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Thailand is predicting it will regain its position as the world's leading rice-exporter, even though the industry is still reeling on the back of ongoing complications related to a failed rice subsidies-scheme.
For decades the Kingdom led the way, until then Prime Minister Yingluck Shinawatra instigated a scheme in 2011 that saw farmers paid 30-40 percent above market level for their rice. With the government unable to shift the grains at a profit, stockpiles have grown dramatically.
Chookiat Ophaswongse, the honorary president of the Thai rice exporters association, told the Anadolu Agency on Thursday that the country could again surpass India and Vietnam.
“We are quite confident that, if our prices are not too far apart from those of our competitors worldwide, we should be able to regain and maintain the position of top world exporter from now on,” he said.
Since 2011, total losses due to the scheme have risen to $5.8 billion, according to Rangsan Sriworasart, permanent secretary of the Ministry of Finance. Thailand is projected to export 9.8 million tons of rice this year, compared to 6.5 million tons in 2013.
It hopes that the 2014 figure will see it surpass India (8.5 million tons) and Vietnam (6.5), but the country is still burdened by its excess.
Of the 17 million ton stockpile, analysts, however, say only 10 percent is considered of good quality.
Somporn Isvilanonda, a senior fellow at the Knowledge Network Institute of Thailand, told AA that around 14 million tons "is substandard" and "needs to be milled again to be sold on the world market."
"The problem is that we don’t know exactly how large is the loss of quality of the stored rice, we just have general data," he added.
Despite the promise of a rise in exports, Thai rice has been heavily penalized by a steep decline in price - mostly because of the massive stockpile and efforts by the previous government to release it onto the world market before it deteriorated.
Ophaswongse said that Shinawatra was forced to sell some of the pile from mid-2013, as the subsidies scheme was costing so much.
"But it did not sell it on a tender-basis, but rather through secret channels at very low prices under the guise of government-to-government agreements,” he claimed.
In fact, he says, the rice was sold to some private companies connected to the government at prices that allowed them to make a very large profit.
“The effect was that it depressed the market price,” he underlined.
Between November 2011 (the launch of the subsidies scheme) and November 2014, the price of Thai rice fell by 30 percent.
The current military appointed government - which overthrew Shinawatra's May 22 - is determined to unload the rice stock as the longer it is kept in warehouses, the longer its quality deteriorates.
It has called for auctions and is trying to negotiate new government-to-government agreements, with its price falling so low that it is becoming attractive again for large buyers such as China, India and Indonesia.
Ophaswongse warned that such agreements should be done with extreme caution. “The government must release the rice from warehouses gradually, not in large volumes, and it has to monitor the market very closely."
"They can do it when the world market is short of rice, for instance a few months after the harvest,” he added.
The Thai commerce ministry announced this week that it plans to sell 400,000 tons of rice before the end of the year, after having sold previously 350,000 tons in November.
www.aa.com.tr/en
