Upturn in fortunes forecast for Thai rice

With state rice stockpiles nearly sold off and major rice-producing nations suffering bad weather, Thai rice exports are likely to hit a record high this year, say government and industry officials.

Mrs Duangporn says rice exports are likely to hit a record high this year. SOMCHAI POOMLARD

Thailand's 2017 rice exports are tipped to reach 11 million tonnes, the most ever, because of rising demand in rice-importing countries at a time that production in grower countries is falling.

Duangporn Rodphaya, director-general of the Commerce Ministry's Foreign Trade Department, said several rice-importing countries have approached Thailand asking to buy more rice.

She said falling state rice stocks have ignited concerns that supply in rice-exporting countries is falling, spurring buyers to rush to secure supply.

"The decline in Thai state rice inventories has helped cut the pressure on global rice prices and also created more room for the price to rise further this year," said Mrs Duangporn.

State rice stocks rose to a historical high of 18.9 million tonnes prior to 2014 after an aggressive rice subsidy scheme, whereby the state offered to buy rice directly from farmers at higher-than-market prices.

The stocks have since fallen sharply to 2.1 million tonnes, of which 1.6 million tonnes was edible-grade white rice and 500,000 tonnes was inedible-grade rice suitable for ethanol production.

Falling government rice stocks also helped cut pressure on global prices, exporters said, adding the prices were expected to rise further over the next few months as there was fresh demand from traditional importing countries that have approached Thailand at a time of limited supply.

Charoen Laothamatas, president of the Thai Rice Exporters Association, said those countries include Iran, Iraq, Bangladesh and the Philippines.

"Some clients that used to import Thai rice but stopped buying over the past several years because of quality issues have come back," said Mr Charoen.

But Thai rice supply is limited because of the 2016 drought and the government's policy to encourage farmers to switch to other lucrative crops such as sugar, which has substantially cut supply from the off-season rice crop.

Rice production from the off-season crop dropped by more than 40% from 9-10 million tonnes on average over the past few years to just 5 million tonnes this year, according to data supplied by the Agriculture Ministry.

That has pushed the price of Thai 5% broken grade white rice to US$462 (15,684 baht) a tonne, up from last month's $416 a tonne, according to the Thai Rice Exporters Association.

"We can say that the Thai rice industry has passed through the crisis and is now on the rise," said Mr Charoen.

Plan to improve all aspects of rice industry in Thailand

The Commerce Ministry will announce a "rice strategy" by the end of this month, aiming to improve the production, marketing and quality of Thai rice, while somehow improving farmers' lives without intervening in the "market mechanism".

Boonyarit Kalayanamit, director-general of the ministry's Internal Trade Department, said the plan was to ensure sustainable development for the entire rice industry from upstream to downstream.

"The rice strategy will emphasise how to increase farmers' incomes while focusing on innovation so that Thailand will be a centre for rice trading in Asean," he said.

The strategy will be outlined to government agencies, the private sector and farmers. It is expected to be ready this month to be proposed to Commerce Minister Chatchai Sarikulya and the Rice Policy and Management Committee.

The strategy is meant to solve long-term rice problems from the production stage to marketing. The government will set up rice-plantation zones while also encouraging farmers to grow other economic crops on land that is not suitable for rice.

The ministry will also support marketing and trading strategies, while avoiding intervention in the market mechanism.

Other strategies include creating fairness in rice trading, enhancing rice standards and the trading system, encouraging more rice consumption, increasing production efficiency, encouraging innovation in the rice industry, and developing the logistics system for rice.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said traders were very worried that the market price for rice will be low during the upcoming harvest season.

Thai rice production in the 2014-15 harvest season is expected to be 24 million tonnes of paddy. India will produce about 103 million tonnes of paddy. As demand for rice consumption in India will be 90 million tonnes, that country will still be a major export rival for Thailand next year.

Vietnam is projected to have output next year of 28 million to 29 million tonnes of rice, of which about 7 million to 8 million tonnes will be exported. Vietnam has also become a major rival for hom mali rice exports to many markets, including parts of Africa. This year, Vietnam could ship 1.2 million tonnes of fragrant rice to Africa, up from 900,000 tonnes last year.

Chookiat said Thailand's large stockpiles would put upward pressure on the competitiveness and downward stress on the rice price in the world market next year. However, this also depends on demand in many markets, including China, the Philippines and Indonesia.

Thailand Rice export volumes soar nearly 60% in first eight months

Rice exports in the first eight months of the year grew significantly, by almost 60 per cent year on year, to 6.59 million tonnes, thanks to strong demand in many markets and a high supply from government stocks, according to the Thai Rice Exporters Association.

