Small Scale Rice Dealing

[Tim207]

I don't understand why you guys in the rice producing areas don't use some capital to build a small wharehouse and offer to buy from the small guys that are forced to sell at a bad time and then wait for a better time. It seems like it would be a better return than working the fields. hel_l, if you wanted to be altruistic you could pay higher prices than the dealers or just loan money on the rice while waiting for a good selling time.

The rubber farmers setup a co-op in Chantaburi with government money but that is a fairly large scale endeavor. I would think a small local endeavor good be financed by the average farang and not only help the poor small scale local farmers but also make an easy profit.

I don't know much about rice so if any of you rice farmers can poke holes in this idea I would appreciate the input.

I thought about this years ago when the Chantaburi farmers were dumping fruit on the street because it was so cheap it was almost worthless. Of course the trouble with fruit is there is no shelf life without first investing a lot in processing equipment. On the other hand rice can be held in storage fairly easily.

[gotlost]

I don't understand why you guys in the rice producing areas don't use some capital to build a small wharehouse and offer to buy from the small guys that are forced to sell at a bad time and then wait for a better time. It seems like it would be a better return than working the fields. hel_l, if you wanted to be altruistic you could pay higher prices than the dealers or just loan money on the rice while waiting for a good selling time.

The rubber farmers setup a co-op in Chantaburi with government money but that is a fairly large scale endeavor. I would think a small local endeavor good be financed by the average farang and not only help the poor small scale local farmers but also make an easy profit.

I don't know much about rice so if any of you rice farmers can poke holes in this idea I would appreciate the input.

I thought about this years ago when the Chantaburi farmers were dumping fruit on the street because it was so cheap it was almost worthless. Of course the trouble with fruit is there is no shelf life without first investing a lot in processing equipment. On the other hand rice can be held in storage fairly easily.

The only hole I see is that legally foreigners can not dabble in agriculture particularly on this scale.

[Tim207]

I don't see that as an impediment any more then the actual farming of the rice would be. Of course this would be a family member's or wife's venture financed by the farang just as all the other farming ventures are done. Not really much difference.

Edited November 3, 2009 by Tim207

[gotlost]

Go for it. You are walking on sticky grounds.

[Tim207]

Go for it. You are walking on sticky grounds.

You misunderstand me. This is more of a theoretical, why don't those in rice producing areas do this. I am not in a rice farming area and don't know much about rice farming so I am asking for input from rice farmers and why something like this might not be feasible.

20 50 or 100 tons of rice held by a Thai married to a farang doesn't seem to be something that would draw too much attention.

[gotlost]

Basically the Thai government already does this they have millions of tons of rice in their warehouses that they bought up at lower prices so you would be suggesting that the individual go in competition with the government.. hummmm

[Somrak]

The ricebusiness is in the hand of a few familys. They do not like competition and do not exept rice from indepentend traders , or only to a very bad price. ....that's the biggest problem.

[ozzydom]

From memory you brought up something like this in the past ,There are rubber speculators and cassava speculators around the traps but rice is such a price controlled commodity that any rises are very small but decreases can be quite severe,making it a risky business at best.

Buying "wet " rice at market prices and storing can lose up to 10% weight for a start without other wastage, and then you have to try to market to a Chinese owned mill who will know exactly what you are up to.Best of Luck.

[WatersEdge]

I think there is a niche for an independent grain dryer business,

since the moisture penalty is so high as to be predatory

For Corn Maize the moisture penalty is B0.10/kg for each 1% Moisture above 15%

Even a moisture testing service where farmers could stop with their load,

receive a quick test from an independent company,

knowing their moisture number in advance

as they proceed to sell to the granary

A Kett Moisture Tester costs B26,500,

and is calibrated for many different kinds of grain.

Back to the large picture,

the stranglehold on the Thailand grain market is not going to relax.

No matter what farmers do to increase their fair share,

the grain tycoons will still be stronger and more determined.

