As rice prices in Thailand fall to an eight year low, the country’s export industry group plans to finance storage of 100,000 tons of the grain in an attempt to thwart falling prices. The measure aims to soften the impact of price declines on farmers.
Apiradee Tantraporn, Commerce Minister, stated that Rice exporters will purchase the grain at market price, while the Thai Rice Exporters Association will cover the cost of storing it from December through February. By removing the race from the market for a few months, prices will stabilise.
It will cost the Thai Rice Exporters Association approximately 50 million baht to store the rice, according to the association’s head Charoen Laothamatas. The value of the 100,000 tons of rice is estimated to be 2.6 billion baht.
Thailand, one of the largest exporters of rice in the world, is sitting on an oversupply of rice, with stockpiles reaching millions of tons. A subsidy scheme that caused the surge in rice supplies is no longer in effect.
Thailand has approximately 13.3 million tons of rice in stock and hopes to reduce this number to just 4-5 million tons by the end of 2016. The country is aiming to export at least 10 million tons of rice in 2016, which would be on par with export levels in 2015.
To further help reduce its stock, the country is also making deals with African countries and Iran.
The Commerce Ministry is also prepared to release 13 million tons of rice from it stockpiles by the end of 2018. The Ministry also expects Thailand to export, at minimum, 9 million tons of rice in 2016 as rice supplies are lower than normal globally due to drought conditions and climate change.
Chutima Bunyapraphasara, the ministry’s permanent secretary, stated that the Thai government is confident price stockpiles would be cleared within the next few years.
The government is also set to sign a rice contract with the Chinese government in December. This would result in the second rice shipment to China under a g-2-g (government-to-government) deal for 1 million tons of rice.
The first contract between Thailand and China was for one million tons, and is expected to be completed early in 2016. Thus far, the country has shipped 800,000 tons of its rice to China.
The Thai authorities are making efforts through a raft of measures to help boost the country’s rural economy. Recently, the cabinet approved a $1.13 billion measure designed to fund grants and soft loans to farmers.