News / Economy

Thai Rice to Flood Global Markets as Subsidy Ends

Kittisak Ratanawarahal, chairman of the Northern Farmers Network, stands in warehouse of rotten rice abandoned ten years ago in Phichit province under price-support scheme by then-prime minister Thaksin Shinawatra Feb. 6, 2014.
Kittisak Ratanawarahal, chairman of the Northern Farmers Network, stands in warehouse of rotten rice abandoned ten years ago in Phichit province under price-support scheme by then-prime minister Thaksin Shinawatra Feb. 6, 2014.
Reuters
Millions of tons of Thai rice are set to flood into already oversupplied international markets when the government's controversial subsidy scheme grinds to a halt later this month.

The country's caretaker government last week said it did not have the power to renew the program, which has paid farmers in one of the world's top exporters of rice nearly double market rates and is due to expire at month-end.

That will force farmers to offload the March harvest into a market currently dominated by India and Vietnam. With Bangkok already shifting grain from record government stockpiles, the sales threaten to worsen a supply glut that has dragged on international prices.

While many rice farmers are expected to remain loyal to Prime Minister Yingluck Shinawatra, who swept to power in 2011 on the back of rural votes generated in part by the subsidies, a slump in prices that could be blamed on her leadership would erode her support base and be another blow for her embattled government.

The bulk of the around 5 million tons of milled grain that is expected to be produced from next month's crop, equivalent to more than 10 percent of all rice traded globally last year, is likely to be sold to exporters as farmers and millers have limited capacity to hold back stocks.

"It's like farmers are being set adrift. We will have to sell rice to millers at prices lower than what we got in the past," said Boonserm Thongsook, a farmer in the province of Suphan Buri, around 40 km north of Bangkok.

"I may not vote for Yingluck again as she ignores us. The scheme is about to end and she does nothing to support us."

The subsidy program has been mired in allegations of corruption and faced growing losses, becoming a target of a Bangkok-based protest movement bent on ousting Yingluck and the caretaker government she has led since December.

Unrest is spreading to her party's natural supporters in the countryside, where many farmers have gone unpaid for their rice for months as the program scrambles for funding.

Hundreds of unpaid Thai rice farmers this week swarmed around Yingluck's temporary office and threatened to storm the building.

Any possible reintroduction of the rice-buying scheme would be off the cards until the completion of disrupted elections, which the country's Election Commission said was unlikely until late April.

Most market participants expect some sort of program to re-emerge no matter who wins at the polls, though it is likely to be far less generous than the current scheme. Thailand has had different forms of rice support scheme for around three decades.

"From the world market's point of view, the end of the scheme could be bearish because it implies a potentially large boost to world export availability," said Darren Cooper, senior economist with trade body the International Grains Council in London.

Global glut

Traders and officials said Thai rice prices, which have already dropped 14 percent since January, won't fall much further as they are already cheaper than competing varieties.

"Exporters will not offer prices that are lower than their costs of production," said Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association.

Thai exporters said prices could fall to $350 ($1 = 32.4 baht) a ton for the benchmark 5-percent broken variety, the lowest in seven years, from $375 a ton currently offered on a free on board basis.

That compares with $410 a ton being quoted for similar varieties in top exporter India and $400 a ton in No.2 seller Vietnam.

Thailand paid farmers 15,000 baht ($463) per ton of paddy under the intervention scheme that started in October 2011, compared to the 8,000-9,000 baht per ton they can expect in the open market this year.

Most Thai farmers live in poor and remote areas that lack access to large storage silos, meaning they have little opportunity to hold back rice in hope that prices will climb in future.

As well as sales from the upcoming harvest, authorities will open a tender this week to sell 500,000 tons of rice from state warehouses, after a previous 400,000-ton offering attracted healthy interest.

Extra supply from Thailand comes as India is looking to shrink reserves swollen after bountiful monsoon rains and Vietnam starts to harvest the highest-yielding of its three annual crops.

