Thailand Faces Its Biggest-Ever Rice Stockpile

[webfact]

State faces huge stockpile

PETCHANET PRATRUANGKRAI

THE NATION

BANGKOK: -- Thailand will have to deal with its biggest-ever rice stockpile of more than 10 million tonnes this year if the government insists on maintaining its subsidy scheme and targeted export price of US$700 per tonne.

The huge stockpile is expected to bring trouble for Thai rice exports, as overseas buyers will shift to countries offering more attractive prices. The whole stock burden is expected to be endured by the government eventually.

Thailand will face export difficulties next year, as importing countries will push for low prices due to excess supplies. Holding rice in warehouses for so long will also cause the quality of Thai rice to deteriorate. But a key factor is global prices are not expected to rise, as huge stocks remain. If the rice price does not go up as projected, all rice is likely to be handled by the government at taxpayers' expense.

Niphond Wongtra-ngan, former president of the Thai Rice Millers Association and ex-director of the Marketing Organisation for Farmers, said in an interview with The Nation that 2012 would be a bumper year for rice due to high rainfall. But the exorbitant price of Thai rice would make it hard for Thailand to release rice from government stockpiles.

"The government is overly optimistic that India will suspend its rice exports in the second half of this year as they have reduced their stocks. However, according to the analyses and reports of many organisations, India will grow plenty of rice. New Delhi will not easily suspend its rice exports this year," he said.

It seems impossible that the export price of Thai white rice will reach $700 per tonne this year, as the government expects. India will not easily suspend its rice exports, while Vietnam, Burma and other rice producing countries will continue to drive their exports this year, as they also appear likely to enjoy huge harvests.

The Thai government has a target to export 9.5 million tonnes of rice this year, although private exporters and the United States Department of Agriculture project that Thailand will export only 6.5 million-7 million tonnes this year.

The USDA predicted global rice supplies will increase from 97.2 million tonnes last year to 100.1 million tonnes this year, while trading will drop from 34.8 million tonnes to 31.9 million tonnes. Many countries are expected enjoy greater output of rice and other cereals because La Nina will create more rain and increase production of major farm commodities including rice and wheat.

Global rice production is tipped to edge up from 450 million tonnes last year to 461 million tonnes this year. Stocks should increase from 42.6 million tonnes to 44.5 million tonnes in China, 23 million tonnes to 24.5 million tonnes in India, 5.6 million tonnes to 7.9 million tonnes in Thailand, and 1.9 million tonnes to 2.2 million tonnes in Vietnam.

However, Niphond said Thailand might end up with 10-14 million tonnes of rice as the highly subsidised price has hurt Thai rice export competitiveness.

The government's centralisation of |rice trading and the high pledging price would completely ruin normal trading. |The government may only be able to re-lease a few million tonnes under government-to-government contracts, while monthly exports could fall to only 400,000 tonnes.

"Thai rice trading will be in limbo as |the price is not competitive. Other rice importing countries will turn to purchas-|ing rice from other rivals or turn to other cereals, which have lower prices.

Thailand will end up with huge stocks and losses |and that will be seen by the end of year," he said.

The government currently holds 2 |million tonnes of rice. At least 5 million tonnes from the current pledging project |for the main crop recently entered the state stockpile. And with the government to extend the rice-pledging scheme to the |second crop, a further 4-6 million tonnes are expected to enter warehouses, while |the private sector will carry 1.5-2 million tonnes of rice in their silos.

The high subsidy will encourage farmers to grow more rice in their second crop. The government will shoulder greater stocks under the pledging scheme as the year goes on.

Normally, about 6-8 million tonnes of paddy are produced in the second crop. But due to plentiful rainfall and water, the second crop this year is projected to reach 8-12 million tonnes.

Since the government has set the pledging price high, Thai exporters will not actively compete with the government to purchase rice from farmers. Thailand is expected to lose huge sums subsidising rice in such an inefficient price intervention.

The government has set aside Bt400 billion for the main crop, and plans to spend Bt100 billion-Bt150 billion for the upcoming second crop.

To ensure Thailand will not suffer huge losses under the pledging project, many analysts say the government should lower its pledging price and set a lower export price in order to compete with other rice exporting countries.

There are also fears the huge inventory will breed corruption among government officials, politicians and unscrupulous traders under the rice-releasing policy.

