Thailand to benefit from growing world rice demand, market monitors say

[webfact]

RICE
Thailand to benefit from growing world rice demand, market monitors say
The Nation

Thai farmers. File photo

BANGKOK: -- Despite climatic shifts and natural disasters plaguing some rice producing countries, the 2013 season has produced more rice than expected, adding to the ninth straight year of rice surplus or 'carry over,' the UN's Food and Agriculture Organisation (FAO) reported recently.

And in terms of exports, Thailand is expected to capture much of the expected expansion in world demand and remain the world's No.2 exporter after India in 2014.

As farmers in many countries begin the last harvests of the 2013 season, several countries have raised their 2013 production estimates above those reported in November. They included China, India, Pakistan and the Philippines, which had endured a number of climatic setbacks, but where damage to crops was said to have been less severe than previously thought, according to the FAO's first Rice Market Monitor (RMM) report for 2014.

Prospects also improved for Colombia, Indonesia, Iran, Japan, Nepal, Sri Lanka and Tanzania, while they deteriorated for Cambodia, Laos, Myanmar and Russia, according to the report.

"Overall, the revisions translated into a 3.5-million tonne upgrade of 2013 global paddy rice production to 744.9 million tonnes (496.6 million tonnes, milled basis), which makes for a 1.1 per cent increase from the previous season, and renewed again an historic world record harvest," said Hiroyuki Konuma, FAO assistant director-general and regional representative for Asia and the Pacific.

While the damage caused by floods, storms and other erratic weather in Asia and the Pacific took a toll in 2013, the report warns that, going forward, "climatic events affecting the development of 2014 season crops, such as the potential El Nino event, are also likely to influence market sentiment."

FAO's first global production forecast for 2014 predicts a third consecutive season of subdued growth. "Global paddy production in 2014 could reach 751 million tonnes (500.7 million tonnes, milled basis), 0.8 per cent more than currently estimated for 2013," the RMM reports.

Based on the latest estimates, global rice stocks carried over into 2014 are set to rise for the ninth consecutive year, reaching 180.5 million tonnes (milled basis), 1.5 million tonnes more than foreseen in November, and 3.2 per cent above their opening level in 2013. Developing countries would be responsible for the entire increase in stockpile.

Combined, the five major rice exporters (India, Pakistan, Thailand, the United States and Vietnam) remain projected to end their individual 2013/14 marketing years with 3 per cent more on reserve, or 48.4 million tonnes.

Accelerated release of Thai rice

Much of this rice stock growth would reflect larger holdings in Thailand supported by an overall good harvest and official procurement under the main-crop round of the 2013/14 paddy-pledging programme. Nevertheless, reserves in the country are forecast to end down 1.1 million tonnes in 2014, lower than previously envisaged, at 19.3 million tonnes, consistent with the country's improved outlook for exports in 2014, following the accelerated pace of government stock releases since the latter half of 2013 and the suspension of the secondary crop round of the scheme.

Overall, three of the five major rice exporting countries (Pakistan, Thailand and Vietnam) are expected to continue to build up their reserves, but that will be compensated globally by a drawdown in the other two major exporters, India and the United States. As a result of these changes, the world stock-to-use ratio, a key indicator of food security, is predicted to rise from 35.7 per cent in 2012-13 to 35.9 per cent in 2013-14. In light of the higher expected availabilities and sustained declines in Thai export quotations, FAO anticipates Thailand to raise its level of exports to 8.7 million tonnes, 200,000 tonnes more than last projected and 2 million tonnes above the 2013 poor performance.

"Given expectations of an overall ample supply in major exporting countries, these harvests could exert additional pressure on export quotations. Against this backdrop, buying decisions will play an important role. The government of the Philippines has already announced plans to conduct an import tender in April," the report notes.

The return of other important buyers could mitigate the downward pressure on prices. According to FAO's price sub-index, the price of high quality Indica rice declined by 2.4 per cent in March.

Among major rice importing countries, China is expected to renew its status as the world's No 1 rice importer with imports expected to increase to 3.3 million tonnes in 2014, while the Philippines and Indonesia are expected to increase their imports of rice by around 60 to 70 per cent in 2014 to 1.2 million tonnes and 1.1 million tonnes, respectively. Malaysia's rice import is projected to remain at the level of 1.1 million tonnes this year.