The world's top rice buyers in Southeast Asia and Africa, who have stayed out of the market since January, are likely to make the most of their purchases from Thailand, hitting Indian and Vietnamese exports.

"Demand in the start of the first quarter has been subdued but we expect buyers to be back in the market in March or April," said a Singapore-based trader, who declined to be named.

"They will any day prefer Thai rice over other origins even if the prices are at par."

Thailand, which was the world's top exporter of rice until Yingluck's intervention scheme derailed shipments in 2011, is known for its high quality grains.

Vietnam has said it expects its rice exports in January-March to decline by a quarter with African buyers switching to cheaper Thai cargoes.

You May Like

Ebola Death Toll Nears 5,000 as Virus Advances

West Africa bears heaviest burden; Mali toddler’s death raises new fears More

Jordan’s Role in Fighting IS Carries Domestic Risks

There are Western concerns Islamic State militants soon may unleash offensive in kingdom that could create upheaval - though nation has solid intel, grip on banking system More

Asian-Americans Enter Public Office in Record Numbers

A steady deepening engagement in local politics pays off for politicians like Chinese-American Judy Chu More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
After Decades of Pressure, Luxembourg Drops Bank Secrecy Rulesi
X
October 21, 2014 12:20 AM
European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.
Video

Video Young Nairobi Tech Innovator on 'Track' in Security Business

A 24-year-old technology innovator in Nairobi has invented a tracking device that monitors and secures cars. He has also come up with what he claims is the most robust audio-visual surveillance system yet. As Lenny Ruvaga reports from the Kenyan capital, his innovations are offering alternative security solutions.
Video

Video Latinas Converting to Islam for Identity, Structure

Latinos are one of the fastest growing groups in the Muslim religion. According to the Pew Research Center, about 6 percent of American Muslims are Latino. And a little more than half of new converts are female. VOA’s Carolyn Presutti travelled to Miami, Florida -- where two out of every three residents is Hispanic -- to learn more.
Video

Video Exclusive: American Joins Kurds' Anti-IS Fight

The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video South Korea Confronts Violence Within Military Ranks

Every able-bodied South Korean male between 18 and 35 must serve for 21 to 36 months in the country’s armed forces, depending upon the specific branch. For many, service is a rite of passage to manhood. But there are growing concerns that bullying and violence come along with the tradition. Reporter Jason Strother has more from Seoul.
Video

Video North Carolina Emerges as Key Election Battleground

U.S. congressional midterm elections will be held on November 4th and most political analysts give Republicans an excellent chance to win a majority in the U.S. Senate, which Democrats now control. So what are the issues driving voters in this congressional election year? VOA National Correspondent Jim Malone traveled to North Carolina, one of the most politically competitive states in the country, to find out.
Video

Video Comanche People Maintain Pride in Their Heritage

The Comanche (Indian nation) once were called the “Lords of the Plains,” with an empire that included half the land area of current day Texas, large parts of Oklahoma, New Mexico, Kansas and Colorado.The fierceness and battle prowess of these warriors on horseback delayed the settlement of most of West Texas for four decades. VOA’s Greg Flakus reports from Lawton, Oklahoma, that while their warrior days are over, the 15,000 members of the Comanche Nation remain a proud people.
Video

Video Turkey Campus Attacks Raise Islamic Radicalization Fears

Concerns are growing in Turkey of Islamic radicalization at some universities, after clashes between supporters of the jihadist group Islamic State (IS) or ISIS, and those opposed to the extremists. Pro-jihadist literature is on sale openly on the streets of Istanbul. Critics accuse the government of turning a blind eye to radicalism at home, while Kurds accuse the president of supporting IS - a charge strongly denied. Henry Ridgwell reports from London.

All About America

AppleAndroid

World Currencies

EUR
USD
0.7893
JPY
USD
107.68
GBP
USD
0.6238
CAD
USD
1.1214
INR
USD
61.185

Rates may not be current.