Thai rice scheme causes price uncertainty
A populist policy aimed at boosting the incomes of Thai farmers has raised fears of global rice price turbulence, and experts say the kingdom could just be hurting itself.
Bangkok: A populist policy aimed at boosting the incomes of Thai farmers has raised fears of global rice price turbulence, and experts say the kingdom could just be hurting itself.
Thailand, the world's biggest rice exporter, has vowed to boost the minimum price farmers receive by buying unmilled rice directly at 15,000 baht (USD 485) per tonne from October.
The current price is about 10,000 baht.
The move, part of an array of promises that helped propel former premier Thaksin Shinawatra's allies to victory in a July election, has fuelled speculation that world prices could be set to surge.
While it is unclear what effect the policy might have on global consumers, prices have already risen and observers fear a spike could pile further pressure on poor importer nations.
Rice is the staple food for more than three billion people, about half the world's population, and Thailand produces about one third of global exports, with China, Bangladesh, Philippines, South Africa and Nigeria among its major customers.
Export prices for Thai rice on world markets have jumped from USD 500 per tonne in early July to around USD 600 as Thai farmers withheld stocks to take advantage of the rice deal, according to analysis from Capital Economics.
The Thai Rice Exporters Association, concerned that the country could lose out to competitors, has warned that prices could hit USD 800 per tonne.
Vichai Sriprasert, head of Riceland International, said last week the move could push Thai prices "higher than anybody".
"Any government in the world when they subsidise their commodities (it is) to be more competitive, but Thailand just did the opposite," he said.