Thailand’s rice production is on the rise this year. Rice prices, which hit a record high in recent months, are likely to fall because of more output flooding the market.
The Thai rice situation was reported to the National Rice Policy Committee during its meeting on 6 June 2008, chaired by Prime Minister Samak Sundaravej. The meeting acknowledged a report by the Ministry of Agriculture and Cooperatives that Thailand’s annual paddy output between the 2008 and 2009 production period is expected to reach 23.6 million metric tonnes. The figure represents an increase of 0.2 percent over that of the previous year. This volume will make an appearance in the market from October 2008 onwards.
Since rice prices from January to April this year rose significantly, farmers have turned to increasing their second rice crop production. Paddy output for the second crop is expected to be 3.4 million tonnes. It will be released into the market from this month onwards.
So the month of June will see more rice flooding the market. The report says that several foreign buyers are halting their rice purchases due to skyrocketing prices in the world market. In addition, India and Vietnam, two major rice exporters, are expected to relax their rice export restrictions. As a result, concern for a shortage of rice in the country will ease and domestic rice prices are likely to be on the decline.
However, demand for rice in the global market remains high. The Ministry of Commerce has set a target to export nine million tonnes of rice in 2008, down from an unexpectedly high 9.5 million tonnes in 2007. The Department of Foreign Trade reported that Thai rice exports from January to May this year amounted to five million tonnes, worth almost 85 billion baht.
The Public Warehouse Organization reported that the Government had 2.1 million tonnes of rice in its stockpile at the end of May 2008. According to a survey conducted by each province, the combined volume of rice possessed by the private sector was 3 million tonnes at the end of April.
The Ministry of Finance and the Bank for Agriculture and Agricultural Cooperatives have been instructed to carry out a rice mortgage scheme for 2.5 million tonnes of rice in the Government’s stockpile, including a portion of the second rice crop to be released into the market. The Government has agreed to buy rice under the scheme at 14,000 baht a tonne, the price of which is considered quite high. The scheme is intended to shore up paddy prices for farmers.
After three months from the implementation of the scheme this month, farmers may redeem their rice and take profits. For example, if the rice price is 15,000 baht a tonne at that time, farmers will receive 1,000 baht in profit. All provincial provinces were told to ensure that the rice mortgage scheme would be carried out transparently for the benefit of farmers.