High cost to drive Thailand behind ASEAN in rice exports

[webfact]

High cost to drive Thailand behind ASEAN in rice exports



BANGKOK: -- Thailand will likely lag ASEAN in rice exports due to increasing competitors and farmers’ low income, a Thai economist said.

He suggested the government to scrap the rice pledging scheme and subsidize 40 per cent of farmers production cost, twice a year.

University of the Thai Chamber of Commerce’s Center for International Trade Studies (CITS) Director Dr Aat Pisanwanich on Tuesday expressed concern that Thailand may lose rice markets upon the upcoming formation of the ASEAN Economic Community (AEC).

He suggested the government to ditch the controversial rice pledging scheme and set up a fund of around 196 billion baht a year, in order to support 40 per cent of the rice production cost of farmers.

Normally, the production cost is 9,763 baht for each ton of rice. Under the new scheme, the Thai farmers will, twice a year, directly receive 3,900 baht for each ton of rice. This will save the government’s spending of up to 300 billion baht annually.

Dr Aat noted that Thailand may lose the status of leading rice exporter in ASEAN due to increasing competitors including Myanmar and Vietnam, while country’s major rice buyers namely Indonesia, Philippines and Malaysia are likely not increasing rice imports. Thai rice also has the highest production cost in ASEAN, which makes Thai farmers earn less profit at only 1, 555 baht/ton.

The U.S. Agriculture Department says Thailand will this year rank as the world’s third-largest rice-exporting country. The Thai rice export is projected at 6.5-6.8 million tons this year, a drop of 0.2-0.5 million tons year-on-year. India would top the world’s largest rice exporter this year at 9.3 million tons, while Vietnam likely ranks second at 7.8 million tons.

Permanent Secretary of Commerce, Srirat Rattapana, meanwhile, said January exports fell 1.98 per cent year-on-year at USD17.9 billion, while imports were valued at USD20.4 billion, a decline of 15.5 per cent.

She said rice from Thailand especially fragrant rice saw an obvious plunge in exports, while natural rubber also hit its lowest in four years. Exports to high potential markets like ASEAN saw a contraction of 5 per cent, Hong Kong at minus 14 per cent and India at minus 11 per cent.

However, positive signs were seen in major markets as Japan saw a growth of 1.8 per cent, US 0.4 per cent and Europe 4.6 per cent.

As a result, she said she was certain that Thailand’s exports this year will grow 5 per cent as targeted, only if the country’s growth is not threatened by political instability and drought problems.

Source: http://englishnews.thaipbs.or.th/high-cost-drive-thailand-behind-asean-rice-exports/


-- Thai PBS 2014-02-26

[clockman]

If, is a big word!

[Robby nz]

Dr Aat noted that Thailand may lose the status of leading rice exporter in ASEAN

You are behind the times sir Thailand has already lost it.

There is also the high processing cost in Thailand as compared to Vietnam and Burma which was quoted recently as :

Thailand 9266 B per ton

Vietnam 5615 B per ton

Burma 4353 B per ton

No we don't need farmers subsidized by hundreds of billions a year that only leads to dependency, high costs and inefficiencies.

There will need to be some support in the short term but the goal must be to get costs down and profit per rai up.

[djjamie]

But my "belief" that the rice scheme is successful because the PTP told me overrides those facts……Sarcasm.

[SoilSpoil]

Dr Aat noted that Thailand may lose the status of leading rice exporter in ASEAN

You are behind the times sir Thailand has already lost it.

There is also the high processing cost in Thailand as compared to Vietnam and Burma which was quoted recently as :

Thailand 9266 B per ton

Vietnam 5615 B per ton

Burma 4353 B per ton

No we don't need farmers subsidized by hundreds of billions a year that only leads to dependency, high costs and inefficiencies.

There will need to be some support in the short term but the goal must be to get costs down and profit per rai up.

Yes but Thai rice is 3 times more delicious, especially when aged in a cellar for a couple of years. The flowery fungal taste is addictive!

[rucus7]

Dr Aat noted that Thailand may lose the status of leading rice exporter in ASEAN

You are behind the times sir Thailand has already lost it.

There is also the high processing cost in Thailand as compared to Vietnam and Burma which was quoted recently as :

Thailand 9266 B per ton

Vietnam 5615 B per ton

Burma 4353 B per ton

No we don't need farmers subsidized by hundreds of billions a year that only leads to dependency, high costs and inefficiencies.

There will need to be some support in the short term but the goal must be to get costs down and profit per rai up.

You neglected to mention, why someone would vote away their subsidy. This is a Democracy.

[KillerMan]

Looks like everyone who understands the global rice industry has totally shrugged off the government's declaration of selling 12 million tonnes this year.

Which, by the way, is against International rice export rules as it affects the global market and pushes rice farmers worldwide into poverty as the price tumbles.