The government should open its rice bidding to traders and consider offsetting some losses to allow exports of Thai rice.

It should also establish a central com-mittee, Niphond said, with rice traders, |academics and farmers to inspect the |rice-releasing method and set a fair in-|tervention price in the upcoming harvest season.

-- The Nation 2012-02-06

[Ricardo]

Poor misguided foreigners, not wanting to pay more than the world going-price, for the privilege of buying Thai rice, it's clearly a plot by an unseen-hand or someone wanting to overthow the new government, MP-Jatuporn should not hesitate to speak-out about this !

[Soutpeel]

Poor misguided foreigners, not wanting to pay more than the world going-price, for the privilege of buying Thai rice, it's clearly a plot by an unseen-hand or someone wanting to overthow the new government, MP-Jatuporn should not hesitate to speak-out about this !

Welcome to free market principles, Thai rice prices are not competative...then you need to make them competative..

[Moruya]

Financially, this is all adding up to create the perfect storm. Cost after cost after cost hitting the Thai economy.

Commodity wise this could also add up to the perfect storm. If Thailand can't sell the rice, it will run out of storage. If there is no storage the millers can't buy it from the farmers.

[Pib]

Maybe the government could use the excess rice to fill sand bags for this year's floods; beats letting it deteriorate in warehouses and at least the taxpayer's baht will be put to additional use.

[exeter]

Rice is good news but what we really want , what Thailand really wants is a wine lake, have they learnt nothing from the farangs?

[wintermute]

The economic impact of this will be remarkably stupid. It begs the question as to why they are insistent on creating this policy to begin with. I actually don't believe they are that dumb but that a few corruption politicians are playing economic brinksmanship so they can ship in rice from neighboring countries to fleece the government. Then once they make their fortunes they will back off and let the pledging policy be revised or removed altogether. It's the perfect pump and dump situation.

[AleG]

The economic impact of this will be remarkably stupid. It begs the question as to why they are insistent on creating this policy to begin with.

...

Because it lets PTP supporters (no!, not the farmers, you silly) to legally raid the state coffers.

There is a mountain of loot to be made for those that control the mills.

Gives me a warm and fuzzy feeling when I pay my taxes... not.

Edited February 6, 2012 by AleG

[GentlemanJim]

So with the rice pledging, and the Ipads (not!) for kids, just how much money has this government blown belonging to the country, just to get a seat in parliament? That is before we consider the cost of minimum wages and 15k minimum wage for graduates (95% of them must be graduates these days).

I agree with AleG, this is purely to provide a mountain of cash for the middleman. Most will now import 1000's of tons of cheap rice from Vietnam and Burma, re bag it and give it to the Government as Thai rice to claim the massive subsidy payments on it. Amazing Thailand.

[geriatrickid]

In case anyone did not notice, a large part of the world faces a food shortage. Yes, there are some suppliers in the market that can and will sell for less than Thailand. Let them. Thailand still produces high quality grades of rice that are sought after in the market. These grades fetch the higher prices on the market. Yes, there may be stockpiles of the lower grades. However, its these lower grades that end up in the food aid programs that benefit SE Asia and Africa. They can sit for a bit, because as long as there are starving people, there will be a market, even at the alleged higher prices.

BTW, the PM didn't recently pop into India to practice yoga.

- 2.5 million children in India die every year from malnutrition and related illnesses — that is 25 times the number of people estimated to have died in Somalia due to famine-related causes last year.Rasnah Warah, Daily Nation (Indian Newspaper) Sunday, February 5 2012

[Moruya]

In case anyone did not notice, a large part of the world faces a food shortage. Yes, there are some suppliers in the market that can and will sell for less than Thailand. Let them. Thailand still produces high quality grades of rice that are sought after in the market. These grades fetch the higher prices on the market. Yes, there may be stockpiles of the lower grades. However, its these lower grades that end up in the food aid programs that benefit SE Asia and Africa. They can sit for a bit, because as long as there are starving people, there will be a market, even at the alleged higher prices.

BTW, the PM didn't recently pop into India to practice yoga.

- 2.5 million children in India die every year from malnutrition and related illnesses — that is 25 times the number of people estimated to have died in Somalia due to famine-related causes last year.Rasnah Warah, Daily Nation (Indian Newspaper) Sunday, February 5 2012

Time will tell. If the facts in the article are correct then

+ there will be 3m Tonnes more rice produced in the world this year than last.

