Thai junta tries its hand in the rice market

14.11.2016

A freshly harvested golden brown paddy field encircles the home of Narong Tapluang, a weather-beaten rice farmer in the rice growing Thai village of Baan Ao Sawai. Beyond his house are fields of new paddy shoots, dull green under the grey monsoon sky.

This patchwork of brown and green, spread across the flat plains of Chai Nat, a central province in Thailand's agricultural heartland, should signal a rewarding period for the local farmers. This year, however, they are anything but happy, amid a glut in the rice market and plummeting prices.

Narong epitomizes the stress that grips Baan Ao Sawai, where 30 of the 70 households till the land for a living. He has had to settle for 6,000 baht ($169) per ton of unmilled white rice for his 50-ton harvest, which barely covered the cost of growing the crop.

"This lower price makes life harder; I owe other people money and cannot pay it back," the 55-year old said in a soft voice, comparing this year's monsoon crop with last year, when he got 7,000 baht per ton from a local miller. "We did not expect the rice price to drop so low," he said.

Narong's plight is shared by farmers across Thailand's rice bowl, which is expected to produce 27.7 million tons of rice in 2016, of which 24 million tons will be harvested during the current monsoon, according to official estimates. In parts of the north and northeast, where premium priced fragrant jasmine rice is grown, the harvested grain is fetching only 5,000 baht per ton, down from nearly 10,000 baht per ton last year.

Out of desperation, some farmers in Ubon Ratchathani province set up roadside stands to sell the long, tapering grain directly to consumers. Another farmer made a direct appeal to Thailand's ruling junta for help via a social media video clip. Jasmine rice accounts for nearly 10.7 million tons of the annual rice crop in the world's second largest exporter of the grain.

The military-led regime of Prime Minister Prayuth Chan-ocha is scrambling to keep Thailand's largest constituency in check, mindful that it accounts for 40% of the country's nearly 40 million workers. On Nov. 7 the junta approved an 18 billion baht package to help farmers who grow white rice, largely in the central provinces. A week earlier it approved 36 billion baht in funds to help jasmine rice farmers in the north and northeast.

Both schemes provide soft loans to help farmers keep their stocks in barns at home instead of releasing their harvested crops into the oversupplied market. The regime is banking on this intervention in the rice market to dig the country out of the price slump.

"Short term solutions can allow farmers to carry on with their lives and build stability step by step," Prayuth, a former army chief who led the 2014 coup that installed his government, said during an address to the nation. "The government has emphasized the importance of the price of rice, as the cabinet has recently approved measures to stabilize rice prices for the fiscal year 2017."

However, while the junta may contain spreading rural discontent through short-term measures, the international rice picture is likely to keep the generals on edge. The U.S. Department of Agriculture estimates that global rice production for the 2016-17 season is at a record high.

nikkei

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