Thai rice scheme a heavy burden

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Thailand’s rice pledging scheme of buying domestic rice at inflated prices will lead to losses of around $5 billion for the government, the World Bank said on December 19.

Under the rice scheme, which is meant as an income support for Thai farmers, the government pays 15,000 baht ($480) per tonne for plain, white, unhusked rice and 20,000 baht ($650) per tonne for Hom Mali, or Jasmine rice. Purchases began in October 2011. This is way above the market price. Jasmine rice on the world market fetches around $550, according to price quotes by the Food and Agriculture Organisation of the United Nations (FAO).

The World Bank estimated that the government spent $12 billion in purchasing rice in the past fiscal year, which ended September 30, 2012 and would spend another $14.5 billion this fiscal year, equivalent to 3.8 per cent of GDP.

The government has now accumulated more than 12 million tonnes of rice in warehouses that it has been unable to sell overseas. Shipments have fallen between 40 and 50 per cent this year.

Thailand, which has been the world’s leading rice exporter for the past three decades, is expected to fall behind India and Vietnam in rice trade this year.

Hong Kong as an example for dropping exports

“If the price of Thai rice were $100 per tonne lower, Thailand would regain its lost market share,” said Kenneth Chan, chairman of the Rice Merchants Association of Hong Kong and vice chairman of the Hong Kong Rice Suppliers Association during a meeting with Thai rice exporters on December 10.

Hong Kong used to be a major rice importer from Thailand, but exports have dropped sharply by 20 per cent in the first 10 months of 2012 year-on-year.

According to Chan, Thailand cannot count on its reputation for producing high-quality rice and charge too much for it, as the global market is highly competitive.

Thailand currently has 55 per cent of the Hong Kong rice market, a drop from 90 per cent in 2008. Meanwhile, Vietnam holds 33 per cent of the Hong Kong rice market, a rapid rise from less than 20 per cent in 2008.

 

 

 

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Reading Time: 2 minutes

Thailand’s rice pledging scheme of buying domestic rice at inflated prices will lead to losses of around $5 billion for the government, the World Bank said on December 19.

Reading Time: 2 minutes

Thailand’s rice pledging scheme of buying domestic rice at inflated prices will lead to losses of around $5 billion for the government, the World Bank said on December 19.

Under the rice scheme, which is meant as an income support for Thai farmers, the government pays 15,000 baht ($480) per tonne for plain, white, unhusked rice and 20,000 baht ($650) per tonne for Hom Mali, or Jasmine rice. Purchases began in October 2011. This is way above the market price. Jasmine rice on the world market fetches around $550, according to price quotes by the Food and Agriculture Organisation of the United Nations (FAO).

The World Bank estimated that the government spent $12 billion in purchasing rice in the past fiscal year, which ended September 30, 2012 and would spend another $14.5 billion this fiscal year, equivalent to 3.8 per cent of GDP.

The government has now accumulated more than 12 million tonnes of rice in warehouses that it has been unable to sell overseas. Shipments have fallen between 40 and 50 per cent this year.

Thailand, which has been the world’s leading rice exporter for the past three decades, is expected to fall behind India and Vietnam in rice trade this year.

Hong Kong as an example for dropping exports

“If the price of Thai rice were $100 per tonne lower, Thailand would regain its lost market share,” said Kenneth Chan, chairman of the Rice Merchants Association of Hong Kong and vice chairman of the Hong Kong Rice Suppliers Association during a meeting with Thai rice exporters on December 10.

Hong Kong used to be a major rice importer from Thailand, but exports have dropped sharply by 20 per cent in the first 10 months of 2012 year-on-year.

According to Chan, Thailand cannot count on its reputation for producing high-quality rice and charge too much for it, as the global market is highly competitive.

Thailand currently has 55 per cent of the Hong Kong rice market, a drop from 90 per cent in 2008. Meanwhile, Vietnam holds 33 per cent of the Hong Kong rice market, a rapid rise from less than 20 per cent in 2008.

 

 

 

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