Rice news during the past year has been dominated by Thai efforts to support it's farmers and rural areas by buying up all the nations rice at above market levels and storing it for future sales. Though initially rosy, the plan has backfired. Sales are near non-existent, world market prices have dropped rendering potential huge losses and the large amount of fraud has resulted in national political liability for the ruling party.
And all of it could have been expected.
And has anything changed the last few weeks? well, there's certainly been a fair share or reporting.
Sales or not?
An MoU was signed between Thailand and China concerning the purchase of more than a quarter million tons (Nation, 22 Nov.).
A day earlier the same source
reported the possibility of 5 million tons moving northwards. But
spread over 3 years. The bad news:
'However, Thai rice exports to China dropped 57.8 per cent in the first 10 months of the year, to 91,460 tonnes'.
Another day later, context comes in. The Nation:
'It has been remarked that this week's MoU is totally different from previous government statements that China would purchase 5 million tonnes of rice from Thailand in three years. There was no such fixed figure in the MoU but only a statement, without any firm commitment, that China would import high volumes of Thai rice and that Thailand would supply the rice as required by China. In addition, the price will be negotiated based on the market price at the time of any future transaction'.
On the 24th the Bangkok Post has more insight on the potential losses:
'Mr Paibul also cited a warning from the Thailand Development Research Institute (TDRI) that the rice scheme could saddle the country with huge debts."The TDRI estimated losses from the rice scheme would be around 6,000-7,000 baht per tonne of paddy. This amounts to nearly 200 billion baht of losses per year or 800 billion baht during the four-year term of this government," he said.As it is only a memorandum of understanding, either partner can cancel it at any time. In this case, Thailand needs China to import rice to help its dispose of its huge stockpile of about 6 million tonnes accumulated under its high-priced pledging scheme. Unfortunately, there is no G2G deal at all now'.
And a few days later, apparently the Chinese ambassador to Thailand has said there is no deal at all (Bangkok Post, 2 Dec.):
'The Democrat Party has demanded the government present documents to prove it has sealed a rice export deal with Beijing, after the Chinese ambassador to Thailand said the agreement had only been reached in principle'.
Pledge sidelines
Nigeria mentions receiving 10 year old Thai rice (Nation, 20 Nov.). With the Thai government hoarding it's own nations surpluses this could become more commonplace. Same publication, same day notes that already 100 cases are being researched by the Thai anti-graft agency.
The Thai Finance Minister though sees a positive future (Bangkok Post, 23 Nov.):
'He [Fin. Min.] said the rice pledging scheme, which pays 15,000 baht per tonne for white rice paddy, might incur some losses, but the figure would not reach 300 billion baht'.
Hongkong reports that Thai rice is losing flavour in the local market:
'"Hong Kong consumer behaviour has changed to lower-quality rice because of high prices of Thai rice and slowing economic growth. The Thai government should set a competitive price for rice, which should be lower than the current price by $100 a tonne in order to narrow the gap between Thai [rice] and its rivals," Chan [chairman of the Rice Merchants Association of Hong Kong and vice chairman of the Hong Kong Rice Suppliers Association] said'.
Report from the Bangkok Post (19 Dec.).
The Nation (18 Nov.) notes:
'The high price of Thai rice has resulted in the Kingdom losing about 50 per cent of its export customers as countries switch to importing more rice from India and Vietnam, which offer more attractive prices'.
And then the hard talk
Another commentary from the Bangkok Post (13 Dec.) applauds efforts to redistribute wealth between the wealthy Bangkok and the poorer rural areas, but questions the rice-pledging scheme as the main driver:
'So far, the government has not taken any steps to deal with graft allegations. Actually, the Pheu Thai Party failed from the start in not being able to explain why the rice pledging price was set at 15,000 baht per tonne. It's unlikely that the sum is based on rational calculation.Moreover, it failed to specify measures to handle the existing stock and the glut of incoming stock to prevent a decline in the quality of rice and also to recoup the sum it invested'.
Adding more content is this commentary by the Bangkok Post (5 Dec.) It first mentions the main points which have been repeated oft enough: the discrepancy between the government has bought the rice and the
likely huge losses stemming from the sales. The other is the system
which encourages fraud. Significant other non-intended consequences lie
ahead such as farmers now intentionally seeking less favourable environs for their rice fields: if all fails they
are confident they will receive government hand-out. More mono-cropping.
The trading system is whithering away. And it finally notes the
political undercurrent: the farmers are now the recipients and are relied upon to vote and empower their leaders ...
And over the horizon is more bad news for Thailand. FAO reports (19 Nov.) that production is growing faster than consumption:
'Global rice production for 2012 is forecast to outpace consumption in 2012/13, resulting in an upward revision of 5 million tonnes in 2013 closing inventories, according to a new forecast by FAO's Rice Market Monitor (RMM) issued today'.
More inventory ultimately means lower prices in the long term.
Cambodia
In Cambodia much promise was made of the potential to export even larger amounts. Not happening.
The FAO have once again assessed Cambodia's productivity and expects it to drop (Phnom Penh Post (PPP), 22 Nov.). It's a bit unclear by how much.
Cambodia needs a loan of $200 million to make exports happen What's that? No show, well then we need um .. $50 million. So reports the PPP (27 Nov.):
'Son Kuthor, president of the state-run Rural Development Bank (RDB), said last week that previous negotiations for a loan of $200 million stalled because of differences between the parties in how the loan should be used.
“We don’t hope for $200 million because of the conditions the bank imposed,” he said.
“We now hope to receive a pilot loan to buy paddy rice. We’ve so far suggest $20 to 50 million,” he added'.
Cambodia's rice sector is reorganising itself by initiating a sole organisation which can deal with the Ministry of Economy and Finance (PPP, 17 Dec.). Name: Federation of Cambodian Rice Exporters (FCRE).
'Cambodia’s Minister of Commerce Cham Prasidh, who presided over the launch ceremony, said the federation will gain the full support of the government and will work with it to deal with all issues over the export of milled rice.“The FCRE is the only partner in the rice industry authorised to discuss issues with the government,” he said.Cambodia has a number of milled rice associations, leading to inter-association disputes. However, Cham Prasidh said all of the organisations will maintain their authorisation to export milled rice.He also warned that associations which do not become members of the FCRE will lose their right to talk to the government on export issues'.
Bodes well?
The same source, a week earlier highlights one other organisation:
'The Alliance of Rice Producers and Exporters of Cambodia (ARPEC) will release US$2 million after December 15 to its members in nine provinces so they can buy paddy rice before the harvest season ends and stocks have been depleted.Hann Khieng, director of ARPEC which was formed in May this year, said an internal meeting between the alliance’s management teams and members last week agreed to disburse about $2 million to its members'.
Back
Finally back on subject, hybrids. Hybrids are the panacea for our future, still so it seems, despite little proof forthcoming this year on whether or not anything tangible (more financial returns?) might arise. An interesting article from the South China Morning Post (28 Nov.) as even they are raising question marks as to whether the grail of achieving more is sustainable?
'A farming pioneer's ambitious goal to increase the yield of hybrid rice by 11 per cent in the next three years risks making the staple more vulnerable to weather, disease and pests, agriculture experts have warned....China's rice fields, including both hybrid and normal rice, already yield 6.7 tonnes a hectare annually. That was not far behind the 7.5-tonne yields in developed countries where the most advanced farming technologies are used, such as Australia and the United States.Several scientists, however, said the 15-tonne target was impractical because the costs of growing such rice, in terms of fertiliser and land management, would be enormous. Moreover, they warned that focus on field yield could sacrifice the crop's resistance to weather and pests'.
A good read.