"On the policy front, decisions in Thailand concerning government support to the rice sector will hold particular sway, as will the pace with which officials continue the disposal of public stocks," the report adds.

Since its last report in November, the RMM has lifted its estimate for global rice utilisation in 2013-2014 by one million tonnes to more than 490 million tonnes (on a milled basis), an increase of 2.5 per cent on the previous year. That figure could rise to 502 million tonnes in 2014-2015. While human consumption accounts for most of the increase (83 per cent), other uses, such as animal feed are also expected to increase.

While surpluses continue to grow even with modest production increases, international trade in rice is forecast to make a recovery in 2014.

"FAO is predicting that 2014 will experience a 5 per cent jump in international trade of rice," said Konuma. "That is an increase of more than one-million tonnes on the 38 million tonnes foreseen just four months ago - a new high."

On the supply side, ample availabilities in exporting countries, following large harvests and inventories, are intensifying competition for markets. Amid sustained efforts to curb its public inventories, Thailand is expected to capture much of the expansion in world demand.

"Larger deliveries by these countries would come at the expense of reduced exports by India, which may, nonetheless, retain its number one position among exporters." According to the report, India is expected to retain its No 1 rice exporter position in 2014 with estimated rice export of 9.5 million tonnes in 2014, followed by Thailand (8.7million tonnes) and Vietnam (7.2 million tonnes).


-- The Nation 2014-04-14

[WoopyDoo]

So with an actual overcrop in the global rice producing arena and Thailand driving down the price for everyone...... How can this actually benefit Thailand?

Surely this is actually another nail in the coffin of the rice farmers?

[Robby nz]

From what I understand by reading as much as possible on the rice scheme and markets Thailand is now selling the new seasons crop instead of storing it as they have done in the last 2 years.

It is this sale of new seasons rice that has elevated Thailand back to second largest exporter.

In the past rice was sold season by season with most of the surplus (not consumed locally) sold each year, this selling of the annual crop was what kept Thailand in the number one position and ensured a reputation of quality.

Even if Thailand does sell enough each season to bring it back to the past position of quantity and quality it still does not address the stockpiles of old seasons rice for production per season will be enough to satisfy demand.

[noitom]

Let's hope if there is any benefit to Thailand, that some of the money finds its way in to the pockets of those poor Thais working in the fields all day holding up their end of the Thai economy and enabling the fat cats to play golf and lunch at the clubs.

[chainarong]

One hopes that the good rice farmers lot improves and they vote accordingly at the next Thai general elections , (When ever that is) although alarming stats have over a period of time seen some Asian countries coming up to speed with westernized food and are dropping the rice factor and going more towards meats and western junk food, I have seen a general trend over the past twenty years in Thailand of a much more dumpier population, this has side effects in the medical area and with Asian bone structure , is not a good look.

[CraigSchuler]

I just love Thai soap opera's!

[OnTheRun]

I've got a great idea. To encourage Thai farmers to grow as much rice as they can and keep Thailand in the top bracket of worldwide rice producers why not promise the farmers a pre confirmed income for what they produce?

This could be funded by the billions of Baht that was recently slushing about in Hong Kong bank accounts.

I'm sure the farmers would be 100% behind this.

[bushwacker]

Thailand can grow more rice but just cannot seem to get out of the warehouse!

[antimedia]

So why hasn't someone set up a vehicle whereby the farmers can sell the new crops direct to maximise their income and recoup some of their losses. Same old practice, screw the farmer we refuse to take our snouts out of the trough.

[rickirs]

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From what I understand by reading as much as possible on the rice scheme and markets Thailand is now selling the new seasons crop instead of storing it as they have done in the last 2 years.

It is this sale of new seasons rice that has elevated Thailand back to second largest exporter.

In the past rice was sold season by season with most of the surplus (not consumed locally) sold each year, this selling of the annual crop was what kept Thailand in the number one position and ensured a reputation of quality.

Even if Thailand does sell enough each season to bring it back to the past position of quantity and quality it still does not address the stockpiles of old seasons rice for production per season will be enough to satisfy demand.

The article has too many figures on too many topics that makes it a little confusing. So it maybe that your interpretation is incorrect.

