Country faces tough task clearing out rice stocks
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It remains doubtful if the Yingluck Shinawatra government can do what it promised - finalise the loss figure of the rice-pledging scheme in a few years after releasing all of its rice stockpiles.
The US Department of Agriculture (USDA) has forecast that the inventories of many countries, including Thailand, will grow this year and next year.
The high price of Thai rice is expected to make it difficult to make quick sales of rice to clear out the inventory.
The government has recently denied that the rice mortgage scheme suffered losses of about Bt260 billion during the past two years of pledging, as calculated by the Finance Ministry’s committee auditing the scheme’s financial records.
It was Commerce Minister Boonsong Teriyapirom who made the promise. The government has unofficially reported that it has about 14 million-15 million tonnes of milled rice in stock. The country normally exports about 6.5 million-10 million tonnes of rice a year.
According to the USDA’s projection, Thailand will carry 11.63 million tonnes of milled rice in storage this year and 14.23 million tonnes next year.
Global rice trade was expected to increase only slightly by 0.09 per cent from 38.6 million tonnes this year to 38.64 million tonnes next year.
The USDA believes that Thailand can boost its exports more than its major rivals, with shipments abroad expected to rise by 6.25 per cent from 8 million tonnes this year to 8.5 million tonnes next year.
Vietnam’s rice shipments would expand 4.05 per cent from 7.4 million tonnes to 7.7 million tonnes, while India’s overseas sales would drop by 5.56 per cent from 9 million tonnes to 8.5 million tonnes.
Global rice consumption is expected to pick up by 1.49 per cent from 469.85 million tonnes to 476.84 million tonnes, while global supply of milled rice is expected to increase by 1.92 per cent from 470.22 million tonnes to 479.26 million tonnes.
Thailand’s milled rice production would go up 4.46 per cent from 20.2 million tonnes to 21.1 million tonnes. India’s rice output would climb 3.85 per cent from 104 million tonnes to 108 million tonnes.
Vietnam’s milled rice would increase 0.72 per cent from 27.65 million tonnes to 27.85 million tonnes. Myanmar’s output would edge up 3.13 per cent from 10.67 million tonnes to 11 million tonnes.
Indonesia, which is one of the world’s major rice importers, would harvest more rice for local consumption under its self-reliance policy. Its production is projected to increase 0.53 per cent from 37.5 million tonnes to 37.7 million tonnes.
Due to the stable global rice trade, Thailand would have a problem moving out all its stocks within a few years, a rice trading source said, adding that Thailand’s relatively high price would also be a negative factor.
Stored rice would continue to deteriorate in quality, so the government would have a tough time selling rice to buyers and revenue would much be lower than cost.
“The price gap between Thailand and other countries is quite high, by more than US$100 to $150 a tonne. It has discouraged buyers from demanding Thai rice, despite the higher quality and good technique in milling,” the source said.
Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said that if the government would like to clear out stockpiles and encourage more rice exports, it needs to drop the pledging price to about Bt10, 000-Bt11,000 a tonne of paddy from the current Bt15,000.
“By setting a pledging price that reflects the market price, there would be greater opportunities for the government to clear out stocks. Thai exporters would be more competitive and export more rice next year,” he said.
Due to the high pledging price, the association estimates that Thailand would export about 6.5 million tonnes of rice this year. The carryover stock would exceed 12 million tonnes by year-end.
According to the association’s report, as of Wednesday, 5-per-cent Thai white rice was quoted at $532 a tonne against $370 for Vietnamese rice and $445 for Indian rice.
