Thailand Seen Struggling to Move Rice Mountains by 2017 Deadline

The Philippines on Tuesday (16/08) said it expected its paddy rice output to reach 18.135 million tonnes in 2016, down 0.08 percent from last year following crop losses in the first half due to El Nino-induced drought. (Reuters Photo/Issei Kato)

By : Patpicha Tanakasempipat and Simon Webb | on 9:15 AM December 26, 2015
Category : International, SE Asia

Bangkok. Thailand's military government will struggle to offload by a 2017 deadline some 14 million tonnes of rice in state warehouses left over from a policy of the civilian government it ousted, traders and exporters said.

The government inherited 18.7 million tonnes of rice built up under the previous government's rice subsidy scheme and has since held 12 auctions, offloading about 5 million tonnes of rice worth $1.39 billion.

The junta earlier this year set a target to offload the remaining 13.7 million tonnes by 2017, including 6 million tonnes of spoiled rice that the commerce ministry says is no longer fit for human consumption.

The disposals have been a headache for the government, which is also trying to appease rice farmers accustomed to government subsidies and minimum prices that were sometimes double the market rate.

The rice in Thai state warehouses is more than three times the amount imported in 2014 by top consumer China, according to USDA statistics, and rice traders and exporters doubt it can be cleared by 2017.

"I don't think it's possible, but even if it is, offloading that much rice within a short time will have a negative effect on market prices," said Supachai Vorraapinyaporn, president of Tanasan Rice Group, Thailand's third-biggest rice exporter.

"It will also encourage bidders to delay bids and wait to purchase rice at even lower prices in the next auctions."

One rice trader, who declined to be named because he did not want to be seen as critical of the state, said the government's goal was "unrealistic".

At its last auction, the government sold 37,400 tonnes of rice worth $5.50 million for industrial uses such as ethanol production.

Supachai said the government should change its strategy and sell according to demand.

The government says, however, that it is prudent about when it holds auctions.

"We're trying to be careful with timings to not affect market prices", Duangporn Rodphaya, chief of the foreign trade department at the commerce ministry, told reporters on Tuesday.

The commerce ministry's permanent secretary, Chutima Bunyapraphasara, said the government will meet its deadline.

"We're still on track," she said.

In January, a military-appointed legislature impeached ousted former Prime Minister Yingluck Shinawatra for negligence over a government rice scheme that distorted markets and built up massive stockpiles.


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