"Nevertheless, reserves in the country are forecast to end down 1.1 million tonnes in 2014, lower than previously envisaged, at 19.3 million tonnes, consistent with the country's improved outlook for exports in 2014, following the accelerated pace of government stock releases since the latter half of 2013 and the suspension of the secondary crop round of the scheme."

It appears that Thailand is selling the 2013 crop in 2014 in combinatio with 2014 crops to mitigate storage costs for the 2014 stock.

[oldsailor35]

So why hasn't someone set up a vehicle whereby the farmers can sell the new crops direct to maximise their income and recoup some of their losses. Same old practice, screw the farmer we refuse to take our snouts out of the trough.

If only the rice growers were able to form Co-operatives to sell their own rice thus starving the sharks who do nothing but get fatter and fatter.

[oldsailor35]

What is needed is a few young uni students from the poor rice growing areas to get their heads together, study the marketing side of the industry. Then form a co-op and move in on the market, killing off the fat cats . Thus getting a good return for their families. But i do not think this will ever happen in Thailand, where its 'every man for himself'

[TinoThailand]

* RICE

Thailand's "elite" to benefit from growing world rice demand, market monitors say

[RPCVguy]

The article does mention the developing El Nino in the Pacific. What effect does that form on Thai rainfalls and crops? I know it means drought for the Philippines and Australia, but am less sure as to what El Nino generates as to weather changes in Thailand.

This story about the El Nino admits it is still an early forecast, but a monster El Nino just might shake up the worlds weather for awhile.
"The pool of 4-6+ degree Celsius above average temperatures continues to widen and lengthen, now covering 85 degrees of longitude from 170 East to 105 West. Perhaps more disturbing is the fact that the zone of extreme 6+ C temperature anomalies has both widened and extended, covering about 50 degrees of longitude and swelling to a relative depth of about 30-40 meters. This is an extraordinarily intense temperature extreme that well exceeds those observed during the ramp-up to the record 1997-98 El Nino event."

http://www.dailykos.com/story/2014/04/08/1290498/-Break-Out-Your-Sun-Tan-Lotion-Monster-El-Nino-Forming-In-The-Pacific?detail=email

... got most of the answer already, via this thread and a few others.
http://www.thaivisa.com/forum/topic/710287-thailand-in-grip-of-drought/

The real answer of mitigating between drought and floods is to have mature and extensive forests to break the force of rains, soak it into the hills and replenish aquifers. On that account it is late, but not yet too late. The research on which trees to plant first to optimize restoration of forests has been done
http://www.forru.org/th/intro.php

Edited April 14, 2014 by RPCVguy

[moe666]

What is needed is a few young uni students from the poor rice growing areas to get their heads together, study the marketing side of the industry. Then form a co-op and move in on the market, killing off the fat cats . Thus getting a good return for their families. But i do not think this will ever happen in Thailand, where its 'every man for himself'

There were village co-ops and millers buying and selling local rice but when PTP the government became the trader of choice at the inflated prices all of these were put out of business.

[Lupatria]

It will benefit Thailand as much as the global demand for snowmobiles.

[GuestHouse]

Thailand's competitors are all producing more rice. (Fresh out of the fields, not stored for two, coming up three years).

Over 180 million tons of excess production in store across the rice producers - Thailand holding the largest excess stores (two years old coming on three).

Thailand is going to benefit from what?

[billsmart]

So why hasn't someone set up a vehicle whereby the farmers can sell the new crops direct to maximise their income and recoup some of their losses. Same old practice, screw the farmer we refuse to take our snouts out of the trough.

If only the rice growers were able to form Co-operatives to sell their own rice thus starving the sharks who do nothing but get fatter and fatter.

There is already such a cooperative. It's called the government of Thailand. Any shortfall from the guaranteed price is made up out of the general fund. That's called a subsidy and is done for farmers in every country of every ex-pat on this forum. Farmers are given a subsidy to enable small scale farmers who don't have the capital to withstand occasional crop failures but more importantly market price manipulation by middle men. It's no different in principal from giving certain industries government-backed, low interest loans, tax breaks and exclusions, and of course bloated government contracts. The mismanagement of the rice and the money is undeniable, but this appears to be common in many government programs no matter who is in charge. It's this mismanagement that must be addressed and brought into control, not the Rice Scheme itself. It is a subsidy with a worthy purpose.