+ demand for imported rice will drop globall by 3m tonnes

[moe666]

In case anyone did not notice, a large part of the world faces a food shortage. Yes, there are some suppliers in the market that can and will sell for less than Thailand. Let them. Thailand still produces high quality grades of rice that are sought after in the market. These grades fetch the higher prices on the market. Yes, there may be stockpiles of the lower grades. However, its these lower grades that end up in the food aid programs that benefit SE Asia and Africa. They can sit for a bit, because as long as there are starving people, there will be a market, even at the alleged higher prices.

BTW, the PM didn't recently pop into India to practice yoga.

- 2.5 million children in India die every year from malnutrition and related illnesses — that is 25 times the number of people estimated to have died in Somalia due to famine-related causes last year.Rasnah Warah, Daily Nation (Indian Newspaper) Sunday, February 5 2012

This higher quality rice is still not fetching what they think it is worth but what it is worth. By the way fetch your own slippers

[nullx8]

700usd per 1000kg ?

Where ricefarmers getting 7000Baht from the mills ... Interesting

[DP25]

BTW, the PM didn't recently pop into India to practice yoga.

- 2.5 million children in India die every year from malnutrition and related illnesses — that is 25 times the number of people estimated to have died in Somalia due to famine-related causes last year.Rasnah Warah, Daily Nation (Indian Newspaper) Sunday, February 5 2012

She would have been better off doing Yoga than convincing India to buy this overpriced rice. India is the 3rd largest exporter of rice in the world. They exported 4.5 million tons last year and imported a negligible amount, compared to 8 million tons exported for Thailand. They are a competitor. If India were to import rice for poor people they would want cheap rice not the overpriced rice from this sceme

[AleG]

In case anyone did not notice, a large part of the world faces a food shortage. Yes, there are some suppliers in the market that can and will sell for less than Thailand. Let them. Thailand still produces high quality grades of rice that are sought after in the market. These grades fetch the higher prices on the market. Yes, there may be stockpiles of the lower grades. However, its these lower grades that end up in the food aid programs that benefit SE Asia and Africa. They can sit for a bit, because as long as there are starving people, there will be a market, even at the alleged higher prices.

BTW, the PM didn't recently pop into India to practice yoga.

- 2.5 million children in India die every year from malnutrition and related illnesses — that is 25 times the number of people estimated to have died in Somalia due to famine-related causes last year.Rasnah Warah, Daily Nation (Indian Newspaper) Sunday, February 5 2012

So the plan is to rip-off humanitarian aid agencies with the artificially inflated price?

Lovely.

[wxyz]

"Let them eat RICE cakes"

Edited February 6, 2012 by wxyz

[Bakseedaa]

In case anyone did not notice, a large part of the world faces a food shortage. Yes, there are some suppliers in the market that can and will sell for less than Thailand. Let them. Thailand still produces high quality grades of rice that are sought after in the market. These grades fetch the higher prices on the market. Yes, there may be stockpiles of the lower grades. However, its these lower grades that end up in the food aid programs that benefit SE Asia and Africa. They can sit for a bit, because as long as there are starving people, there will be a market, even at the alleged higher prices.

BTW, the PM didn't recently pop into India to practice yoga.

- 2.5 million children in India die every year from malnutrition and related illnesses — that is 25 times the number of people estimated to have died in Somalia due to famine-related causes last year.Rasnah Warah, Daily Nation (Indian Newspaper) Sunday, February 5 2012

But the people who are facing the food shortage you are talking about , Do not have moneys to pay....

If you don,t eat your meat, how can you have any pudding..?

[sparebox2]

Look at the good side.

Better to have huge stockpile than Thai people have no rice to eat.

3 cheers for the govt.

[MikeOboe57]

The Yingluck Government copied a similar scheme created by the EEC (European Economic Community) the predecessor of the EU in the 1960s. The EEC had offered a price guarantee for butter well above the world market price. This fuelled the production of butter far beyond domestic (EEC) demand. The surplus, of course, could not be sold outside the EEC and had to be stockpiled.

