Rice Farming Middle Men Getting The Real Benefit

[ray23]

Who is getting the windfall?

Expensive raw materials mean that higher rice prices are not necessarily raising the incomes of farmers.

By Nareerat Wiriyapong and Phusadee Arunmas

The sharp rise in rice prices should be helping heavily indebted Thai farmers climb out of poverty.

But farmers' net gains are limited as their costs have also risen significantly.

Prasit Boonchuey, the president of the Thai Farmers Association, says the cost of growing rice is about 5,720 baht per rai compared to 4,000 baht before prices started to jump.

Hom Mali rice is priced at 18,000 baht per tonne, and regular rice 13,000 baht. "In case any unexpected unfavourable incident happens, such as the crop being struck by disease, costs could be pushed up to 14,000 to 14,500 baht per tonne," he said.

Of the total expense, fertiliser tops the table of inputs at 1,200 baht per rai (see chart). Fertiliser prices have doubled to 20,000 baht a tonne in the past year.

Seed prices have also doubled as farmers must buy them from traders and the quality is not guaranteed, he said. Land rental fees are soaring as well. Farmers who used to pay 700 baht per rai per year are now paying 500 baht for one crop that lasts three months.

About 70% of Thai farmers don't own their land but rent from others. Many had to sell land to get out of debt.

"We have made some gains from the current prices of rice but they will be used for debt repayment. It's not enough to make farmers rich," says Mr Prasit.

"The current rice price is only enough for farmers to service all debt and get their rented land back. That would be just great for them at the moment."

Farmers who have left for the cities to seek better-paying jobs, such as driving taxis or factory work, don't want to risk coming home because conditions are so volatile, he adds.

"Even with the higher cost of living, those coming to town know exactly how much they will get per month. They are able to calculate the amount they should spend if they want to have savings.

"Meanwhile, farmers cannot predict how much they will get because they are lots of uncontrollable factors. It is very risky job."

Apichart Jongsakul, secretary-general of the Office of Agricultural Economics (OAE) says rising rice prices are likely to benefit millers the most, and the windfall would be ever higher if they are exporting.

"We expect the millers will enjoy higher incomes up to 60-70% [more than last year] from impressive rice prices, with exporters to see higher incomes of 20% and farmers about 30%," he said. "The income structure is expected to move like this if rice prices keep moving up further." However, he warns that farmers are expected to feel the pinch from higher production costs of about 40% in the next crop because higher fuel oil prices, expensive rental fees and costs of pesticides and fertiliser.

Plengsaksi Pakaspesat, president of the Thai Fertiliser and Agricultural Marketing Association, says fertiliser prices have doubled over the past 12 months because of high global demand.

The phenomenon affects Thailand, which imports 98% of the raw materials for local production of fertiliser.

"Thailand cannot dictate the price of fertiliser that we use," he says. "The major concern now should be how to get as much fertiliser as we need, not the prices."

However, Niphon Poapongsakorn, dean of economics at Thammasat University, says that every party involved in the rice sector should be expected to earn an equal share of the current gains.

"The rice market is seeing intensifying competition. People may believe that merchants have taken advantage of farmers, but the more the market competes, the more farmers will benefit."

Viroj na Ranong, the research director for health, economics and agriculture at the Thailand Research Development Institute (TDRI), also believes farmers have seen significant gains. He says rice prices so far have been keeping pace with higher input costs such as fertiliser.

Of course, local farmers' gains depend on global price trends, but the current run-up in rice has lasted two months and shows no sign of abating.

"If prices go up for only a few weeks or a month, farmers who have sold their rice would not benefit. This time, high prices have lasted long enough for Thai farmers to gain," Mr Viroj says. "Currently, farmers are obtaining a windfall from skyrocketing prices."

The more rice farmers grow, the more water they need, which has environmental implications. Mr Viroj suggested the government consider a water tariff to encourage farmers to use the resource more efficiently.

"Politically, a water tariff is very unpopular but the whole country could gain substantially if the same amount of water is available for use by more farmers," he says. "Many farmers realise this and are currently willing to pay 10,000 to 30,000 baht digging wells and installing pumps.

"They would rather pay for water than get zero water at zero price.

"As we will eventually need [more water], now would good time [for a tariff] when rice prices are high."

