Rice inventories jump as exports climb

Thailand will see a 17% jump in its rice stockpiles to a record level next year as it pursues a policy of buying from farmers at above market rates, the Food and Agriculture Organisation (FAO) said on Wednesday.

The government has stepped up efforts since July to dispose of inventories even at a loss to free up storage space and raise funds, the United Nations agency said in its quarterly report on the global market. The reserves, described as huge, will still climb to 20.4 million metric tonnes next year even as exports rebound 26% to 8.5 million tonnes, the FAO said.

Prime Minister Yingluck Shinawatra's administration, which fended off violent demonstrations across Bangkok over the past week by protesters seeking her removal, started its rice-buying programme in 2011. The policy, designed to boost rural incomes, spurred the buildup of record stockpiles as output rose and exports fell. The International Monetary Fund (IMF) said last month the programme should be replaced, warning that left unchanged it would hurt confidence in public finances.

"The government continues to face significant pressure over the financial implications of its high price-support policy,'' the FAO said. "There have been renewed efforts by the Thai authorities to offload supplies from public granaries to secure funds for the continuation of the programme.''

The price of Thai 5% broken white rice, an Asian benchmark, tumbled 23% to US$450 (14,400 baht) a tonne this year, helping to cut global food costs. Rice prices will probably come under increasing downward pressure as the government tries to reduce the stockpiles and global supplies rise, said the FAO.

While the comments from the IMF were rejected by ministers, they followed Moody's Investors Services remarks in September that the programme heightened risks for Thailand achieving its goal of a balanced budget by 2017. A committee representing World Trade Organisation members asked for more information earlier this year after the United States, European Union, Australia and Canada questioned if Thailand was breaching support limits.

The expansion of Thai stockpiles will help global milled reserves gain 2.6% to 179 million tonnes in 2013-2014, rising for a ninth year, said the FAO. World rough-rice production will expand 1.1% to a record 741.1 million tonnes, with Thai output rising 3.9% to 38 million tonnes.

"Greater competition resulting from an increase in Thai supplies in the world markets is expected to come to the detriment of a number of suppliers,'' said the FAO, citing India as the most at risk. India will be the world's largest exporter this year, according to the US Department of Agriculture.

 While there has been meek interest from potential buyers in the 1.1 million tonnes offered for sale by Thailand since July, signals of the Thai authorities willingness to accept sales at a loss were enough to weigh heavily on market sentiment, said the Rome-based agency.

