Thai rice fiasco: More problems on the horizon
The Thai rice thriller gets an extension: The newly established cabinet of Thai prime minister Yingluck Shinawatra on July 1, one day after it was sworn in by the King, decided to get rid of surplus rice estimated at around 17 million tonnes “as quickly as possible”.
New deputy commerce Yanyong Phuangrach said there will be “an urgent sale” of at least of 4 to 5 million tonnes over the next three months and the government will seek a price of $500 per tonne.
However, experts say that rice for that price won’t sell on the world market because the global rice price currently stands at around $450 per tonne with large rice exporters such as Vietnam and India selling even below that level.
On June 30, the Thai Rice Exporters Association said if the government is unable to sell the rice for an appropriate price it could run up losses of up to $22 billion for the entire rice pledging scheme that started in 2011. The association claimed that the commerce ministry has managed to sell 3 millions of rice before but only earned $330 per tonne.
Adding to the problem, the government’s National Rice Price Policy Committee on July 1 in an obviously political motivated reversal of its previous decision declared to continue the much criticised price pledging scheme at 15,000 baht ($483) per tonne until September 15 for the majority of farmers and until November 30 in the south of the country.
“The whole system of subsidising rice farmers is collapsing with a bang,” a bank analyst in Bangkok told Investvine asking not to reveal his identity as he is not allowed by his employer to speak with the media.
“It seems the politicians are totally helpless. Phuangrach’s promise to sell one tonne for $500 is completely unrealistic as no one is going to buy it. They just set this up to calm down the angry farmers as they see they are losing their loyalty – but it is just delaying the inevitable,” the analyst said.
“Interestingly, in the US and the EU farming subsidies are even higher and it is nothing unusual. But they are part of a comprehensive fiscal strategy which is not the case in Thailand.”
[caption id="attachment_11672" align="alignleft" width="300"] Thai rice farmers demanding to maintain the 15,000 baht rice pledging scheme[/caption] The Thai rice thriller gets an extension: The newly established cabinet of Thai prime minister Yingluck Shinawatra on July 1, one day after it was sworn in by the King, decided to get rid of surplus rice estimated at around 17 million tonnes "as quickly as possible". New deputy commerce Yanyong Phuangrach said there will be "an urgent sale" of at least of 4 to 5 million tonnes over the next three months and the government will seek a price of $500 per tonne. However,...
The Thai rice thriller gets an extension: The newly established cabinet of Thai prime minister Yingluck Shinawatra on July 1, one day after it was sworn in by the King, decided to get rid of surplus rice estimated at around 17 million tonnes “as quickly as possible”.
New deputy commerce Yanyong Phuangrach said there will be “an urgent sale” of at least of 4 to 5 million tonnes over the next three months and the government will seek a price of $500 per tonne.
However, experts say that rice for that price won’t sell on the world market because the global rice price currently stands at around $450 per tonne with large rice exporters such as Vietnam and India selling even below that level.
On June 30, the Thai Rice Exporters Association said if the government is unable to sell the rice for an appropriate price it could run up losses of up to $22 billion for the entire rice pledging scheme that started in 2011. The association claimed that the commerce ministry has managed to sell 3 millions of rice before but only earned $330 per tonne.
Adding to the problem, the government’s National Rice Price Policy Committee on July 1 in an obviously political motivated reversal of its previous decision declared to continue the much criticised price pledging scheme at 15,000 baht ($483) per tonne until September 15 for the majority of farmers and until November 30 in the south of the country.
“The whole system of subsidising rice farmers is collapsing with a bang,” a bank analyst in Bangkok told Investvine asking not to reveal his identity as he is not allowed by his employer to speak with the media.
“It seems the politicians are totally helpless. Phuangrach’s promise to sell one tonne for $500 is completely unrealistic as no one is going to buy it. They just set this up to calm down the angry farmers as they see they are losing their loyalty – but it is just delaying the inevitable,” the analyst said.
“Interestingly, in the US and the EU farming subsidies are even higher and it is nothing unusual. But they are part of a comprehensive fiscal strategy which is not the case in Thailand.”