[GunterChiangMai]

So with an actual overcrop in the global rice producing arena and Thailand driving down the price for everyone...... How can this actually benefit Thailand?

Surely this is actually another nail in the coffin of the rice farmers?

Forget about the farmers, we have enough to eat!

[sae57]

So with an actual overcrop in the global rice producing arena and Thailand driving down the price for everyone...... How can this actually benefit Thailand?

Surely this is actually another nail in the coffin of the rice farmers?

It's a necessary transitional period, from the rice pledging disaster. Once the warehouses are down to reasonable levels the prices will tend back upward. Note that Abhisit's government, saddled with warehouses full of rice from Thaksin's pledging program that couldn't be released for fear of forcing prices down, implemented crop insurance--i.e. paid the difference between actual market and a predetermined fair price. There were problems with that, but something of the sort needs to be implemented to help the farmers over the current hump. BTW, co-ops exist and are officially encouraged by the government, though the rice-pledging program tended to drive them and other small operations out of business.

--S

[IsaanAussie]

Thailand produces 26 million ton and consumes 10. Warnings are that 2014 may hold 6 baht/kg price for paddy rice. That's below the cost of production for most. Got to think long and hard about planting this season.

All milk and roses ahead for the Thai rice farmers.

[Thaddeus]

It appears that Thailand is selling the 2013 crop in 2014 in combinatio with 2014 crops to mitigate storage costs for the 2014 stock.

While still having to pay the storage costs for the 2012 crop.

[Robby nz]

a bi

So with an actual overcrop in the global rice producing arena and Thailand driving down the price for everyone...... How can this actually benefit Thailand?

Surely this is actually another nail in the coffin of the rice farmers?

It's a necessary transitional period, from the rice pledging disaster. Once the warehouses are down to reasonable levels the prices will tend back upward. Note that Abhisit's government, saddled with warehouses full of rice from Thaksin's pledging program that couldn't be released for fear of forcing prices down, implemented crop insurance--i.e. paid the difference between actual market and a predetermined fair price. There were problems with that, but something of the sort needs to be implemented to help the farmers over the current hump. BTW, co-ops exist and are officially encouraged by the government, though the rice-pledging program tended to drive them and other small operations out of business.

--S

Thai stockpiles whether sold or not will make very little difference to world prices.

Thailand is a big producer but not that big that, proof of that the failure of the rice pledging scheme to raise world prices.

World production is riseing among traditional producers and south American countries are coming into the export market.

What is needed is an overhaul of the growing system to get better yields and focus on quality.

As an example Vietnam is getting around twice as many tons of rice per rai as Thailand and Cambodia has won the best rice in the world for the last 2 years in a row.

If farmers can be taught to get the same or better yields than Vietnam and concentrate on quality then their income will increase for the same amount of work and less cost input.

There is no instant fix for the rice farming industry and unfortunately it is, in the short and medium term, going to be marred by "We want your vote".

[RogueLeader]

Price inflation of a staple food crop will 'benefit Thailand'?

[Thaddeus]

Price inflation of a staple food crop will 'benefit Thailand'?

Not if it is cancelled out by the inflation in the cost of production, and the cost of storage for years.

[Thaddeus]

So why hasn't someone set up a vehicle whereby the farmers can sell the new crops direct to maximise their income and recoup some of their losses. Same old practice, screw the farmer we refuse to take our snouts out of the trough.

If only the rice growers were able to form Co-operatives to sell their own rice thus starving the sharks who do nothing but get fatter and fatter.

There is already such a cooperative. It's called the government of Thailand. Any shortfall from the guaranteed price is made up out of the general fund. That's called a subsidy and is done for farmers in every country of every ex-pat on this forum. Farmers are given a subsidy to enable small scale farmers who don't have the capital to withstand occasional crop failures but more importantly market price manipulation by middle men. It's no different in principal from giving certain industries government-backed, low interest loans, tax breaks and exclusions, and of course bloated government contracts. The mismanagement of the rice and the money is undeniable, but this appears to be common in many government programs no matter who is in charge. It's this mismanagement that must be addressed and brought into control, not the Rice Scheme itself. It is a subsidy with a worthy purpose.

