News / Economy

Thailand’s Controversial Rice Policy Helps Neighbors’ Exports

A Thai vendor weighs a bag of rice at a market in central Bangkok, July 26, 2013.
A Thai vendor weighs a bag of rice at a market in central Bangkok, July 26, 2013.
Ron Corben
The Thailand government is pressing ahead with a rice price support scheme despite criticism over financial losses, concerns over rice quality and falling rice export sales.  The scheme is possibly helping rival exporters, especially Vietnam and Burma.
 
The rice program was a keystone of Prime Minister Yingluck Shinawatra’s electoral success in 2011 and was hugely popular among rice growers from rural areas that form the backbone of political support for her party.  
 
Under the program the government buys paddy - or unmilled - rice at $480 a metric ton.  Private sector traders said this translates into export prices for milled rice of up to $750 a ton - well above the market of $400 for similar grades.  
 
That means to sell rice for export, the government needs to take a loss.
 
Thai Rice Exporters Association honorary president, Vichai Sriprasert, estimated the losses from the program may reach some $19 billion, while at the same time curbing the volume of exported rice.
 
“The announced aim of helping to raise the incomes of the poor - that was the announced objective. They tried this for two years - we export less and we get less income. High prices doesn’t mean bigger income it means smaller income. The farmers that benefit a lot from this scheme are the farmers in the central plains who have bigger acreage and bigger incomes already,” said Sriprasert.
 
Despite concerns over the program’s cost and its benefit to mainly larger rice growers, Prime Minister Yingluck recently said the program is helping to alleviate poverty among poorer farmers and it will continue.
 
Credit rating agency Moody’s warned the government the mounting financial losses from the scheme and other policies, are putting Thailand’s credit standing at risk. Critics also claim the scheme is open to rampant corruption.
 
Thailand was the world’s leading rice exporter, but since has fallen behind India and Vietnam. Meanwhile Thai rice stocks, which are now too expensive to be sold, have soared to almost 18 million tons. Rogue traders from neighboring countries have smuggled an estimated one million tons of rice into Thailand to take advantage of the government buying program.
 
Darren Cooper, an economist with the London-based International Grains Council, said Thailand’s policy has led to distortions in the international rice market.
 
“Looking at thing in the totality the pledging scheme per se has caused a pretty strange market in the past couple of years. Certainly with rice out of Thailand trading at more than $150 [a ton] above comparable grade in Vietnam, of course it’s going to be attractive for people to try and smuggle rice from different origins into it. So certainly it’s having a distorting effect,” Cooper said.
 
Cooper said international traders are now concerned over when Thai authorities plan to release their massive rice stocks onto the market. This, he said, will have a “significant downward pressure” on prices.
 
But Sam Mohanty, an economist at the International Rice Research Institute (IRRI), said the program appears to have the unintended effect of helping other exporters boost production.  “I’m arguing that if the Thai program continues for the next few years in fact it’s going to help Myanmar [Burma] to establish themselves as exporters," said Mohanty. "It will give them some of the market sales where Thai is going to lose out. So it’s definitely better for other competing exporters.”

India’s return to the global market pushed global rice prices lower while traditional rice importers such as Indonesia and the Philippines have also enjoyed good crops, further keeping prices low. The cheap prices have meant good news for consumers, but additional challenges for the Thai government, which must figure out a way to unload its growing stockpile of rice before it spoils.

You May Like

FIFA Indictments Put Gold Cup Tournament Under Cloud

Experts say US indictments could lead to charges of other world soccer officials, and lead to major shakeup in sport's governance More

Video Seoul Sponsors Korean Unification Fair

At a recent even in Seoul, border communities promoted benefits of increased cooperation and North Korean defectors shared stories of life since the war More

Video VOA EXCLUSIVE: Iraq President Vows to Fight IS 'Until They Are Killed or We Die'

In wide-ranging interview with VOA Persian service reporter, Fuad Masum describes conflict as new type of fight that will take time to win More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Expelled from Pakistan, Afghan Refugees Return to Increased Hardshipi
X
Ayesha Tanzeem
May 28, 2015 6:48 PM
Undocumented refugees returning to Afghanistan from Pakistan have no jobs, no support system, and no home return to, and international aid agencies say they and the government are overwhelmed and under-resourced. Ayesha Tanzeem has more from Kabul.
Video

Video Expelled from Pakistan, Afghan Refugees Return to Increased Hardship

Undocumented refugees returning to Afghanistan from Pakistan have no jobs, no support system, and no home return to, and international aid agencies say they and the government are overwhelmed and under-resourced. Ayesha Tanzeem has more from Kabul.
Video

Video Britain Makes Controversial Move to Crack Down on Extremism

Britain is moving to tighten controls on extremist rhetoric, even when it does not incite violence or hatred -- a move that some are concerned might unduly restrict basic freedoms. It is an issue many countries are grappling with as extremist groups gain power in the Middle East, fueled in part by donations and fighters from the West. VOA’s Al Pessin reports from London.
Video

Video Floodwaters Recede in Houston, but Rain Continues

Many parts of Texas are recovering from one of the worst natural disasters to hit the southwestern state. Heavy rains on Monday and early Tuesday caused rivers to swell in eastern and central Texas, washing away homes and killing at least 13 people. As VOA’s Greg Flakus reports from Houston, floodwaters are receding slowly in the country's fourth-largest city, and there likely is to be more rain in the coming days.
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 Al-Shabab Recruitment Drive Still on In Kenya

The al-Shabab militants that have long battled for control of Somalia also have recruited thousands of young people in Kenya, leaving many families disconsolate. Mohammed Yusuf recently visited the Kenyan town of Isiolo, and met with relatives of those recruited, as well as a many who have helped with the recruiting.
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 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 Iowa Family's Sacrifice Shaped US Military Service for Generations

Few places in America have experienced war like Waterloo. This small town in the Midwest state of Iowa became famous during World War II not for what it accomplished, but what it lost. As VOA’s Kane Farabaugh reports, the legacy of one family’s sacrifice is still a reminder today of the real cost of war for all families on the homefront.

VOA Blogs

World Currencies

EUR
USD
0.9205
JPY
USD
123.69
GBP
USD
0.6508
CAD
USD
1.2456
INR
USD
64.051

Rates may not be current.