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.

Fancy

China a compass nation? Well, read this (China Post, Mar. 8): 

'China has delayed the introduction of genetically modified rice and corn as it tries to head off public fears, leading government scientists said on Thursday.'

Caving in to public demand? Fancy that. Oh, do note this is a Taiwanese publication ...

Rice pledge price

Will the pledge price drop? Bangkok Post (Feb. 28): 

'The Ministry of Commerce will propose to the National Rice Policy Committee that the pledging price of non-glutinous unmilled rice be lowered, permanent secretary Watcharee Wimuktayon said.

The rice panel, chaired by Commerce Minister Boonsong Teriyapirom, is scheduled to meet on Friday, March 1.

Mrs Watcharee said her ministry will propose three price levels for non-glutinous paddy to the committee for consideration - the same 15,000 baht per tonne, 14,000 baht and 13,000 baht per tonne'. 

So the ministry is so wise they can't even come up with 1 recommendation? More government logic: 

'If the pledging price of the paddy is lowered, rice exporters would be able to export more and foreign exchange revenue would rise and the rice industry would expand, while farmers would not be affected, she said'. 

If the pledge price drops, farmers will not be affected? 

On the same proposal the Nation clarifies: 

'Vatchari [same as Watcharee above] said farmers should be able to accept the price change because the government will continue to support them and help with reducing the costs of production.
Although the price pledging is the result of the government's policy, it could be adjusted if it will create a better outcome for the rice industry, Vatchari said. Farmers should not suffer from lower incomes as most have relieved themselves of debts during the past two years of high prices, she added'. 

No proof though ...

The response of farmers: predictable? Bangkok Post (Mar. 1): 

'The Commerce Ministry's proposal to slash the rice pledging price has infuriated paddy farmers, who are threatening to hold a mass rally if it goes ahead.

Kittisak Ratanawaraha, head of a network of rice growers in 17 northern provinces, said any move by the government to go back on its promise to pay 15,000 baht for each tonne of pledged rice would be completely unacceptable'.

It also notes

'Mr Kittisak said farmers rarely receive the full 15,000-baht rate under the present rice pledging scheme, because moisture and contamination are often cited as excuses to cut the price.

Even with the best rice, farmers are often paid only up to 11,000 baht a tonne.

The government has delayed payments for four months, forcing farmers to depend on loan sharks who charge interest rates of 20% a month.

He said if the government cut the pledging price to 13,000 baht a tonne, farmers could end up being paid only 8,000-9,000 baht a tonne.

The Phichit farmer said the pledging scheme was ripe for abuse and does not really benefit farmers.

"If the government wants to really help farmers, it should freeze the prices of fertilisers and farm chemicals, cut interest rates for us and end the delays in payments for pledged rice," Mr Kittisak said'.  

Pandora´s box, once opened it will never ever close .... 

The article garners nearly 50 comments!

Anyway the Nation (Mar 1) reports that even the notion that prices might drop has been ... dropped:

'Commerce Minister Boonsong Teriyapirom yesterday said the NRPC [National Rice Policy Committee] would not convene today, as earlier announced by the ministry's permanent secretary Vatchari Vimooktayon.

...

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said that to keep its promises to farmers, the government might maintain the pledging price. But because of fiscal constraints, it may put a lid on the amount each farmer can get from the programme.
"Officers involved with the scheme admitted that the pledging scheme had created many problems, including excessive budgets, limited warehousing space, and a drop in export volume," he said'. 

Inevitable?

But the pledge system continues. Bangkok Post (Mar 11) reports 

'The pledging price for the 2012-2013 second crop of off-season rice will remain unchanged, Internal Trade Department director-general Wiboonlaksana Ruamraksa says'. 

Aha. Farmers win? Or the cleptocrats?

On the side

The Nation continues (Mar. 6)  with summing up the costs: 

'The government's rice-pledging scheme is taking a toll on Thailand's tightly squeezed budget, as some of the funds from fiscal years 2014-16 might be required to offset the Bt100-billion [US$3 billion!] loss'.

Sell-off on the cards? 

