Rice stockpiles will surge to a record this year driven by the government's rice-purchase programme, according to the Food and Agriculture Organisation (FAO).
The FAO said the country may be running out of room to store the staple.
Milled holdings may jump 40 per cent to 18.2 million (metric) tonnes in 2013, the Rome-based United Nations agency said in a report Friday on the global rice market. The reserves, which averaged 5.4 million tonnes a year between 2008-2010, have increased from 7.8 million tonnes in 2011, according to the report.
There may be a "looming shortage of storage space," the agency said. "Government stock-release plans have progressed slowly, further aggravating the supply situation for an export sector that is faced with little offshore demand," it said.
The projection highlights the buildup of rice in Thailand even as the country is forecast to reclaim its mantle as the biggest exporter this year as the government tries to step up sales. The FAO's forecast compares with a Jan 30 estimate from the Thai Rice Exporters Association, which put milled holdings at 17 million tonnes.
Former Thai Prime Minister Thaksin Shinawatra said in September the rice-purchase programme should be extended for several more years.
The rice-purchase scheme has elevated local prices, prompted increased production and "fostered a considerable rise in unofficial inflows" from neighboring countries, the FAO said in the report. An estimated 750,000 tonnes in unofficial shipments was moved in, up from 400,000 tonnes a year earlier, it said.
The government bought nine million tonnes of unmilled rice last harvest and expects to purchase as much as 11 million tonnes this harvest, Commerce Minister Boonsong Teriyapirom said on Jan 23. The stronger baht had made exports "quite difficult," he said.
Thai rice shipments plunged 37 per cent to 6.73 million tonnes last year, the Ministry of Commerce said on Jan 23. That's the lowest level since 2000, according to data from the US Department of Agriculture, and dethroned Thailand as the world's biggest exporter.
Exports may increase to 7.7 million tonnes this year, according to the FAO report. "Shipments from Thailand are anticipated to rebound, mostly on the expectation of releases of supplies from public inventories, which could even bring the country back into the leading rice exporter position," it said.
Thaksin said that the rice purchase reaps economic gains that are about three times the cost, according to an interview in September.
The World Bank estimated the total cost may be as much as 440 billion baht ($14.8 billion) in 2012-2013, compared with 376 billion baht or about 3.4 per cent of gross domestic product the previous year.