So they will be pushing problems THEY have produced onto the rest of the world's rice farmers. It's not bad enough they have screwed their own farmers, but now the want to shaft everyone else?

This Shin clan are a threat to the entire world if you ask me.

Edited February 26, 2014 by KillerMan

[JoeThePoster]

As a result, she said she was certain that Thailand’s exports this year will grow 5 per cent as targeted, only if the country’s growth is not threatened by political instability and drought problems.

If I don't hit any bad shots, I'm gonna have a great round of golf this weekend.

[allan michaud]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

Dr Aat noted that Thailand may lose the status of leading rice exporter in ASEAN

You are behind the times sir Thailand has already lost it.

There is also the high processing cost in Thailand as compared to Vietnam and Burma which was quoted recently as :

Thailand 9266 B per ton

Vietnam 5615 B per ton

Burma 4353 B per ton

No we don't need farmers subsidized by hundreds of billions a year that only leads to dependency, high costs and inefficiencies.

There will need to be some support in the short term but the goal must be to get costs down and profit per rai up.

I recently filmed with the group responsible for producing Cambodia's award winning rice (voted number 1 in the world 2 years running) and it was interesting that these guys told me Thailand has one of the worst ratio's of rice being produced per hectare. Even worse that Cambodia, who's rice business is still recovering from the civil war. They also noted that the country has been flooded by Thai rice traders over the past year.

Thailand would do well to concentrate on farmer education.

[Robby nz]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

Dr Aat noted that Thailand may lose the status of leading rice exporter in ASEAN

You are behind the times sir Thailand has already lost it.

There is also the high processing cost in Thailand as compared to Vietnam and Burma which was quoted recently as :

Thailand 9266 B per ton

Vietnam 5615 B per ton

Burma 4353 B per ton

No we don't need farmers subsidized by hundreds of billions a year that only leads to dependency, high costs and inefficiencies.

There will need to be some support in the short term but the goal must be to get costs down and profit per rai up.

I recently filmed with the group responsible for producing Cambodia's award winning rice (voted number 1 in the world 2 years running) and it was interesting that these guys told me Thailand has one of the worst ratio's of rice being produced per hectare. Even worse that Cambodia, who's rice business is still recovering from the civil war. They also noted that the country has been flooded by Thai rice traders over the past year.

Thailand would do well to concentrate on farmer education.

Also remember reading that Thailand is forth or fifth biggest export market for Cambodia's rice.

Importing rice when cant export ?

[chingching]

Normally, the production cost is 9,763 baht for each ton of rice. Under the new scheme, the Thai farmers will, twice a year, directly receive 3,900 baht for each ton of rice. This will save the government’s spending of up to 300 billion baht annually. How does spending 3900 baht for each ton, save money? Serious

[JRSoul]

Another business genius quite willing to give money away. Let's grow as much rice as we can and sell it for a loss, my scheme will only cost B200 billion instead of B300 billion per year.

News flash - the Thais who aren't rice farmers much prefer that the money is spent on infrastructure improvements (that PTP say are so urgent) and government services for ALL Thais.

[trogers]

Thailand 9266 B per ton

Vietnam 5615 B per ton

Burma 4353 B per ton

Why has the cost for Thailand increased so much? Find the answer and you have the solution.

[zakk9]

Thailand 9266 B per ton

Vietnam 5615 B per ton

Burma 4353 B per ton

Why has the cost for Thailand increased so much? Find the answer and you have the solution.

It has always been more expensive, but the production volume has increased in Vietnam and Myanmar, pushing Thailand out. One of the reasons for the high production costs in Thailand is that in some areas, namely Isan, it's only possible to harvest once or twice per year, and even then the yield is rather low. In Central Thailand and competing countries, they harvest three times per year without having higher fixed costs. Also, the farms in Isan are smaller and often based on more manual labour. This wasn't a problem 50 years ago, when farmers accepted a very frugal lifestyle. They don't any longer, for good reasons.

This is one of the reasons why it's of paramount importance to build infrastructure in Isan, making it more attractive for industrial establishments and alternative work for farmers who cannot make a living from what they do currently.

[Thaddeus]

Thailand would do well to concentrate on farmer education.

A TV Drama based on the style of "The Archers" may work.

That radio series was created decades ago, because back then, you couldn't tell the average English farmer anything if you were not a farmer yourself.

Educate them without them realising they are being educated.

Edited February 26, 2014 by Thaddeus

[trogers]

Thailand 9266 B per ton

Vietnam 5615 B per ton

Burma 4353 B per ton

Why has the cost for Thailand increased so much? Find the answer and you have the solution.

It has always been more expensive, but the production volume has increased in Vietnam and Myanmar, pushing Thailand out. One of the reasons for the high production costs in Thailand is that in some areas, namely Isan, it's only possible to harvest once or twice per year, and even then the yield is rather low. In Central Thailand and competing countries, they harvest three times per year without having higher fixed costs. Also, the farms in Isan are smaller and often based on more manual labour. This wasn't a problem 50 years ago, when farmers accepted a very frugal lifestyle. They don't any longer, for good reasons.

