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6 June 2014
Read in Minutes


Experts divided over plummeting rice prices

Phusadee Arunmas

Thailand set to retain No.1 exporter spot

Rice exporters and academics are still divided over ways to raise paddy prices, which have now tumbled to only 7,500 baht per tonne, half of the 15,000 baht offered by the Yingluck Shinawatra government in the controversial rice-pledging scheme.

Nipon Puapongsakorn, a distinguished fellow at the Thailand Development Research Institute, said it is imperative the state stops selling rice stocks so that the National Council for Peace and Order (NCPO) can assess the exact amount of pledged rice, the amount exported, the amount withdrawn from state warehouses, the amount of good-quality or rotten rice, the amount that has disappeared and the total expenses incurred.

After that, he urged the junta to embark on a nationwide rice stock inspection, with independent organisations and surveyors allowed to participate.

“We have to admit to a lost opportunity to dispose of the rice stocks,” Mr Nipon said. “But once the exact amount is available and clear, it will help disperse market speculation and raise rice prices.”

However, Charoen Laothammatas, president of the Thai Rice Exporters Association, disagreed with the proposal to stop disposing of state rice stocks, saying sales need to become flexible and dynamic.

“Rice sales are a matter of prudent management,” he said. “We have to wait for a proper period for each type of rice. If we fetch the right prices, we should immediately step up rice sales.”

Mr Charoen said the association is preparing to propose measures about rice management to the NCPO if asked.

However, he agreed with Mr Nipon that the junta should speed up inspecting rice stocks to check the exact amount and types of rice in stockpiles.

Mr Charoen also called for an open rice auction and immediate measures to curb further falls in rice prices.

It is estimated that as much as 15-16 million tonnes of rice are now kept in state rice stocks, with exporters expected to take 3-5 years to dispose of stocks.

Mr Charoen also called for the setting up of a rice board to take care of the country’s rice management system and ways to cut rice farmers’ production costs.

A rice board, he said, should include representatives from rice farmers, millers, rice packers and traders, exporters and state officials.

“The rice policy is normally used as a political tool and exploited by political parties,” said Mr Charoen. “This sort of policy has from time to time distorted the rice market.”

In a related development, Chookiat Ophaswongse, honorary president of the association, said Thailand’s rice shipments are expected to rise in the second half of the year on the back of cheaper prices.

He also expected Thailand to overtake India to recover its position as the world’s No.1 rice exporter at the end of this year.

Thai rice prices are now quoted at US$390 per tonne, with Indian rice at $420-430 and Vietnamese grain around $400 per tonne.

From Jan 1 to May 20, Thailand exported a total of 3.93 million tonnes, surpassing India (3.74 million tonnes) and Vietnam (2.4 million tonnes) in the same period.

The association expects the country to export 9 million tonnes of rice in 2014, up from its earlier forecast of 7.5 million.

Mr Charoen said market mechanisms are now allowed to work freely without any intervention programme.

Thailand exported 6.6 million tonnes of rice in 2013, down from 6.9 million tonnes in 2012, when the country lost its crown as the world’s biggest rice exporter to India.

Exports slumped after the government of former prime minister Yingluck Shinawatra started buying rice from farmers at a price way above market levels from October 2011, making export prices less competitive.

The Bank for Agriculture and Agricultural Cooperatives has urged the junta to introduce measures to prevent rice prices from falling further when 20 million tonnes of second-crop paddy flood the market in the coming months.



First published: Bangkok Post, June 5, 2014