'The government will have to sell off its rice stockpile amassed under the rice pledging scheme at market prices, PM's Office Minister Nawatthamrong Boonsongpaisan admitted on Thursday.
...  
Jac Luyendijk, chief executive officer at Swiss Agri Trading SA, which handles 600,000 tonnes of rice annually, said the price outlook in the long run is bleak. "We have to keep in mind that with these increasing rice stocks in Thailand, the problem will become bigger and bigger," Mr Luyendijk said. "Once Thailand unloads its stockpile we will look to very depressed rice prices for years to come." "Thailand will have to get rid of the surplus in the next few months to be able to continue the programme and purchase rice again," said Samarendu Mohanty, a senior economist at the International Rice Research Institute, a group based in the Philippines. "Thailand cannot continue to hold these stocks for a long time due to quality issues and also the space."' 

The optimists view of the road ahead, as reported by the Bangkok Post (Mar. 7).

Extending the rice pledging scheme is bad news (nothing new there ...)? At least according to the Nation (Mar. 14): 

'The government's insistence on maintaining the rice-pledging price at Bt15,000 per tonne for another year will not only continue to dampen Thailand's export competitiveness and the rice-trading industry, but also lead to higher budgetary losses and a gloomy future for rice-farming development'.

'The government's rice pledging scheme appears to have created a new worry for consumers. Besides concerns over whether the government can manage its huge rice stockpile to prevent any severe impact on the country's budget, many people now wonder if is it safe to eat rice that has been kept in warehouses for years'. 

Well, such articles (Bangkok Post, Mar. 18) are undercutting the Thai governments ability to off-load on the local market, let alone as exports ...

More opposition as noted in the Bangkok Post (Mar. 19): 

'The government's costly rice pledging programme is again under fire, this time riling Virabongsa Ramangkura.

"I disagree with the government's plan to use taxpayers' money to subsidise the state's rice pledging scheme in the off-season harvest," said Mr Virabongsa, chairman of the Strategic Committee for Reconstruction and Future Development.

"The government had better shift its focus to promote high-value crops such as Hom Mali rice, organic rice, energy crops and fast-growing plants such as eucalyptus and the neem tree (Sadao). These will generate more benefits."'

There are some limitations set to the pledging. According to the Bangkok Post (Mar. 20), 18 varieties will be excluded. These short duration varieties are considered poor quality and thus fail to meet new quality requirements. do note that this is a proposal ...

 
ASEAN wide

Neighbours of Thailand are becoming ripe for harvesting? CPF thinks so (Nation, Mar. 4) and is investing in Lao and Cambodia: 

'CP Laos and CP Cambodia are investing a combined Bt250 million to set up a new silo for maize in Cambodia and a new feed-meal plant in Laos to strengthen CPF's integrated agricultural-industrial business ...'.

Focus:

'Sakol [Sakol Cheewakoset, president of CP Laos and CP Cambodia] said the plant in Pailin province would ensure the company's distribution in western Cambodia, an important area for agricultural production. Having a plant there will reduce logistics costs. Initially, capacity is set at 10,000 tonnes per month.
The company is also considering investing in aquaculture in Cambodia in the near future.
"CP's business in Cambodia is doing well, as food business still has great opportunity. Our five-year business plan aims to double our total sales every year," Sakol said'.

Meanwhile in Burma, a sign of the rosy future? The Nation (Mar. 19) reports that Burmese rice is heading towards Japan for the first time.

 

Rice and more

Meanwhile Cambodia is experiencing a positive return on it's exports.  Phnom Penh Post (PPP, Mar. 5) reports:

'Cambodia milled rice exports reached 49,815 tonnes in the first two months of this year, an increase of 106 per cent from the same period last year. Jasmine rice was the biggest part of the exports, followed by long grain white rice, data from the Secretariat of the One Window service for rice exports showed'.

Exports for all agricultural products to Malaysia looking up according to the PPP (Mar. 4): 

'Cambodia’s exports of agricultural products to Malaysia rose sharply last year compared to a year earlier, according to a press release from the Malaysian embassy to Cambodia, with milled rice and crude rubber accounting for most of the total'.

The PPP (Mar. 3) cites a report by Cambodia Development Resource Institute (CDRI) which looks into the sales of fertilizer. Amongst it's finds: 

'Lim Chheng Lay, vice-chairman of Lim Bun Heng Trading Co, a fertiliser importer and distribution company, estimates 40 per cent of fertiliser currently on the market is fake. ...

CDRI conducted a small survey of 35 farmers in Takeo province and estimates that 10 per cent of farmers had bought fake fertilisers, causing yield losses worth between $285 and $350.

