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.
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

Video Americans, Tourists, Reflect on Meaning of Thanksgiving

VOA garnered opinions from several people soon after November 13 Paris attacks, which colored many of their thoughts

Video Thais Send Security Concerns Down the River

In northern Thailand, the annual tradition of constructing floating baskets to carry away the year’s bad spirits highlights the Loy Krathong festival

Video Tree Houses - A Branch of American Dream

Workshops aimed at teaching people how to build tree houses have become widely popular in America in recent years

This forum has been closed.
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.
Belgium-Germany Border Remains Porous, Even As Manhunt For Paris Attacker Continuesi
Ayesha Tanzeem
November 25, 2015 10:46 PM
One of the suspected gunmen in the Nov. 13 Paris attacks, Salah Abdeslam, evaded law enforcement, made his way to Belgium, and is now believed to have fled to Germany. VOA correspondent Ayesha Tanzeem makes the journey across the border from Belgium into Germany to see how porous the borders really are.

Video Belgium-Germany Border Remains Porous, Even As Manhunt For Paris Attacker Continues

One of the suspected gunmen in the Nov. 13 Paris attacks, Salah Abdeslam, evaded law enforcement, made his way to Belgium, and is now believed to have fled to Germany. VOA correspondent Ayesha Tanzeem makes the journey across the border from Belgium into Germany to see how porous the borders really are.

Video Islamic State Unfazed by Losses in Iraq, Syria

Progress in the U.S.-led effort to beat Islamic State on its home turf in Iraq and Syria has led some to speculate the terror group may be growing desperate. But counterterror officials say that is not the case, and warn the recent spate of terror attacks is merely part of the group’s evolution. VOA National Security correspondent Jeff Seldin has more.

Video Taiwan Looks for Role in South China Sea Dispute

The Taiwanese government is one of several that claims territory in the hotly contested South China Sea, but Taipei has long been sidelined in the dispute, overshadowed by China. Now, as the Philippines challenges Beijing’s claims in an international court at The Hague, Taipei is looking to publicly assert its claims. VOA’s Bill Ide has more from Beijing.

Video Syrian Refugees in US Express Concern for Those Left Behind

Syrian immigrants in the United States are concerned about the negative tide of public opinion and the politicians who want to block a U.S. plan to accept 10,000 Syrian refugees. Zlatica Hoke reports many Americans are fighting to dispel suspicions linking refugees to terrorists.

Video After Paris Attacks, France Steps Up Fight Against IS

The November 13 Paris attacks have drawn increased attention to Syria, where many of the suspected perpetrators are said to have received training. French President Francois Hollande is working to build a broad international coalition to defeat Islamic State in Syria and in Iraq. Zlatica Hoke reports.

Video US, Cambodian Navies Pair Up in Gulf of Thailand

The U.S. Navy has deployed one of its newest and most advanced ships to Cambodia to conduct joint training drills in the Gulf of Thailand. Riding hull-to-hull with Cambodian ships, the seamen of the USS Fort Worth are executing joint-training drills that will help build relations in Southeast Asia. David Boyle reports for VOA from Preah Sihanouk province.

Video Americans Sharpen Focus on Terrorism

Washington will be quieter than usual this week due to the Thanksgiving holiday, even as Americans across the nation register heightened concerns over possible terrorist threats. VOA’s Michael Bowman reports new polling data from ABC News and the Washington Post newspaper show an electorate increasingly focused on security issues after the deadly Islamic State attacks in Paris.

Video World Leaders Head to Paris for Climate Deal

Heads of state from nearly 80 countries are heading to Paris (November 30-December 11) to craft a global climate change agreement. The new accord will replace the Kyoto Protocol on Climate Change that expired in 2012.

Video Uncertain Future for Syrian Refugee Resettlement in Illinois

For the trickle of Syrian refugees finding new homes in the Midwest city of Chicago, the call to end resettlement in many U.S. states is adding another dimension to their long journey fleeing war. Organizations working to help them integrate say the backlash since the Paris attacks is both harming and helping their efforts to provide refugees sanctuary. VOA's Kane Farabaugh reports.

Video Creating Physical Virtual Reality With Tiny Drones

As many computer gamers know, virtual reality is a three-dimensional picture, projected inside special googles. It can fool your brain into thinking the computer world is the real world. But If you try to touch it, it’s not there. Now Canadian researchers say it may be possible to create a physical virtual reality using tiny drones. VOA’s George Putic reports.

Video New American Indian Village Takes Visitors Back in Time

There is precious little opportunity to experience what life was like in the United States before its colonization by European settlers. Now, an American Indian village built in a park outside Washington is taking visitors back in time to experience the way of life of America's indigenous people. Carol Pearson narrates this report from VOA's June Soh.

Video Even With Hometown Liberated, Yazidi Refugees Fear Return

While the northern Iraqi town of Sinjar has been liberated from Islamic State forces, it's not clear whether Yazidi residents who fled the militants will now return home. VOA’s Mahmut Bozarslan talked with Yazidis, a religious and ethnic minority, at a Turkish refugee camp in Diyarbakır. Robert Raffaele narrates his report.

Video Nairobi Tailors Make Pope Francis’ Vestments

To ensure the pope is properly attired during his visit, the Kenya Conference of Catholic Bishops asked the Dolly Craft Sewing Project in the Nairobi slum of Kangemi to make the pope's vestments, the garments he will wear during the various ceremonies. Jill Craig reports.

Video Cross-Border Terrorism Puts Europe’s Passport-Free Travel in Doubt

The fallout from the Islamic State terror attacks in Paris has put the future of Europe’s passport-free travel area, known as the "Schengen Zone," in doubt. Several of the perpetrators were known to intelligence agencies, but were not intercepted. Henry Ridgwell reports from London European ministers are to hold an emergency meeting Friday in Brussels to look at ways of improving security.

Video El Niño Brings Unexpected Fish From Mexico to California

Fish in an unexpected spectrum of sizes, shapes and colors are moving north, through El Niño's warm currents from Mexican waters to the Pacific Ocean off California’s coast. El Nino is the periodic warming of the eastern and central Pacific Ocean. As Faiza Elmasry tells us, this phenomenon thrills scientists and gives anglers the chance of a once-in-a-lifetime big catch. Faith Lapidus narrates.

Video Terrorism in Many Forms Continues to Plague Africa

While the world's attention is on Paris in the wake of Friday night's deadly attacks, terrorism from various sides remains a looming threat in many African countries. Nigerian cities have been targeted this week by attacks many believe were staged by the violent Islamist group Boko Haram. In addition, residents in many regions are forced to flee their homes as they are terrorized by armed militias. Zlatica Hoke reports.

Video Study: Underage Marriage Rate Higher for Females in Pakistan

While attitudes about the societal role of females in Pakistan are evolving, research by child advocacy group Plan International suggests that underage marriage of girls remains a particularly big issue in the country. VOA’s Ayesha Tanzeem reports how such marriages leads to further social problems.

VOA Blogs

World Currencies


Rates may not be current.