Thai rice exports hurt by government subsidies

Featured - October 25th, 2012
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Thailand’s rice exports are expected to halve this year, hurting the top rice exporter behind Vietnam and India as its government’s rice subsidy scheme pushes rice prices to uncompetitively higher levels.

The US Department of Agriculture (USDA) projects Thailand’s worldwide share to drop to less than one-fifth in 2012 from nearly a third of the global export market, AFP reports. Latest figures show that Thailand exports 5.2 million tonnes of rice a year, compared to rivals Vietnam and India, which export 5.9 million tonnes and 5.6 million tonnes respectively.

Thailand produces about 20 million tonnes of rice each year on average, about half of which is exported. In an attempt to boost farmers’ incomes, Thai Prime Minister Yingluck Shinawatra subsidized 50% more of rice’s market price which led to soaring prices and overflowing stocks.

Ammar Siamwalla, an economist at the Thailand Development Research Institute (TDRI) estimates that Thailand has about 10 million tonnes of unsold stock. The country will have stocks of about 9.4 million tonnes at the end of 2012 and 12.1 million tonnes in 2013, according to USDA predictions.