Pramote Vanichanont, honorary president of the Thai Rice Millers Association, says the paddy that farmers sell for 13,000 baht a tonne has 25-26% moisture content, and prices rise to 15,000 baht after millers dry the paddy to reduce moisture to 15%. Paddy milled into 5% white rice costs exporters 27,000 baht a tonne.

"This (milled rice) price excludes the expense of packaging by exporters which is normally about $50 per tonne. Given the rising world prices, we estimate exporters could enjoy a profit of about $70-100 per tonne compared with about $10 per tonne in the past," says Mr Pramote.

[pnustedt]

Farmers in my area (Southern Isaan) who only have one rice harvst per year will not have benefitted from the price increase yet unless they had the foresight to store rice for sale, however, most sell their rice as soon as it is harvested, in November.

The factory gate price around here is about Bt20/kilo, it was about Bt9.5/kilo last year so, if the price incease is maintained through to November, they do stand to gain. Fertiliser prices have gone up substantially but not all farmers use them. There is a case to increase yield by better tending of land and fertiliser use, but most farmers will just carry on as they do every year.

Hopefully, there will be some happy celebrations in the village later in the year!

[PaddyThai]

Excuse my ignorance, but are there alternatives to imported fertilisers?

Is it possible to rotate crops or grow crops that can then be ploughed back into soil as fertiliser?

Or, if farming on a small scale would farm manure or slurry spread over land work?

[egg]

here is my 2 satang's worth ,,,, we are in Northern Isaan and not doing this on a big scale,,, we sold a small amount of rice yesterday(about 600KG)we were told the price has gone DOWN ,,we recieved about 9Bt a KG,should have been 10 but they said the rice was still green,, by the time we cut the rest of it we will make a small profit ,,,,, l think someone in the middle is making a killing

cheers

egg

[ray23]

Egg Udon is the same way. Small farms are a tough road and most around here are just that a few rai. I had hard time understand the statement to pay more, eat less and help the farmer, just didn't really see the profits going to the producer.

Small farms are almost nonexistent in the states these days.

[C-sip-degree]

here is my 2 satang's worth ,,,, we are in Northern Isaan and not doing this on a big scale,,, we sold a small amount of rice yesterday(about 600KG)we were told the price has gone DOWN ,,we recieved about 9Bt a KG,should have been 10 but they said the rice was still green,, by the time we cut the rest of it we will make a small profit ,,,,, l think someone in the middle is making a killing

cheers

egg

Hey Egg,

If you had gone with your product to sell you will then know how they grade this.

Don’t now what to say really they grade the rice which in necessary, if your product is not up to par well, “Fare-enough” right/wrong.

600kg leads me to believe rice was hand cut or was this done by a machine….

What is your drying method.

As your talking about harvesting more so you must be planting twice a year what seed are you using.

How many (I think someone in the middle is making a killing) are you talking about here for a farmer in Isaan please explain...

Based outside of Roi-et myself just wondering <deleted> is up.

Regards

C-sip

[SAP]

here is my 2 satang's worth ,,,, we are in Northern Isaan and not doing this on a big scale,,, we sold a small amount of rice yesterday(about 600KG)we were told the price has gone DOWN ,,we recieved about 9Bt a KG,should have been 10 but they said the rice was still green,, by the time we cut the rest of it we will make a small profit ,,,,, l think someone in the middle is making a killing

cheers

egg

Hey Egg,

If you had gone with your product to sell you will then know how they grade this.

Don’t now what to say really they grade the rice which in necessary, if your product is not up to par well, “Fare-enough” right/wrong.

600kg leads me to believe rice was hand cut or was this done by a machine….

What is your drying method.

As your talking about harvesting more so you must be planting twice a year what seed are you using.

How many (I think someone in the middle is making a killing) are you talking about here for a farmer in Isaan please explain...

Based outside of Roi-et myself just wondering <deleted> is up.

