Rice prices to peak mid-year
Global consumers beefing up stockpiles
Rice prices are expected to rise until the middle of the year as global consumers are beefing up their stockpiles, with China unlikely to rev up its rice exports for food security in light of the Covid-19 outbreak.
Chookiat Ophaswongse, honorary president of Thai Rice Exporters Association, said global rice demand has surged since the deadly virus outbreak, leading rice prices to increase by US$30-50 since early in the year.
"People, particularly in the US, Europe and Asia, are staying home, while China, which controls a massive rice stock of up to 120 million tonnes, has halted exports after shipping 3 million tonnes priced about $100 per tonne lower than Thai grains last year," he said.
Before the virus outbreak, it was estimated China would boost its rice shipments to 3.5-4 million tonnes this year.
"Buyers from several countries are now more interested in Thai rice, with some importers willing to buy unlimited amounts to boost their stocks," said the veteran. "The free-on-board prices of white rice 5% have risen to $440-450 per tonne from $400 at the beginning of the year."
"The past few years traders had a difficult time selling Thai rice, given its relatively higher prices than grains of other countries," he said. "Once China started halting its shipments, the baht weakened, and Indonesia looked likely to resume its rice purchases, prospects brightened."
Mr Chookiat predicts rice prices will gradually increase until the middle of the year, or longer if the epidemic is prolonged.
In a separate development, the National Rice Policy Committee yesterday approved a rice insurance scheme for the 2020 season worth 2.91 billion baht, aiming to cover 44.7 million rai of farmland.
Narumon Pinyosinwat, the Government House spokeswoman, said the rice insurance scheme will be offered for two types -- a basic insurance programme (tier 1) and a voluntary programme (tier 2).
The tier 1 rice insurance will be for customers of the Bank for Agriculture and Agricultural Cooperatives (BAAC) and farmers in low-risk areas, charging an insurance premium of 97 baht a rai and 58 baht per rai, respectively. The government and BAAC will contribute subsidies for both cases.
Insurance premiums for general farmers in at-risk areas will be charged at 210 baht per rai, with the government subsidising 73.77 baht per rai.
Under the scheme, farmers will receive compensation of 1,260 baht per rai for rice damaged by natural disasters. They can further secure 630 baht per rai for damage caused by plant diseases and epidemics.
The tier 2 scheme will apply to BAAC customers who want to buy additional insurance and general farmers.
The premium rates will charge 24 baht per rai for farmers in low-risk areas, 48 baht per rai in medium-risk areas and 101 baht per rai in high-risk areas.
Farmers will receive compensation worth 240 baht per rai for natural disasters and 120 baht per rai for losses caused by plant diseases and epidemics. The government will not offer any subsidies for the tier 2 scheme.