CDRI’s preliminary findings also question the government’s licensing conditions, suggesting that it constrains market potential and encourages “large scale” illegal fertiliser smuggling from Vietnam.

After many attempts to make contact, the Ministry of Agriculture, Forestry and Fisheries would not comment on the issue'. 

All involved want the government to take action as if the government is able to, willing and most preferred party to intervene. How about companies taking action? Or farmers identifying fake fertilizer traders?

Millers need cash. So the Asian Development Bank responds with the Climate Resilient Rice Commercialization Sector Development program. Newsworthy? PPP (Mar. 11): 

'The Ministry of Commerce and bank officials announced yesterday that they will hold a meeting next month aimed at better facilitating rice millers’ access to credit'. 

So not newsworthy.

New markets? Green Trade is betting on Libya, so reports the PPP (Mar. 14). They cite company officials sounding very upbeat. Note:

'Last August, Green Trade signed a deal with Indonesia’s state-owned DULOG to supply 100,000 tonnes of milled rice per year. However, the rice was never exported'.

The PPP (Mar. 13) notes that returns from rubber are dropping even though prices are going up (seasonally) year-on-year the prices are down. 

'In 2012, Cambodia exported 54,000 tonnes of dried rubber, up 16.6 per cent from 46,700 tonnes in 2011.
The total value of 2012 exports, however, dropped 21.2 per cent to $158 million from $201 million in 2011, according to figures from the Ministry of Commerce'.

An article in the PPP (Mar. 20) notes how the government would like to diversify it's exports by promoting exports of agricultural produce. Seems more wishful thinking than a sound strategy.

Something missing from Cambodia? Not in the national news but Radio Australia (Mar. 19) mentions that large-scale rice cultivation should be halted: 

'Environmental scientists are calling for a stop to commercial rice farms being granted huge swathes of land in Cambodia, as one way to protect tropical flooded grasslands and the species that depend on them'. 

It follows on the heels of a Bangkok Post (Mar. 18) report on the subject: 

'Scientists from England's University of East Anglia said big companies have swept into the region, blocked off local communities, and set up commercial rice farms.

"The loss of this entire ecosystem from Southeast Asia is imminent," they said bluntly.

Researchers around the Tonle Sap great lake in northwestern Cambodia called the loss "catastrophic". The area is a wildlife centre of biodiversity and, equally, "a vital fishing, grazing, and traditional rice farming resource for around 1.1 million people," the researchers said'.

Rice prices
Do note that Vietnamese prices are dropping in real terms as well as in comparison to Thai rice prices, according to recent price overview from the FAO:

Prices are set to drop though. Bloomberg (Mar. 5) reports global plantings up to a record high with demand flat or even dropping.

Odd

Odd going-ons in Vietnam. According to Saigon GP Daily (Mar. 19) hybrid rice is illegally being cultivated in Tien Giang. The charactter of the offence: 

'Since Man [Nguyen Duc Man, director general of Pioneer Hi-Bred Vietnam Co. Ltd] is growing hybrid rice on a non-appointed area and without a legal license from the government, the Tien Giang Department of Agriculture and Rural Development is now checking his documents and will hold a meeting with local authorities to resolve this issue'. 

Sometimes one can exaggerate the dangers. The article also mentions: 

'In related news, residents of Tan Loi Hamlet in Tan Tien Commune in Tri Ton District of An Giang Province, discovered suspicious looking strangers trying to lease 12 hectares of land to grow hybrid rice. Had they not been found out and reported to local authorities, these strangers would have organized an informal discussion to introduce growing techniques for this hybrid variety to farmers'.

Following on the succes of it's hybrid rice seeds, Longping Agriculture wants to expand (Chinadailyusa, Mar. 14) to become a global leader. It's next step: 

'Wu [Wu Yueshi, chairman of the board of Yuan Longping High-tech Agriculture] said that in its first step to achieve the company's goal, it has submitted a proposal to the current session of CPPCC National Committee to build an "International Rice City" in Changsha of Hunan province, under the leadership of agrarian scientist Yuan Longping, honored as the father of hybrid rice.

"If the proposal is approved, the city will serve as an international production base of hybrid rice to further secure the national grain supply and meet the world's food demand," said Wu, who is also a member of the CPPCC National Committee'.