Tightening

No brains

Many rice price spotters are reporting that the circumstances leading to rice prices are changing. 

Some views:

• The Bangkok Post (July 23) notes that due to droughts rice production will drop in Thailand. Farmers are also planting less as subsidies have also dried up.
• The Bangkok Post reports on a supposed upswing in Thai rice fortunes (Aug. 5). China will get their rice and auctions will start once again.
• The upside of the rainy season? Cambodia's output to rise, so says the Phnom Penh Post (Aug. 5).
• Cross border (Vietnam to China) trade no more? Vietnamnet (8 Aug):

  'According to Khanh [rice trader in Hanoi], China has prevented the rice imports across the border in order to tighten control over tax payments made by Chinese rice importers'. 

  As unofficial statistics put this figure at 2 million tonnes, this may well drive prices and traders crazy at least until market finds different ways to accommodate the trade. Prices in Vietnam to drop, in China to rise  ...  

In any event there are many factors to be considered but no main trends.

For a more background on global rice prices and especially on Thailand, take a look at Sam Mohanty's recent (July 31) views. On Thailand:

'In the case of Thailand, it is becoming more evident that its ricepledging scheme will not come back. Without it, it is a no-brainer that Thai farmers will plant less rice in the wet season. But, that should not be a problem for the global market because Thailand has plenty of stocks to make up for the shortfall'. 

He does however warn the countries most involved in the rice export and import business to keep their heads cool as a new price crisis may evolve. Though I seriously doubt this, can it be true that nothing has been learnt from the most recent past?

In any event prices have nudged up slightly this year (Oryza.com, Aug. 4)

Squeeze

A trending topic for some months has been Italy's protest to the EU of trade favours to Cambodia and Myanmar meaning tariff free imports of rice from both these countries.

Despite being much richer and having the EU to protect them, the Phnom Penh Post (July 21) notes that farmers in Italy want a fairer rice deal. The irony is that the fairness should be paid from their colleagues in Cambodia and Myanmar, which seems totally contradictory. Part of the interesting article quotes that rice plantings in Italy have dropped by more than 20% on an annual basis as a consequence of Cambodia's tariff free importation.

But what is actually at stake are the ever increasing costs in Europe faced with stagnant prices for rice production. The dilemma is that farmers are being squeezed out with those producing at higher costs eing the first to go. For the consumer the only way to maintain lower prices is to import from regions where the cost of labour (and rice growing) is negligible.

United

Cambodia joins the bigger boys (boys?) as it announces that it will take part in seeking to bid to import rice in the Philippines, so reports the Phnom Penh Post (Aug. 5):

'Thon Virak, chairman and director-general of Green Trade, a Cambodian state-owned milled-rice exporter, said the Kingdom is ready to make a bid this time, after missing out on a similar tender by the Philippine government last year due to a shortage of able exporters.

“This is the second time the Philippines has invited Cambodia to the bidding,” Virak said.

“We missed previous bidding because we did not have a united exporter group yet to transport the huge load. But now we have one, we are ready,” he said, referring to the recently founded Cambodia Rice Federation (CRF), which united the country’s rice exporter community in one organisation.

“I do not work alone. We are working together in the group now.”

Virak, however, admitted that Cambodia’s high transportation and shipping costs could hamper the country’s chances of landing the deal'. 

Cambodia Daily reports likewise but two days later ...

Cambodia yet again to export to China? Or will this time round prove reality? Phnom Penh Post (Aug 12): 

'The Chinese government-run China National Cereals, Oils and Foodstuffs Corporation (COFCO) will today formally agree to import 100,000 tonnes of rice from Cambodia, local officials say.

...

But trust between the two nations might not be the only reason for today’s deal, according to David Van, president of local rice producing firm, Boost Riche Cambodia.

“The South China Sea dispute lately may have also played indirectly a part in China wanting to diversify its rice import base as imports from Vietnam hit a substantial figure. China imported over 66 per cent of its total rice imports from Vietnam in 2013, while only 1 per cent came from Cambodia,” Van said'.

Note that China has said illegal rice imports from Vietnam must stop (see above).

Not satisfied

While adding the rice kernels the Bangkok Post (July 22) mentions some losses from Chachoengsao province. It adds it's own opinion on the matter:

'The dust-to-dust discovery was only the latest chapter in rice-pledging scheme's disastrous history. The programme, cooked up by the Pheu Thai Party and former prime minister Yingluck Shinawatra, paid farmers 50% above market rates for rice in an attempt to bolster the party's popularity in rural areas and distort the international rice market.

