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

Changing Under Pressure, IS ‘Potent’ as Ever

US intel officials describe Ramadi's fall as concerning, but say it isn't emblematic of larger effort to degrade IS capabilities More

Nigeria Fuel Shortage Shows Fragility of Africa’s Oil Giant

Although it is the largest oil producer in Africa, country has nearly ran out of fuel it needs to power its generators, cars and airplanes over the past week More

Arrested Football Officials Come Mainly From the Americas

US Justice Department alleges defendants participated in 24-year scheme to enrich themselves through corruption of international soccer 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.
3D Printer Makes Replica of Iconic Sports Cari
|| 0:00:00
...    
🔇
X
George Putic
May 27, 2015 9:31 PM
Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video 3D Printer Makes Replica of Iconic Sports Car

Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video US Voters Seek Answers From Presidential Candidates on IS Gains

The growth of the Islamic State militant group in Iraq and Syria comes as the 2016 U.S. presidential campaign kicks off in the Midwest state of Iowa.   As VOA’s Kane Farabaugh reports, voters want to know how the candidates would handle recent militant gains in the Middle East.
Video

Video A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensions

When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video Film Festival Looks at Indigenous Peoples, Culture Conflict

A recent Los Angeles film festival highlighted the plight of people caught between two cultures. Mike O'Sullivan has more on the the Garifuna International Film Festival, a Los Angeles forum created by a woman from Central America who wants the world to know more about her culture.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video US-led Coalition Gives Some Weapons to Iraqi Troops

In a video released Tuesday from the Iraqi Ministry of Defense, Iraqi forces and U.S.-led coalition troops survey a cache of weapons supplied to help Iraq liberate Mosul from Islamic State group. According to a statement provided with the video, the ministry and the U.S.-led coaltion troops have started ''supplying the 16th army division with medium and light weapons in preparation to liberate Mosul and nearby areas from Da'esh (Arabic acronym for Islamic State group).''
Video

Video Amnesty International: 'Overwhelming Evidence' of War Crimes in Ukraine

Human rights group Amnesty International says there is overwhelming evidence of ongoing war crimes in Ukraine, despite a tentative cease-fire with pro-Russian rebels. Researchers interviewed more than 30 prisoners from both sides of the conflict and all but one said they were tortured. Henry Ridgwell reports for VOA from London.
Video

Video Washington Parade Honors Those Killed Serving in US Military

Every year, on the last Monday in the month of May, millions of Americans honor the memories of those killed while serving in the armed forces. Memorial Day is a tradition that dates back to the 19th Century. While many people celebrate the federal holiday with a barbecue and a day off from work, for those who’ve served in the military, it’s a special day to remember those who made the ultimate sacrifice. Arash Arabasadi reports for VOA from Washington.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.

VOA Blogs

World Currencies

EUR
USD
0.9152
JPY
USD
122.70
GBP
USD
0.6494
CAD
USD
1.2374
INR
USD
63.925

Rates may not be current.