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

On Everest, Helicopters Rescue Stranded Climbers

Choppers transport some of more than 100 mountaineers trapped after deadly quake, avalanches More

Video Ten Years After Riots, France Searches for Answers to Neglected Suburbs

In 2005, a Paris suburb exploded into violence after two teenagers were electrocuted as they hid from police; since then, somethings have changed, others not More

US, Japan Announce Historic Revision of Defense Cooperation Guidelines

Nations say new guidelines will be 'cornerstone for peace and security' in Asia-Pacific region while also serving as 'platform for a more stable international security environment' More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
‘Angel of the Migrants’ Helps Desperate Syrians Arriving in Europei
X
Henry Ridgwell
April 26, 2015 10:36 PM
Waves of migrants are continuing to arrive on the shores of southern Italy from North Africa. After their dangerous journey across the Mediterranean, they face an unknown future in Europe. In the Sicilian city of Catania there is an activist dedicated to helping the refugees on their journey.
Video

Video ‘Angel of the Migrants’ Helps Desperate Syrians Arriving in Europe

Waves of migrants are continuing to arrive on the shores of southern Italy from North Africa. After their dangerous journey across the Mediterranean, they face an unknown future in Europe. In the Sicilian city of Catania there is an activist dedicated to helping the refugees on their journey.
Video

Video Ten Years After Riots, France Searches for Answers to Neglected Suburbs

January’s terrorist attacks and fears of more to come are casting a spotlight on France’s neglected suburbs. Home to many immigrants, and sometimes hubs of crime, they were rocked by rioting a decade ago. Lisa Bryant visited the Paris suburb of Clichy-sous-Bois, where the 2005 violence first broke out, and has this report about what has changed and what has not.
Video

Video Gay Marriage Goes Before US Supreme Court

This week, the U.S. Supreme Court will hear arguments on whether gay people have a constitutional right to marriage. VOA’s Michael Bowman reports, the case could lead to the nationwide legalization of same-sex marriage, or a continuation of the status quo in which individual states decide whether to recognize gay unions.
Video

Video Study: Insecticide Damaging Wild Bee Populations

A popular but controversial type of insecticide is damaging important wild bee populations, according to a new study. VOA’s Steve Baragona has more.
Video

Video Data Servers Could Heat Private Homes

As every computer owner knows, when their machines run a complex program they get pretty hot. In fact, cooling the processors can be expensive, especially when you're dealing with huge banks of computer servers. But what if that energy could heat private homes? VOA’s George Putic reports that a Dutch energy firm aims to do just that.
Video

Video Cinema That Crosses Borders Showcased at Tribeca Film Festival

Among the nearly 100 feature length films being shown at this year’s Tribeca Film Festival in New York City are more than 20 documentaries and features with international appeal, from a film about a Congolese businessman in China, to documentaries shot in Pakistan and diaspora communities in the U.S., to a poetic look at disaffected South African youth. VOA’s Carolyn Weaver has more.
Video

Video UN Confronts Threat of Young Radicals

The radicalization and recruitment of young people into Islamist extremist groups has become a growing challenge for governments worldwide. On Thursday, the U.N. Security Council heard from experts on the issue, which has become a potent threat to international peace and security. VOA’s Margaret Besheer reports.
Video

Video Growing Numbers of Turks Discover Armenian Ancestry

In a climate of improved tolerance, growing numbers of people in Turkey are discovering their grandmothers were Armenian. Hundreds of thousands of Armenians escaped the mass deportations and slaughter of the early 1900's by forced conversion to Islam. Or, Armenian children were taken in by Turkish families and assimilated. Now their stories are increasingly being heard. Dorian Jones reports from Istanbul that the revelations are viewed as an important step.
Video

Video Migrants Trek Through Western Balkans to Reach EU

Migrants from Africa and other places are finding different routes into the European Union in search of a better life. The Associated Press followed one clandestine group to document their trek through the western Balkans to Hungary. Zlatica Hoke reports that the migrants started using that route about four years ago. Since then, it has become the second-most popular path into Western Europe, after the option of sailing from North Africa to Italy.
Video

Video US Businesses See Cuba as New Frontier

The Obama administration's opening toward Cuba is giving U.S. companies hope they'll be able to do business in Cuba despite the continuation of the U.S. economic embargo against the communist nation. Some American companies have been able to export some products to Cuba, but the recent lifting of Cuba's terrorism designation could relax other restrictions. As VOA's Daniela Schrier reports, corporate heavy hitters are lining up to head across the Florida Straits - though experts urge caution.
Video

Video Kenya Launches Police Recruitment Drive After Terror Attacks

Kenya launched a major police recruitment drive this week as part of a large-scale effort to boost security following a recent spate of terror attacks. VOA’s Gabe Joselow reports that allegations of corruption in the process are raising old concerns about the integrity of Kenya’s security forces.
Video

Video Japan, China in Race for Asia High-Speed Rail Projects

A lucrative competition is underway in Asia for billions of dollars in high-speed rail projects. Cambodia, India, Indonesia, Malaysia Thailand and Vietnam are among the countries planning to move onto the fast track. They are negotiating with Japan and the upstart Chinese who are locked in a duel to revolutionize transportation across Asia. VOA Correspondent Steve Herman in Bangkok has details.
Video

Video Scientists: Mosquitoes Attracted By Our Genes

Some people always seem to get bitten by mosquitoes more than others. Now, scientists have proved that is really the case - and they say it’s all because of genes. It’s hoped the research might lead to new preventative treatments for diseases like malaria, as Henry Ridgwell reports from London.
Video

Video Bible Museum Coming to Washington DC

Washington is the center of American political power and also home to some of the nation’s most visited museums. A new one that will showcase the Bible has skeptics questioning the motives of its conservative Christian funders. VOA religion correspondent Jerome Socolovsky reports.
Video

Video Afghan First Lady Pledges No Roll Back on Women's Rights

Afghan First Lady Rula Ghani, named one of Time's 100 Most Influential, says women should take part in talks with Taliban. VOA's Rokhsar Azamee has more from Kabul.

VOA Blogs

World Currencies

EUR
USD
0.9240
JPY
USD
119.41
GBP
USD
0.6618
CAD
USD
1.2155
INR
USD
63.567

Rates may not be current.