The association reported that the value of rice exports also increased by 22.4 per cent year on year to Bt105.83 billion.

Chareon Charoen Laothamatas, president of the association, said demand had increased considerably since July this year, particularly for white rice in some African countries.

In the first eight months of last year, Thailand exported only 4.14 million tonnes of rice worth Bt86.47 billion.

In the JanuaryAugust period this year, Benin imported the most at 852,502 tonnes, followed by Nigeria with 474,561 tonnes, China with 432,220, Ivory Coast with 383,663 and South Africa with 335,529.

More rice exports expected for Thailand as pledging scheme ends

The Thai Rice Exporters Association on Wednesday raised the forecast for rice exports as the end of the state pledging scheme would help bring down prices.

The association said it expects the country to export 9 million tonnes of rice in 2014. This is 20 per cent more than the previously-estimated 7.5 million tonnes.

Rice exports fell in Thailand after the deposed government in October 2011 began buying rice from farmers at above market price, making export rates uncompetitive.

India overtook Thailand as the world’s top rice exporter in 2012 as the scheme, which was meant to help poor farmers, caused a hike in export prices.

The price of Thai 5-per cent broken rice reached US$650 per tonne in October 2011 while India was selling the grain overseas at far lower rates.

The Thai grain is now selling at between US$380 and US$385, while Vietnamese rice costs US$400-US$405.

Some 800,000 farmers were owed payment for months after the rice pledging scheme ran into financial trouble.

The scheme ended in February this year.

Thailand’s current military junta began paying money owed to the farmers after it seized power in a coup.

Rice exports to Thailand dive

Rice exports to Thailand plummeted in the first four months of the year as a result of that country’s surplus, which reached record levels at the end of 2013.

Between January and April, Cambodia exported just 1,550 tonnes of rice to Thailand, down 89 per cent from the 14,250 tonnes shipped in the same period last year, according to the Ministry of Agriculture’s monthly reports.

Hun Lak, president of rice export firm Mekong Oryza Trade, said the decline was due to Thailand’s rice stockpiles, which were accumulated under a state purchasing program launched in 2011 and scrapped at the end of last year.

Thailand accumulated rice stockpiles of reportedly more than 12.8 million tonnes at the end of 2013, equal to about a third of the global export market.

“The overstock of rice in Thailand reduced the demand from Thai traders for Cambodian rice,” Lak said.

“Also, rice prices in Thailand are declining as a result, meaning buyers simply cannot make a profit by importing Cambodian rice,” he added.

Thai rice prices sunk from $1,100 per tonne to $950 per tonne in February as the state-run rice pledging scheme came to an end and the Thai government began selling off its stockpiles. Consequently, Cambodian exporters reduced their prices from $950 to $880 per tonne to compete.

Lim Bunheng, president of Loran Company, said Cambodian farmers depend on Thailand and Vietnam for exports largely due to a lack of local facilities to polish and clean rice – the final stage before the product is fit for international standards.

“I hope the situation will get better after June – when more of Thailand’s stockpiled rice is sold off – because it is having an impact on our industry now both in terms export volume and price,” he said.

Sok Puthyvuth, president of the Cambodia Rice Federation, called on rice exporters to seek other markets rather than “sitting and waiting” for the situation to get better.

“We should take this chance to start to diversify markets to potential countries like China, Indonesia as well as countries in the EU for our rice while waiting for Thailand to settle things,” he said.

Thailand imported 23,550 tonnes of Cambodian rice in 2013, making it the Kingdom’s sixth largest destination for rice exports.

Fears over surplus rice sales in India, Thailand may be groundless

- Vietnam Investment Review - http://www.vir.com.vn/ -

16:19 | 07/03/2014
Fears over surplus rice sales in India, Thailand may be groundless
Agricultural expert chews over whether there is currently a price manipulation in the rice market.


Over the past two weeks local newspapers have reported that Thailand – a leading global rice exporter – is dumping their colossal stocks while Indonesia has also announced an even larger supply. This may cause the price of rice to tumble around the world and have a major impact on Vietnam’s exports.

At this point the Mekong Delta – Vietnam’s granary – has begun its major harvest season and the news from Thailand and India is likely to cast a pall over both the domestic and export markets.

Let’s go inside these assumptions.

First is the case of Thailand.

According to the US Department of Agriculture (USDA) and the Thai Rice Exporters Association (TREA) statistics, following the government’s subsidy policy the Thai government bought over 55 million tonnes of paddy rice (equivalent to nearly 36 million tonnes of rice, three quarters of it white rice) at higher than market prices from October 2011 to February 2014.