Edited November 5, 2009 by WatersEdge

[slapout]

Grain dryers (electric heater type) are in use in the real world but for commercial/large scale drying they are not very cost effective. My family in the real world had 3 grain elevators which ranged in size from 40,000 bushel capacity to 250,000. Wet grain 17% +_ was normally turned a couple of times within the elevator system and then mixed with dry grain prior to binning for storage. The turning/exposure to air bring the moisture down. Moisture of over 17% was normally rejected unless the dryer system (separate from the rest of the normal system) could be used. The dryer system as I remember would handle about 1000 bushel (30 ton) a day. For rice you need milling capability as well as a turning system if you are going after volume, which is how you make money dealing in grain. The smaller of the 3 mentioned elevators was used basically as a collecting/dumping point for onward transport by road (18 wheelers) or rail to the exporters. Even with the total capacity of the 3 elevators no export business was ever attempted. To give an idea of profit margin they would work on a 3 cent (1 baht) bushel on day transactions (cash). If storage could be used for purchased grain the profit was dependent on future price. The farmer who wanted to store his grain hoping price would go up was charged for volume/month. If a facility could dry, mill, package and sell within Thailand this type of system would have a profit potential as at least 3 profit margins from farmer to consumer would be combined. Just my observation.

[midasthailand]

Already being done by some, including me. A friend of mine was complaining about the lack of interest accumulating on his money in a Thai bank account. I asked him if he was willing to risk 100,000 Baht and he agreed. Gave me the 100,000 which I transferred to my Thai friend's mothers account, she lends the money to rice farmers during the planting/spraying season at 8 Baht/ kilo (lend 8,000 Baht, get 1000 Kg's rice when harvested) of course all of this is done with trusted locals and no paperwork. Last week she just sold the first 1000 KG's at 14 Baht/Kilo. By the end of January I expect they will have recovered all the rice and expect to get approximately 160,000 Baht. The Thai friends family get to keep 30% of the profit with the remainder plus initial investment going back to my friend. All up he will get approx 142,000 back for a six month investment.

Of course the whole exercise is fraught with possibilities for disaster, but if you know the people you are dealing with personally and trust them, it can be beneficial for all involved.

[slapout]

midas; maybe you have the touch but your scenario is nothing like my potential profit proposal. Loaning money (not your money if I read correctly) for part of the rice harvest and it sounds like a goodly portion of it, is a completely different way of getting into the farming/marketing sector than what I mentioned. Yes what you mention has been going on for a long time in Thailand and is one of the reasons the farmers are in the shape they are in.

[desmondspencer]

from my little knowledge, rice do have a self life (How long are you prepared to wait?)

"new" & "old rice" command different prices...

you might want to take this into consideration should you decide to make that idea a reality

[finner]

You misunderstand me. This is more of a theoretical, why don't those in rice producing areas do this. I am not in a rice farming area and don't know much about rice farming so I am asking for input from rice farmers and why something like this might not be feasible.

20 50 or 100 tons of rice held by a Thai married to a farang doesn't seem to be something that would draw too much attention.

Tim

Even 20 tonnes of rice is a lot of rice to store. You would need a space, above ground about the size of a studio apartment for that amount. It would also cost about B300,000, plus the cost of storage, rat control (always clean your rice before eating) and pilferage if it's not being stored near your house.

Having said that, your idea is sound and my gf does it every year, buying as much of the best rice available that she can afford, about 7 tonnes. Right now the harvest is in full swing and the highways are jammed with trucks loaded with bags of rice from farmers that need the money right away to repay debts to friends or the government and guess what price they are getting? About 12 Baht!. So the old girl pays them a baht more, holds onto it for 6 months and sells it for 20B. I'm always after her to sell a portion every month but she gives me one of those "hopeless Falang" looks and tells me to mind my own business...........

$

[aras]

ass a farang do not speculate with the food of thai people. rice ?!!! it seems to me that it is a very very bad idea

I really dont know anything but do feel that you should fear getting involved with this, it could turn out ugly for you.