Regards

C-sip

If you sell your Rice wet, it is a simple calculation to work out the actual dry weight and its value

Weight of rice / current moisture content X 14% (I am not sure of the max % they will accept, it might be 15% or it might be 12.5%, if so multipy by accepted number)

SAP

[egg]

Hi C-sip, ,,,

first up let me say , l am NOT a rice farmer,,,, l know bugger all about it,,, well l know a bit more than what l did 3 months ago

the wife went with the rice while l rehabilatated in the pool,,,, she is the 1 that is in charge of the operation and like a lot of Thai's ,,, she couldn't run a 1 cistern sh*thouse,,,, but l love her for that and more,, l might add that l would have a problem there too if everything was automatic,,,,,,,,,,

the rice was hand cut,, with 95% left to dry for a few days on the concrete under the veranda,,, the other 5% was cut and de-storked (or whatever you call it) and bagged with the dry stuff,,, not a good idea l wouldn't think ,,but she's the boss ,,, the only thing l can tell you about the rice is that it is the sticky kind ,, of good quality ,,,,,,,the bit about someone making a killing refers to the fact that every day l hear on the news about how the price of rice is rising ,,,and l think the Thai PM even said it will benefit the farmers ,,, to me that is a load of crap ,,,,so somewhere after it leaves the farmer,, someone must be making a good profit ,,,, we only did this for a "test" on about 3 rai,,, as l didn't like to see the land sitting there doing nothing for 7 or 8 months ,,, l hope what l have written makes sense C-sip ,,

cheers

egg

here is my 2 satang's worth ,,,, we are in Northern Isaan and not doing this on a big scale,,, we sold a small amount of rice yesterday(about 600KG)we were told the price has gone DOWN ,,we recieved about 9Bt a KG,should have been 10 but they said the rice was still green,, by the time we cut the rest of it we will make a small profit ,,,,, l think someone in the middle is making a killing

cheers

egg

Hey Egg,

If you had gone with your product to sell you will then know how they grade this.

Don’t now what to say really they grade the rice which in necessary, if your product is not up to par well, “Fare-enough” right/wrong.

600kg leads me to believe rice was hand cut or was this done by a machine….

What is your drying method.

As your talking about harvesting more so you must be planting twice a year what seed are you using.

How many (I think someone in the middle is making a killing) are you talking about here for a farmer in Isaan please explain...

Based outside of Roi-et myself just wondering <deleted> is up.

Regards

C-sip

[Nickthegreek]

Prasit Boonchuey, the president of the Thai Farmers Association, says the cost of growing rice is about 5,720 baht per rai compared to 4,000 baht before prices started to jump.

I have just started in to this with my wife and I am not sure where they get these prices from but this is way off....

Edited May 1, 2008 by Nickthegreek

[ozzydom]

Prasit Boonchuey, the president of the Thai Farmers Association, says the cost of growing rice is about 5,720 baht per rai compared to 4,000 baht before prices started to jump.

I have just started in to this with my wife and I am not sure where they get these prices from but this is way off....

It looks to be if your look at his figures and the average yield per rai of rice grown in Thailand,it would seem every body loses in farming rice.

[Nickthegreek]

It looks to be if your look at his figures and the average yield per rai of rice grown in Thailand,it would seem every body loses in farming rice.

Ozzydom,

Without the risk of seeming synical,it strikes me that this media hipe,lets hope it keeps the price high an the Farmers do benefit, but I continue to think that it will be the middlemen and processors that continue to make the large profits...

Only time will tell

[slapout]

Wife and I went to Makro yesterday, 5 kilo Jasmine rice 250 baht, another white rice which wife uses as dog food was 195 baht for 5 kilo. Just sold rice from farm in Fang area (sticky rice) for 12 baht/kilo last week. She bought a 5 liter container of Round-up for 900 baht. She said price was 430 baht last time she bought it (6 month ago) 5 hp, 3inch water pump costs 100 baht a day in fuel to run for 8 hours=- depending on whose doing it. Just glad I dont see a P/L statement on our little farm. Guess we are contributing to the welfare of the local village business owners and local labor. ha The good news was the yearly (tax??) payment on 28 rai came to 135 baht. Dont even ask about fish pond etc as last time I was there her family invited neighbors, cousins, grandmas grandpa, etc to fish bbq. With the various crops we raise, rice, beans, lamyai, mango, chili, veggies etc there may be a profit if it wasnt for the extended family, but it does keep them from hitting this farang up for cash during the year, and they have to live there to get benifits. The best part is its 150 kilometer away.