This is one of the reasons why it's of paramount importance to build infrastructure in Isan, making it more attractive for industrial establishments and alternative work for farmers who cannot make a living from what they do currently.

Skilled labour means people who are willing to be educated. And only skilled labour commands relatively higher income.

You can have high tech factories located here or there but cannot operate due to lack of an educated workforce. What resouce have the govt put into improving the education infrastructure and teaching methods, other than tablets?

You can have your high speed train, but it will be just a novelty to the lowly educated.

[Lupatria]

<script type='text/javascript'>window.mod_pagespeed_start = Number(new Date());</script>

Dr Aat noted that Thailand may lose the status of leading rice exporter in ASEAN

You are behind the times sir Thailand has already lost it.

There is also the high processing cost in Thailand as compared to Vietnam and Burma which was quoted recently as :

Thailand 9266 B per ton

Vietnam 5615 B per ton

Burma 4353 B per ton

No we don't need farmers subsidized by hundreds of billions a year that only leads to dependency, high costs and inefficiencies.

There will need to be some support in the short term but the goal must be to get costs down and profit per rai up.

I recently filmed with the group responsible for producing Cambodia's award winning rice (voted number 1 in the world 2 years running) and it was interesting that these guys told me Thailand has one of the worst ratio's of rice being produced per hectare. Even worse that Cambodia, who's rice business is still recovering from the civil war. They also noted that the country has been flooded by Thai rice traders over the past year.

Thailand would do well to concentrate on farmer education.

"Thailand would do well to concentrate on farmer education."

Nice Idea! Except, how would you keep any explanation about an economically suicidal rice pledging system out of the curriculum? Btw any kind of education does not work so well in this country anyway.

[JRSoul]

A TV Drama based on the style of "The Archers" may work.

That radio series was created decades ago, because back then, you couldn't tell the average English farmer anything if you were not a farmer yourself.

Educate them without them realising they are being educated.

I have a synopsis for the first episode, based on a true story.

Somchai realises he'll never make enough money farming rice, leases his land to his brother, and gets work as a laborer in the city. Sends a little money home each month to wife and children, while she works in paddies. He comes home after 6 months with a second-hand pick-up, starts a fresh produce run to town every day selling to village. 6 months later, has built a shop on his house, business making good money.

Somchai and wife move to city, leasing shop/business to her sister. Both working, children getting better education, but miss village life.

Final scene - come back to village for a break, family happy to see them, glad at their prosperity. Neighbours snub them as Bangkok elite.

[alant]

I still would like to understand the high cost of Thai rice, is it purely because of the subsidy having a knock on effect? Is it the lack of workers? The minimum wage? I here talk of crops power year but around chiang mai they are on 3 I think.

What I do see is the move away from manual traditional labour to mechanised systems. I would love to know the answer so if anyone has a reference link to this info please let me know.

Thanks

[chainarong]

Pay the farmers first , worry about the export trade when you lower the cost back to trade market place price and stick a reminder on your fore head , never shall I try to do this again.

[winstonc]

I still would like to understand the high cost of Thai rice, is it purely because of the subsidy having a knock on effect? Is it the lack of workers? The minimum wage? I here talk of crops power year but around chiang mai they are on 3 I think.

What I do see is the move away from manual traditional labour to mechanised systems. I would love to know the answer so if anyone has a reference link to this info please let me know.

Thanks

i was told that fertilizer and such are few and owned by a couple of people keeping those costs high...

[espinoza]

If the Thai farmers stop burning after each crop they will have a lot of fertilizer fro free. Now they burn their free fertilizer and buy sacks of fertilizer from the big fertilizer producers. They burn million of tons every year, and it`s themselves that has to pay for it. In other words, the Thai farmers burn their money.

[Scamper]

The views of independent agencies in the rice industry could not contrast more strongly than with the views of the Yingluck administration. The former sees the mess that's it's in, and what it has done to the country in terms of its rice export standing. The latter will never admit to any of that, preferring instead to prop up their own narrative, and their ever changing figures. The NACC's narrative will be based on the facts that everyone but the administration acknowledges. The problem for Pheu Thai, is that it has not been on good speaking terms with facts lately.

[belg]

farmer gets 1.5 baht per kilogram

in tesco & others : 25-40 baht per kilogram

[zakk9]

farmer gets 1.5 baht per kilogram

in tesco & others : 25-40 baht per kilogram

That comparison doesn't hold water. A lot of weight is lost during the process and there are several links in the chain that must make a profit from this. That doesn't mean that the system is necessarily fair, but in the real world, Thai farmers have to compete with farmers who get only half of what they get under the rice pledging scheme.