The Thai baht's rally to the highest level in 16 years is hindering exports from the world's biggest rice shipper, curbing the government's efforts to diminish record state stockpiles and threatening to increase its losses.
Overseas buyers have rejected attempts by the government to boost prices in dollars to offset reduced revenues as the baht has strengthened, according to Commerce Minister Boonsong Teriyapirom. Thai stockpiles are set to double to 11.6 million tonnes (metric tonnes) in 2012-2013 from two years ago, according to data from the US Department of Agriculture.
The government of Prime Minister Yingluck Shinawatra began buying rice from farmers at above-market rates in 2011 to boost rural incomes. While benefitting growers, the programme has spurred the buildup of the biggest-ever stockpiles. Even as the USDA forecasts Thailand will regain its role as the largest exporter this year, displacing India, the estimated 8 million tonnes shipped would be about 25 per cent less than two years ago.
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