The country is producing less jasmine rice, causing a sharp increase in prices due to low yields, according to the Thai Rice Exports Association (TREA).
TREA president Charoen Lathammatas confirmed a supply shortage of jasmine rice in the country. He described output this year as being lower than usual owing largely to particularly wet weather, which hurt productivity during the growing season last year.
Also, the low rice prices have given farmers less incentive to invest in farming. Many of them bought less fertiliser to nourish paddy resulting in a lower rice yield per rai, according to Mr Charoen.
He said the statistics showed the average output per rai of paddy used to be 370kg. Now, the figure has dropped to 350kg.
Mr Charoen said it is forecast the country will produce 7.2 million tonnes of paddy jasmine rice, which will be made into four million tonnes of polished rice, this year.
The TREA president added more farmers have switched to growing sugar cane after more licences were granted to set up sugar mills. It is estimated that each factory has the capacity to mill cane grown on up to 400,000 rai.
He said many rice fields could be turned into sugar cane farms, particularly in the Northeast, adding that one million rai of rice fields could be replaced by sugar farms.
In light of the short supply, jasmine rice now fetches a price of 17,000 baht per tonne, the highest in 20 years, up from 11,000-12,000 baht per tonne from the same period last year.
The export price has also steepened to US$1,100 (34,550) per tonne, compared with US$700 a year ago, according to the TREA.
Meanwhile, the Thai Rice Mill Association (TRMA) said the jasmine rice output of 7.2 million tonnes had missed the target of 9.9 million tonnes set by the Agriculture Ministry.
Last year, a lot more farmers opted to grow glutinous rice instead of jasmine rice, which drove down jasmine rice volume. This could have contributed to the shortfall in exports and higher domestic retail prices of jasmine rice, said TRMA secretary-general Hassadin Suwannapongchet.
He said the problem requires effective management of overall rice supply. Thailand exports about two million tonnes of jasmine rice a year, a level which should be maintained this year despite lower supply in order to take advantage of the higher export prices.