To be truly called a subsidy, payment would have to be paid directly to the farmers without altering the price of their product (which is what the Dems did)

The PTP scheme was a blatant and deliberate attempt to manipulate world market prices, which failed, they were repeatedly told is was going to fail, they didn't listen..... they actually didn't care (well, one man didn't care and 310 just did as they were told, some government hey)

There is a staggeringly large difference between the two in both operation and implication, but some fail to see it, some don't want to see it, and some flatly try to deny it.

Edited April 14, 2014 by Thaddeus

[Robby nz]

It appears that Thailand is selling the 2013 crop in 2014 in combinatio with 2014 crops to mitigate storage costs for the 2014 stock.

While still having to pay the storage costs for the 2012 crop.

And 2011.

And if what I read is correct from Thaksins time, although this is stored correctly in purpose built silos which will limit deterioration, that these facilities are full is why the pledged crops had to be stored in warehouses.

Should also be remembered that it is normal for countries to keep a stockpile of (in this case rice) staple crops for the countries own use in case of crop failure, this stockpile can be up to a full year local consumption although mostly less. Hence the silos.

That emergency store will be over and above the stockpiled pledged rice.

[hawker9000]

Not that this doesn't sound more like a net growth in supply than demand, but where is the market price of all these new expected sales relative to what the thai rice farmers were promised? If the difference is to be subsidized, where in the scheme was the provision for that? The general fund you say. Oh, then this really was pandering and vote buying - using money not generated from actual sales (the correct euphemism is apparently now "general fund") to buy PT votes. And was this "provision" actually mentioned in the legislation?

If PT wanted to launch a farm subsidy initiative, then they should have proposed a farm subsidy bill. Not something disguised as something else. It was the same with the amnesty bill - PT thought everybody would be too stupid to realize it was about getting TS back home, but everybody saw through that immediately. And, miraculously, the usual fast-talking didn't succeed in misinforming them.

Edited April 14, 2014 by hawker9000

[Wombat6]

Thailand can grow more rice but just cannot seem to get out of the warehouse!

Well, when you have thousands of Tons of rice being smuggled over the border from Myanmar /Cambodia etc(taking advantage of the Rice Pledging scheme), it doesn't help

[sae57]

a bi

So with an actual overcrop in the global rice producing arena and Thailand driving down the price for everyone...... How can this actually benefit Thailand?

Surely this is actually another nail in the coffin of the rice farmers?

It's a necessary transitional period, from the rice pledging disaster. Once the warehouses are down to reasonable levels the prices will tend back upward. Note that Abhisit's government, saddled with warehouses full of rice from Thaksin's pledging program that couldn't be released for fear of forcing prices down, implemented crop insurance--i.e. paid the difference between actual market and a predetermined fair price. There were problems with that, but something of the sort needs to be implemented to help the farmers over the current hump. BTW, co-ops exist and are officially encouraged by the government, though the rice-pledging program tended to drive them and other small operations out of business.

--S

Thai stockpiles whether sold or not will make very little difference to world prices.

Thailand is a big producer but not that big that, proof of that the failure of the rice pledging scheme to raise world prices.

World production is riseing among traditional producers and south American countries are coming into the export market.

What is needed is an overhaul of the growing system to get better yields and focus on quality.

As an example Vietnam is getting around twice as many tons of rice per rai as Thailand and Cambodia has won the best rice in the world for the last 2 years in a row.

If farmers can be taught to get the same or better yields than Vietnam and concentrate on quality then their income will increase for the same amount of work and less cost input.

There is no instant fix for the rice farming industry and unfortunately it is, in the short and medium term, going to be marred by "We want your vote".

No quick fix--indeed! But Thailand is a large enough producer to affect prices, all other things being equal. What happened though is that when it held product off the market, other producers compensated--simply took up the slack. Meanwhile, releasing those stocks depresses prices as the other countries aren't going to withhold stocks, compensating in the other direction. I.e. the pledging program, as the /primary/ instrument of agri price support, was conceptually flawed from the start. As for yields, you have to consider variety and I don't know enough to comment. Anyway agricultural market intervention is necessary and messy in every country.