Even drastic measures at taxpayers expenses like dumping butter on the world market at 25% of its value could not prevent the "Butterberg" (butter mountain) to rise above 600 Mio tons.

http://www.spiegel.de/spiegel/print/d-46135792.html

The trademark of an idiot is to make the same mistake again and expect a different result.

[PaulHamon]

Australia had all these wool scheme trying to keep a marketing afloat, they never work in the long run, teaching Thais to diversity would be much wiser.

[sfbandung]

I'm probably over simplifying things.

But aren't there loads of people starving around the world? I've never heard of a global food surplus before.

Even if they give it away to starving people, think of the karma!

[Amr]

Well thats weird !!!! a week ago i do remember that some where here i read : thailand remain the world largest rice exporter !!! Total BS

[hellodolly]

Look at the good side.

Better to have huge stockpile than Thai people have no rice to eat.

3 cheers for the govt.

Can the poor Thai's afford it?

[wxyz]

From a FLOOD of water, to a FLOOD of rice.

[otherstuff1957]

In case anyone did not notice, a large part of the world faces a food shortage. Yes, there are some suppliers in the market that can and will sell for less than Thailand. Let them. Thailand still produces high quality grades of rice that are sought after in the market. These grades fetch the higher prices on the market. Yes, there may be stockpiles of the lower grades. However, its these lower grades that end up in the food aid programs that benefit SE Asia and Africa. They can sit for a bit, because as long as there are starving people, there will be a market, even at the alleged higher prices.

BTW, the PM didn't recently pop into India to practice yoga.

- 2.5 million children in India die every year from malnutrition and related illnesses — that is 25 times the number of people estimated to have died in Somalia due to famine-related causes last year.Rasnah Warah, Daily Nation (Indian Newspaper) Sunday, February 5 2012

Nice rant, but India is exporting rice this year. In fact they are one of Thailand's competitors.

[Reasonableman]

Look at the good side.

Better to have huge stockpile than Thai people have no rice to eat.

3 cheers for the govt.

A huge stockpile that costs money to store and not sell, and which will eventually translate into higher local prices for Thai consumers. Yay!!!

Edited February 6, 2012 by Reasonableman

[zappalot]

Here are the numbers for the value of exported rice from Thailand in Baht (i dont see why it should raise to 21000 within the next time. That would be about an 20% up then...)

14/12/54 18899.322 0.000 21/12/54 17963.330 -935.992 28/12/54 17812.872 -150.458 04/01/55 17839.521 26.649 11/01/55 16900.364 -939.157 18/01/55 16817.439 -82.925 25/01/55 16670.377 -147.062 01/02/55 16880.864 210.487

[wxyz]

I'm probably over simplifying things.

But aren't there loads of people starving around the world? I've never heard of a global food surplus before.

Even if they give it away to starving people, think of the karma!

Thailand give away to overseas farangs? They only give aid to their neighboring countries and they already have rice.

[Moruya]

In case anyone did not notice, a large part of the world faces a food shortage. Yes, there are some suppliers in the market that can and will sell for less than Thailand. Let them. Thailand still produces high quality grades of rice that are sought after in the market. These grades fetch the higher prices on the market. Yes, there may be stockpiles of the lower grades. However, its these lower grades that end up in the food aid programs that benefit SE Asia and Africa. They can sit for a bit, because as long as there are starving people, there will be a market, even at the alleged higher prices.

BTW, the PM didn't recently pop into India to practice yoga.

- 2.5 million children in India die every year from malnutrition and related illnesses — that is 25 times the number of people estimated to have died in Somalia due to famine-related causes last year.Rasnah Warah, Daily Nation (Indian Newspaper) Sunday, February 5 2012

But the people who are facing the food shortage you are talking about , Do not have moneys to pay....

If you don,t eat your meat, how can you have any pudding..?

How can you have any pudding if you don't eat yer meat laddie?

[sfbandung]

I'm probably over simplifying things.

But aren't there loads of people starving around the world? I've never heard of a global food surplus before.

Even if they give it away to starving people, think of the karma!

Thailand give away to overseas farangs? They only give aid to their neighboring countries and they already have rice.

Probably because they don't know where the other countries are! My wife is quite well educated, not university but all the way through high school and she can read and write Thai and English, but her knowledge of geography is appalling. She only knows where Australia is now because she's been there so often and can watch the map on the screen on the 777.