Adding to the complexity of the situation is the global rise in rice production, fueled by the La Niña phenomenon that blessed rice-growing nations with abundant rainfall. Countries like Indonesia, with its self-sufficiency policy, and the Philippines, undergoing restructuring in its rice import system, have significantly impacted the supply-demand balance in the market. Vietnam, a key rice exporter, is gearing up to release its winter-spring and second-crop harvests, projecting a higher yield driven by favorable prices in the previous year.
As a result of these factors, Thailand experienced a decline in rice exports, with January’s export volume standing at 700,000 tonnes, expected to drop to over 500,000 tonnes in February. This downward trend has led to a reduction in domestic rice prices, with paddy prices plummeting from 11,000 to 12,000 baht per tonne to a range of 7,500 to 7,800 baht per tonne. Despite the decrease in export volume, Thailand’s rice shipment prices have remained higher than its competitors due to elevated production costs, with a free on board price of US$420 per tonne, compared to $380 for Vietnam, $385 for Pakistan, and $390 for India.
Strategies to Support Farmers and Traders
In the face of these challenges, experts like Mr. Chookiat suggest that government intervention could provide a lifeline to beleaguered farmers and traders. By incentivizing rice mills to stockpile rice through interest compensation and offering direct support to off-season farmers, the government could help alleviate some of the immediate pressures. However, more ambitious initiatives like income guarantees and rice pledging schemes might be off the table due to budget constraints.
On the export front, China emerges as a promising market, with projections of increased rice imports reaching around 3 million tonnes this year, creating an opportunity for Thailand to tap into this demand. Despite the potential gains, exporters face stiff competition from global heavyweights like China, India, and Indonesia. The volatile exchange rates further compound the challenges, with fluctuations impacting traders on a daily basis.
To safeguard Thailand’s rice industry and its farmers, Mr. Chookiat emphasizes the importance of lowering production costs, developing rice varieties that align with market preferences, and enhancing yields per rai. Additionally, advocating for the creation of low-carbon rice varieties can help combat climate change and promote sustainable farming practices.
Government Measures to Boost the Rice Sector
Recognizing the urgency of the situation, the Department of Internal Trade has rolled out a series of measures to support off-season rice farmers. These initiatives include offering subsidies to farmers for storing rice in granaries, providing interest subsidies to rice mill operators, and supporting rice purchasing points to stimulate trade. The total budget for these measures amounts to 1.89 billion baht, with the aim of managing 3.8 million tonnes of rice output.
Furthermore, the Commerce Ministry has announced proactive steps to lift rice prices, such as organizing paddy market fairs across the Chao Phraya River basin to empower farmers to sell rice at competitive rates. These fairs, scheduled in 20 provinces, are expected to boost prices by 100-200 baht per tonne. Additionally, the ministry is exploring new export opportunities, with plans to visit South Africa to finalize a significant rice shipment deal.
Amidst these efforts, the long-term forecast for rice production and consumption remains optimistic, with the USDA projecting a global increase in milled rice production and consumption. Thailand, a key player in the rice export market, continues to navigate the shifting tides of supply and demand, seeking innovative solutions to sustain its agricultural economy.
As we delve deeper into the intricate world of rice pricing and production, one thing remains clear – the resilience and ingenuity of farmers and traders will continue to shape the future of Thailand’s rice sector. By embracing change, fostering innovation, and collaborating on a global scale, the rice industry stands poised to overcome current challenges and thrive in the ever-evolving market landscape.
