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10 June 2014
Read in Minutes


Experts call for total overhaul of rice industry

Keanchai Rungfapaisarn


THE RICE-PRODUCTION Sector needs a major revamp to sustain itself amid high costs and heavy competition in export markets, a roundtable has heard.

According to some participants, the Kingdom should abandon its strategy of massive production and low prices and move toward lower growing volumes of higher quality.

This would allow the country to sell its produce at higher prices by serving niche premium markets.

Speaking at a roundtable forum hosted by Krungthep Turakij news-paper recently, Soungpol Poolsawat, chairman of the Ang Thong Agricultural Committee, said rice growers could not survive as production costs got higher while revenue got lower.

The average age of rice farmers is about 60, and it is the responsibility of the next generation to find a way to make farming sustainable.

“The rice growers should actually apply the philosophy of sufficicency economy or sustainable farming developed by His Majesty the King. Local water sources should be seriously developed so the efficiency is enhanced,” he said.

“Representatives from the rice growers should participate in the policy-making process so that real information is accessed and problems are solved correctly.”

Manus Kitprasert, president of the Thai Rice Millers Association, said milling was seen as a sunset industry, and many had begun facing serious problems getting bank load.

“The government sector does not have enough money at this moment to help the farmers, and if farmers cannot love, none of us can survive,” he said.

He said the Thai milling industry had a total capacity of about 80 million tonnes per annum, but the country could produce only 28 million tonnes of race per year.

Permask Makarapirom, a former member of the National Reform Committee, said that in his view, farmers could not survive the current situation as they were burdened by high costs and were selling their paddy at a loss. Some has lost their land because they could not keep up with their debts.

“Most farmer are burdened with about Bt6,150 in costs, for such necessities as seeds and fertilisers, to produce 1 tonne of paddy rice. Deduction those costs, farmers will have about Bt 100}000 a year in net income, which is lower than the minimum wage,” he said.

Permsak said rice farmers needed to reduce their costs if they wanted their businesses to survive.

He said chemical additives such as fertilisers and pesticides accounted for 35 per cent of their costs, while another 15 per cent was for fuel, and 15 per cent for seeds.

In the Central region, 65-70 per cent of paddy growers rent their land, and that accounts for about 20 per cent of their costs.

“What the new government could do to help farmers survive is to increase their land ownership. It could allocate about Bt100 billion of the annual budget to make 3 million farmers landowners, based on ownership of no more than 50 rai each, Permsak said.

He added that rice farmers should have the right to participate not only in production but also in other activities, such as marketing.

Nipon Poapongsakorn, a distinguished fellow at the Thailand Research Development Institute, said the Kingdom would have to relinquish its role as one of the biggest rice exporters as it now faced higher costs than rivals such as Vietnam and Myanmar.

As well, rice consumption globally would decline gradually an coming years.

He said about 40 per cent of Thai labourers were in agriculture, but that sector generated only 10 percent of the country’s total income.

He said the average income of farm labourers in the agricultural sector was now lower that the of their counterparts outside the sector.

Thailand needs to move to wards the production of high-quality rice, not on a huge scale, but small amounts to serve more niche customers. We should move labourers out of the agricultural sector into other work, such as rural economic development, so that they will earn higher incomes. This would also reduce the number of workers still in the agricultural sector and consequently raise their average income,” Nipon said.

He said Thailand should also shift away from agriculture subsidies, replacing such policies with a welfare system that would cover as people, and the poor in particular.

An administrative system should be set up to run the social welfare programmes.

The value-added tax could be raised from 7 per cent to 10 per cent to finance to finance it, he said.

Subsidies to support the former government’s populist policies have been recognised as dangerous and leading to possible political problems, he claimed.

Government support for the process of rice and other agricultural products distort the market mechanism and require huge budgets. And the beneficiaries and not only poor farmers, but wealthy people who are in no need of such assistance.

In the short term, the ruling junta should make a total accounting of how much rice the ousted government took in under to rice-pledging scheme, and how much of that has been sold.

The accounting would include how much rice spoiled and how much went missing.

“In my point of view, an inde pendent body with professional members should be formed to evaluate all stocks to determine how much rice remains and its quality,” he said



First published: The Nation, June 9, 2014