Possible Thai rice curbs rattle world market
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Possible Thai rice curbs rattle world market

Amid scarce rainfall, authorities consider asking farmers to cut back planting

Farmers plant rice seedlings in Phimai district of Nakhon Ratchasima. (Photo: Prasit Tangprasert)
Farmers plant rice seedlings in Phimai district of Nakhon Ratchasima. (Photo: Prasit Tangprasert)

A proposal by Thai authorities for farmers reduce rice planting to save water following poor rainfall poses a fresh threat to global supply after India banned some shipments of the grain.

Farmers in the key Central Plains region have already planted most of their rice but the government is encouraging a switch to other crops that need less water, said Surasri Kidtimonton, the secretary-general of the Office of the National Water Resources (ONWR).

Thailand, the world’s second-biggest rice exporter, is seeing less rain as the country braces for a potential drought next year as the El Niño weather pattern leads to drier conditions.

Cumulative rainfall so far in the central region is about 40% below normal levels and the move to curb planting of rice is to help conserve water for household consumption, according to Mr Surasri.

“What’s worrying is the El Nino phenomenon may extend right through to 2025. We have to plan nationwide water management prudently,” he said on Tuesday.

So far, rice is being farmed on more than 11 million rai, with farmers who have not yet begun planting being urged to either delay their plans or switch to more drought-resistant plants, he said.

Rice prices in Asia surged to the highest in more than three years last month after India — the world’s biggest exporter — banned shipments of non-Basmati rice to shore up domestic supply and keep a lid on local prices. Further price rises on the world market would burden consumers with additional inflationary pressure.

Thailand’s central region was expected to account for almost 14% of total rice-growing area in 2023 and forecast to make up about 19% of the main paddy harvest in 2023-24, according to the Ministry of Agriculture. Water levels in major reservoirs in the area are at about 51% of capacity, said Mr Surasri.

The government previously warned that El Niño could lead to unusually low rainfall, and advised farmers to grow one crop this year instead of the usual two. However, some of the shortage from Thailand could be offset by higher shipments from Vietnam, which are likely to exceed its target for the year. 

As far as water usage in Thailand is concerned, the top priority must go to household consumption, followed by the diversion of water supplies to maintain natural ecological systems, Mr Surasri said.

“It’s crucial that people use water sparingly,” he said.

Vietnam exported 21% more rice in the first six months of 2023 than a year earlier, with shipments increasing to the Philippines, China and Indonesia, according to the Customs Department. The country says an increase in overseas sales won’t affect its food security.

India is by far the world’s biggest rice exporter, accounting for 40% of global trade, while Thailand and Vietnam make up 15% and 14%, respectively, according to the US Department of Agriculture.

Rice exporters in Thailand and Vietnam have been attempting to renegotiate prices on sales contracts for around half a million tonnes for August shipment, two trade sources said this week, as India’s ban has tightened supplies.

Exporters are rushing to cover supplies from farmers who have raised prices following a surge in the world market, putting millions of dollars worth of deals at risk.

Global prices of key rice varieties shipped worldwide have climbed by about $80 per tonne since India imposed the ban on July 20, traders said.

The price of Thai 5% broken rice, an Asian benchmark, has climbed to $625 per tonne, versus $545 around two weeks ago, while similar variety from Vietnam has risen to $590 from a range of $515 to $525.

“The current prices are way higher than the contracted prices,” said one trader in Ho Chi Minh City. “The export price surge has resulted in a sharp rise in domestic paddy prices. Several traders are now rushing to speed up their purchases from farmers.”

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