- Language: English
- Published: August 2012
Country Report Thailand
- Published: June 2013
- 25 Pages
- The Economist Intelligence Unit
The cost of Thailand's rice-price support programme is beginning to weigh heavily on both its international reputation and the credibility of its ruling party, Puea Thai. Given that global grain prices are expected to fall further in the coming months, the government risks facing even greater losses by holding on to its rice stocks.
The cost of the government's plan to support rice prices and raise the income of rural rice farmers has been a source of concern ever since it was introduced by the prime minister, Yingluck Shinawatra, in a show of populist bravado after her landslide election victory in 2011. The programme bought rice from local farmers at 50% above prevailing market prices. Thai policymakers bet that they could then stockpile the rice and drive up global prices, given that Thailand was the world's largest rice exporter at the time. It was a classic attempt to corner the international market for an important commodity. But Thailand did not count on other countries stepping in to make up the shortfall. India returned to the market after halting rice exports for several years. Major importers, such as the Philippines, had also stepped up their production in a bid to improve their own food security after a sharp and destabilising price spike in 2008. Instead of rising, global price prices began to fall. Thailand began losing money almost from the start, and quickly lost its position as the world's top exporter, unwilling to sell its rice holdings. Rice exports in 2012 fell by over one-third from the previous year's level.
The true cost of the price-support programme has long been unclear, however. The Thai authorities do not state the amount of rice currently being stored in government warehouses, and some government leaders still say that they are confident of securing overseas sales and getting back their money. But figures from the Ministry of Finance leaked to the local media put total losses of the programme at as much as Bt260bn (US$8.8bn) if the government's rice stocks are sold at current global prices. That is sharply higher than authorities have indicated previously. On June 3rd a credit-rating agency, Moody's, issued a report stating that Thailand's increasingly expensive rice-support programme is "credit negative" for its sovereign creditworthiness. SHOW LESS READ MORE >
Country Report Thailand
Losses to worsen
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