Share your thoughts

Discussion 1 : 06/12/2013 at 06:09 AM
Any high level meeting about the rice scheme would have to have minutes taken as a legal requirement which is then signed off by the executives. YS as the chair would have to sign this whether she attended the meeting or not. For her to say she is not aware what is said in these meetings is utter rubbish. If the minutes are not recorded and signed off or altered, this constitutes fraud. She should be removed for incompetence and a criminal investigation launched.
Discussion 2 : 06/12/2013 at 05:27 AM
This is nothing but a massive transfer of income from mostly the middle-class people in BKK and the South to the poor underclass in E-Saan, on top of the usual waste of corruption and incompetence along the way. If this is what Democracy looks like, we are seriously doomed!
Discussion 3 : 05/12/2013 at 09:10 PM
No red shirt die-hards present here, not even to manipulate the 'like' 'don't like', why would they, their interest in (and knowledge of) economy seems quite low, and there's nothing justifiable about 'throwing' hundreds of billions out of taxpayers' money 'away', with only few crumbs reaching the poor farmers, not wasted for all that money, mind you, and they know it too well, as they should know it's all about one man's lunacy, and greed!
Discussion 4 : 05/12/2013 at 09:05 PM
Any wonder the guy behind the scam had to constantly change the laws to keep his company profitable?
Discussion 5 : 05/12/2013 at 02:28 PM
the government could make it easyer by giving cash to the farmers. eliminating the mittleman + almost stop fraud , corruption. the rice pice would stabilize itself better + the quality would not go down...oooh, sorry...this is to easy,simpel,controlable+not enough chances for corruption , this is thailand . amazing 555
Discussion 6 : 05/12/2013 at 01:35 PM
The farmers will vote for it no matter how bad it is for their industry because it is easy money .That is the problem with all PT policies .It offers the low road to no where instead of empowerment .Frustrated taxpayers are showing this in their protests .
Discussion 7 : 05/12/2013 at 01:26 PM
Rice can be stored for quite some years: clean, dry, cool, dark, protected from pests, first-in-first-out... so not in Thailand (with some notable exceptions at wholesale level), as here it's more the opposite of my short list. Result: I guess 10,000,000 tons might be waste, but hush, as in the state's accounts it'd mean about 200,000,000,000Baht should migrate to 'loss', and PTP wants to hide that as long it can! Can you imagine, the major 'plan' of our 'great leader' might clock a Trillion Baht of, real, LOSS, before 2016? So: hush!
Discussion 8 : 05/12/2013 at 01:11 PM
Don't sell it, give it to them for free, better than all this corrupted lot brings the money to numbered bank acounts overseas.
Discussion 9 : 05/12/2013 at 11:46 AM
'Only Thailand thought...': Not Thailand, dear Cumphon, no: ONLY THAKSIN THOUGHT, and PTP did...
Discussion 10 : 05/12/2013 at 10:36 AM
Politicians have been replaced by managers, pure technocrats serving their boss. Esther Vilar wrote this about Albert Speer 'The manager of the Third Reich': A politician should be guided by morality. For him the question is: What should be done? For the manager it's the results which count. His question is: What can be done? ...And what can be done will be done... Whether what can be done is the right thing to do, others have to decide... Speer himself said: "That's why it's so dangerous if someone like me should fall into the hands of the wrong politicans: because there are certain questions someone like me doesn't ask himself!"
Discussion 11 : 05/12/2013 at 10:31 AM
I do not understand why the WTO - World Trade Organization is not coming in and slapping the stupid wrists of this administration. Manipulating prices of commodities is a big no no under the WTO. Is Thailand not a member of the WTO? Fools only fool with market prices.
Discussion 12 : 05/12/2013 at 10:13 AM
buy high, sell low ... going down blow by blow
Discussion 13 : 05/12/2013 at 10:02 AM
Maybe it is time for another change of the constitution which would allow only very limited subsidiaries in limited circumstances. No subsidiaries would be perfect but I guess that is unrealistic. If no party would be allowed anymore to spend huge amounts of money on these kind of vote-buying policies this could only be positive for Thailand in the long run.
Discussion 14 : 05/12/2013 at 09:37 AM
Try to fool
Discussion 15 : 05/12/2013 at 09:12 AM
So you want them to drain the state coffers for another two years? You want the corruption to continue for another two years?
Discussion 16 : 05/12/2013 at 09:01 AM
Abhisit paid farmers the difference between a reference market price set by the National rice committee, based on the market, and the price they received when they sold their rice. The money was paid directly to the farmer. if the farmer got a better price, nothing was paid. Cost was about 70 billion Baht per year, all of which went to the farmers. All rice was sold in a free market environment.
Discussion 17 : 05/12/2013 at 08:56 AM