But by now the Thai junta instigated national rice audit is apparently near completion, so reports the Nation (July 28). It doesn't mention any estimates other than this which will come as a disappointment to the ruling elite:

'However, the upshot of the inspection in the East's 14 provinces was that only a few flaws were found. There were 429.8 tonnes of rice missing or 0.018 per cent of the 2.32 million tonne total on the lists, the Second Army Area spokesman said yesterday'.

Some positive news for the rotten rice storers: ethanol is your answer (Bangkok Post, July 30):

'Finance permanent secretary Rangsan Sriworasart, chairman of a sub-committee on closing the rice pledging scheme account, said inspectors had so far found about 100,000 tonnes of inedible rice which could be processed into something else'. 

After checking 90 percent of the stocked rice, 3m out 18m tonnes of rice were deemed substandard, so quotes 

'... a source from a committee charged with checking the stocks.'

According to the Nation (Aug. 13). More or less short of expectation?

Meanwhile the Nation (Aug 6) mentions the first junta approved auction of rice is to take place. However not everything went as planned despite all the transparency built in. The Nation (Aug. 8):

'The working committee did not expect the bids to be lower than floor prices, so it may need to ask for a mandate from the chairman of the Rice Policy Committee to adjust some floor prices in order to release rice from the government's stocks.

If the prices are not satisfactory, the government will not be in a hurry to sell rice from its inventory, as pressure to do so has lessened because of a low supply in the market'.

Clearly some work is still required.

Daft

The junta has been very quiet on what their plans are to be for the future for rice farming in Thailand.

The Nation (July 23) likes the idea of a pension for farmers. It looks like fun:

'Under a draft bill dealing with the farmers and rice development fund, farmer members will pay about three per cent of their monthly income to the fund and the state will also contribute an unspecified amount. When the farmers retire at the age of 60 or 65, they will have a monthly pension of about Bt4,000'. 

Though the concern mat be genuine, there's nothing like creating a pot of gold for politicians to put their hands in. Daft idea, makes the rice pledging scheme look a lot better.

And the past?

The Bangkok Post (Aug. 6) has a foggy article about all the debt which seems to be transferred from one government company to another, though everyone understands that the non-repayment is resulting in additional interest costs brought on by the rice-pledging.

Help

The Phnom Penh Post (July 31) is let on a not-so secret: it finds out that cashew numbers aren't adding up. As do none of the agricultural commodity statistics do. Production = export + internal consumption. It doesn't add up, officially. What the statistics do show:

'Unshelled cashew nut exports totalled close to $2.5 million in the first six months of the year, with 2,800 tonnes exported, a rise of 200 per cent over the same period last year, a report from the Ministry of Commerce shows.

But despite the increases, officials and industry leaders told the Post that Cambodia produces close to six times the recorded export figures.

...

When questioned as to where the unrecorded nuts were going, Ken Ratha, spokesman at the Ministry of Commerce, said cashew nuts may be slipping through smaller corridors at the borders where figures are not recorded.

“Farmers export cashew nuts by themselves, or traders are avoiding tax,” he said'.

Phnom Penh Post (July 23) features the lack of a way forward for the nation's corn farmers. Prices are down, so lot's of headaches. Interestingly it highlights how traders and storers are not wanting to get involved leaving farmers with little place to sell. Or store.

The Cambodia Daily (Aug. 13) finds out that the way forward is to diversify and seek niches. In this case pepper. Attributing the lack of poor markets for rubber farmers in some locations are turning to pepper:

'In Dar commune in Tbong Khmum province’s Memot district, one of the richest pepper-growing areas of the country, the number of households farming pepper has increased from 1,730 last year to 2,300 this year, while cultivated farmland has doubled from 600 hectares to 1,200, according to Yin Sopha, executive director of the Dar-Memot Pepper Agriculture Development Cooperative'. 

Though the article and the interviewees are upbeat one should know that the global market is relatively small, such large changes in production can only come at a loss of other growing areas; 30-40 years ago Malaysia's Sarawak tried to corner the global market, it didn't occur ...

Cassava growers are less fortunate.

'Cassava farmers are calling on the government to standardise prices and help stabilise demand as the market for the root crop continues to prove risky for growers'. 

Phnom Penh Post (Aug 6) reports on the phenomena of prices going up and down: 

'The price increase has been reluctantly welcomed by farmers, who are tired of the crop’s volatile price and fluctuating market demand.

“The price is up today and down tomorrow. Farmers are taking big risks of losing money if crops cannot be sold at a good price,” Pailin province cassava trader Song Sarum said.'

Well, the government is hardly the answer.