Thailand Planning Fewer Rice Harvests in Pest Fight Means Drop in Exports

Thailand, the largest rice exporter, plans to reduce planting to reduce pests and improve quality, an official of the Thai Rice Mills Association said.
The plan was launched in October may reduce exports by about 2 million metric tons per year, or about 20 percent of shipments from Thailand, Pramote Vanichanont, honorary president of the association based in Bangkok, said an interview, without giving a timeframe. The country plans to establish a global reference price through a centralized auction, the government said.
A fall in supplies of the country, representing one third of global shipments of 30 million tonnes, could raise prices in Chicago, which have fallen 3 percent this year, behind wheat and corn. the world food costs rose to a record in February, the United Nations estimates, contributing to unrest in Libya and the overthrow of the leaders in Tunisia and Egypt.
"I doubt if it is a good policy, as the outage can lead to food shortages," Kiattisak Kanlayasirivat, director of the Thai Office of the novel Commodities, SA, which sells $ 600 million of rice year. "By reducing supply, it will make the prices."
Rice for May delivery gained 0.3 percent to $ 13,900 per 100 pounds at 7:05 pm Mexico time today. The most-active contract rose 9.1 percent in the last 12 months rose 52 percent wheat and corn advanced 89 percent.
A privately-run auction, will help establish a global reference price that reflects the demand and supply, Wichai Phochanakij, deputy director general of the Internal Trade Department, said in an interview. Under current rules, buyers look for bargains rice directly from suppliers and prices of individual transactions are not published, he said.
Pest Prevention
Thailand's plan to reduce planting encourages farmers to grow rice twice a year instead of the usual three times, Agriculture Minister Theera Wongsamut said by telephone on 22 March.
"The government wants to stop the spread of pests and diseases, reduce production costs and improve productivity," said Theera. "The benefits of price increases will continue."
Removing one crop a year interrupted the life cycle of pests and plant hoppers and reduce production costs by the use of fertilizers and pesticides, Theera said.
The country produces about 20 million tonnes of milled rice a year, half of what it is for domestic consumption. Thailand's exports can advance as much as 5.2 percent to 9.5 million tons this year, according to the Ministry of Commerce.
Provide incentives
"Talking to help boost Thai farmers productivity, quality and profits is very good, but historically only respond to price signals," said Tom Slayton, a rice analyst Alexandria, Virginia-based former editor of The Rice Trader. "Unless the government can provide incentives, the policy will be ignored and there is no change in levels of production or exports."
Thailand plans to increase exports of varieties of top quality and reduce shipments of low-grade beans, which represent more than half of exports, said Pramote, who is also member of the National Rice Policy. The group, headed by Prime Minister Abhisit Vejjajiva, helps set prices for farmers and supervising the sale of government stocks.
Thai rice, the benchmark for Asia, dropped 6.5 percent this year to $ 519 a tonne on March 16 as reduced external demand and the new crop of Vietnam pushed prices lower, according to the Rice Exporters Association of Thailand. The price rose to a record U.S. $ 1,038 a tonne in May 2008.
Farmers are being encouraged to plant soybeans and green beans - also known as mung bean - which act as a natural fertilizer and can be sold in domestic markets as a substitute for exports, Theera said.
Cambodia, Myanmar
If the program fails, the government may consider other measures such as paying farmers not to plant rice, Pramote said.
"We do not aspire to become the largest exporter in the world," said March 21. "We have learned from past experiences of being a key player in the market as the farmers have suffered losses because you can not set appropriate prices for ourselves."
Rice exports from Cambodia and Myanmar, which have lower production costs could increase to offset any decline in Thailand, Pramote said. The two countries are the third and fourth chargers largest in Southeast Asia, according to the U.S. Department of Agriculture.
The government plans to increase rice productivity by 10 percent, increase in average yields of 500 kilograms per rai (0.16 hectares) in the crop year from October 2015, Prasert Gosalvitra, head of the state Department of Thai Rice said March 21. To increase the production of rough rice to 34.5 million tonnes from 31.4 million tonnes in the current crop year, he said.
The production of jasmine fragrant rice of high quality is expected to increase by 20 percent by 2015, Prasert said.