"is there, I wonder, 20 million tons of anything, anywhere else in the world?" Yes: WASTE, and soon there's an additional 20 million tonnes of wasted RICE!
Discussion 18 : 05/12/2013 at 08:47 AM
And you think the rice farmers, who receive at least part of the money, will vote for another party? Maybe the DEMs should promise them 20,000B per ton and they will get elected…
Discussion 19 : 05/12/2013 at 08:17 AM
Terrible policy. End it by voting them out at the next election- not by calling for coups.
Discussion 20 : 05/12/2013 at 08:11 AM
How long does it take for stored rice to go bad?
Discussion 21 : 05/12/2013 at 07:25 AM
What a monumental disaster. Yet another reason to can this incompetent, greedy, shortsighted regime. It is destroying the economy and the one thing Thailand has always gotten right (until now) - growing rice.
Discussion 22 : 05/12/2013 at 06:21 AM
Abhisit's administration was not buying and stockpiling rice - he had a different programm
Discussion 23 : 05/12/2013 at 05:55 AM
Yep, this Shinawatra regime has done s superb job over the last 2 years of runing the country . . . right into the ground!
Discussion 24 : 05/12/2013 at 05:46 AM
We should praise the government where praise is due. Rice exports were only down 55% on the miserable 2012 figures. In recent months the exports have been down about 66%. So well done, Pheu Thai! We're all proud of you.
Discussion 25 : 05/12/2013 at 05:08 AM
I think it was "The U.N. is not my daddy" to be accurate.
Discussion 26 : 05/12/2013 at 03:49 AM
'While the comments from the IMF were rejected by ministers' well there's a shock, PTP ministers rejecting something that makes them look bad or they don't agree with.
Discussion 27 : 05/12/2013 at 01:38 AM
Is anyone here capable of comparing and contrasting Abhisit's Administration's Farmer Income Insurance Program vs. Yingluck's Rice Pledging Scheme? Would love to see it!
Discussion 28 : 05/12/2013 at 12:58 AM
And that's the problem. These programs are always built with a skim in mind and often at the expense of the programs success.
Discussion 29 : 05/12/2013 at 12:44 AM
The UN, FAO, IMF,...you name it, it doesn't matter. "No one knows Thailand better than Thais" (might not be the exact quotation) is still ringing in my ears. This government believes deeply in their populist policies in order for them to get the majority of the votes from the people who got their handouts in future elections. This is one of the root causes of the ongoing anti-government protest. When the country goes down, they can fly out and use their dirty money somewhere else.
Discussion 30 : 04/12/2013 at 11:15 PM
Sell it to the UN to distribute in Africa...at least do some good from this corruption.
Discussion 31 : 04/12/2013 at 10:44 PM
20 MILLION TONS ! Better get some of those university R&D funds working on ways to use rice as eating this much could constipate you. Is there, I wonder, 20 million tons of anything, anywhere else in the world ?
Discussion 32 : 04/12/2013 at 10:39 PM
Short term stupidity and greed by the government has destroyed not only the rice industry but the quality of our rice which is just lumped into rotting piles . I hope rice farmers wake up soon to the idea they can sell their own rice if they rally the governemnt to let them set up collective rice mills .
Discussion 33 : 04/12/2013 at 10:32 PM
"Prime Minister Yingluck Shinawatra's administration, which fended off violent demonstrations across Bangkok over the past week by protesters seeking her removal”? First of all, is that actually an accurate and comprehensive statement, and second, even if it were, what’s it got to do with the price of rice? Or is the rice mountain yet another obvious economic fallout from the ‘ongoing protests’?
Discussion 34 : 04/12/2013 at 10:18 PM
A government is absolutely not supposed to buy from farmers and build up stockpiles except for basic emergency domestic consumption - that is nonsense. There are much, much better ways of subsidying farmers, ways that do not allow corruption. Farmers income in Switzerland e.g has a very high % stemming from subsidies (around 23%-higher than OECD, NewZealand by comparison 1.3%) but the Swiss government would never,never buy and stockpile milk,cheese,cows,meat,poultry,wheat,etc.(except for emergency national stock) and in all other countries subsidies function the same way. Only Thailand thought there must be a ruining leeway for corruption
Discussion 35 : 04/12/2013 at 10:01 PM
Buy high and sell low - not much prospect for the future. No good sense company would ever embark on such a thought.
Discussion 36 : 04/12/2013 at 09:24 PM
And when the price decreases, the supply curve decreases with it, but it's doubtful many PTP voters ever took Economics 101. Buying rice for more than the market price is madness.
Discussion 37 : 04/12/2013 at 09:19 PM
Only fools, fool with market prices.
Discussion 38 : 04/12/2013 at 09:17 PM
Doesn't apply to thaksinomics, where you make your own prices.
Discussion 39 : 04/12/2013 at 09:00 PM
Its Economics 101 people, more offer than demand decreases the price.

Back to top

More From Bangkokpost.com