Meanwhile the country only exported 10.3 million tonnes of white rice at prices averages $540 per tonne, meaning that Thailand is still holding onto stocks of nearly 16.5 million tonnes of white rice and about 5 million tonnes of glutinous and high-grade rice varieties.

Given this situation, early this year Thai acting Minister of Commerce unveiled a plan to sell one million tonnes of rice each month in the first quarter of 2014.

A USDA report showed that from the beginning of this year through February 13 there were only three public rice auctions in Thailand at which nearly 860,000 tonnes of rice were offered for sale.

The bid price was from 12-30 per cent lower than market price, fluctuating in the range of $322-$405 per tonne and only 100,000 tonnes was reportedly earmarked for export.

But the winning bid price and volumes have yet to be announced.

Also according to the USDA, by February 23 Thailand had only exported 464,000 tonnes of white rice, down 31 per cent against the same period 2013.

Therefore, the concern that Thailand was dumping its huge rice stocks remains most likely an assumption.

In the case of India, saying that Vietnamese rice can’t compete in the global market due to the fact that India has huge reserves of 32 million tonnes was baseless. Why?

It is likely because according to USDA reports from the time India resumed rice exports in September 2011, the government has never held a rice auction. It has consistently held wheat flour auctions.

This practice may suggest the Indian government is using its rice stocks to support the price subsidy policy for local consumers via a public distribution system.

The USDA has reasons to forecast that the demand for rice in India would rise by three million tonnes, leading to a two million tonne reduction of exports.

This year is the first that the Indian government has executed its law on food security, a promise made by the ruling party four years ago.

This means about 70 per cent of the population in rural areas and 50 per cent in urban areas will benefit from the government’s price subsidy, leading to a huge amount of rice being mobilised to serve the programme.

In other words, the reasons why Thailand and India are retaining their rice stocks are different and therefore equating them and linking them to Vietnam’s rice exports is not a fair assumption.

Top experts and government authorities need to step in to investigate whether Thailand is dumping its rice stocks to ensure stability in the domestic market. This is the only way to truly protect Mekong farmers’ best interests.

By Nguyen Dinh Bich, an agricultural expert

Vietnam to stockpile 1m tonnes of rice

Vietnam, the world's second-largest rice exporter, will stockpile 1 million tonnes of rice in the winter-spring crop to help boost prices, authorities said Thursday.

The stockpile will run from March to mid-April, the Vietnam Food Association said, which will affect Vietnam's biggest rice-producing region, the Mekong Delta.

Around 10.3 million tonnes of unhusked rice is expected to be produced in the Mekong Delta during this period, the Ministry of Agriculture and Rural Development said.

Export volume fell sharply in the first two months of this year and is predicted to remain low in the coming months due to weak demand in the global market and strong competition from other rice exporters, including Thailand, India and Myanmar.

A number of rice exporters have asked the government to boost exports to countries including China, Indonesia and the Philippines.

Vietnam plans to export 7 million tonnes of rice this year, up from 6.88 million tonnes, worth US$2.89 billion (94 billion baht) last year.

Cambodia Rice prices continue to fall

As buyers swoop in to purchase Thai rice at garage-sale prices, Cambodian exporters are dealing with lower than usual rates, and the results are being felt all the way down the supply chain to the farmers themselves.

New figures from rice industry publication Oryza show that the cost for Cambodia’s jasmine rice has declined sharply in recent months, in tandem with falling prices in Thailand brought on by that country’s failed rice-pledging scheme.

“This is a concern for everyone in the rice industry now,” said Khan Kunthy, CEO of Battambang Rice Investment Company, adding that sales have also dropped.

Kunthy said that export volume for the first few months of this year was largely based on orders from 2013.

“There is no good sign of orders for this new year yet,” he said.

In 2011, Thai Prime Minister Yingluck Shinawatra vowed to pay farmers above market rates for their rice.

But stockpiles have accumulated to record levels, flooding the global market with new quantities of supply and driving down prices.

Thai officials estimate that there are 15 to 18 million tons of stockpiled rice. Oryza reported that the Thai government planned to offload at least one million tons per month from January to March.

Thai hom mali rice is now at $955 per ton, a decline of 17 per cent compared to the price in December last year, when it stood at $1,163.

The latest figures from Oryza show that, at the end of February, Cambodia’s jasmine rice cost $885 per ton, a 7 per cent decrease from $950 per ton in December.

“We have no other choice besides lowering our rice price, even if we have to put up with the loss if prices went even lower than they are now, or no one will buy from us,” Kunthy, of Battambang Rice Investment Company, said.
Kunthy, who runs a newly established rice milling operation, is also under pressure to repay the bank for a loan he took out to help set up the mill.

Lim Bun Heng, owner of Loran Company, one of the country’s largest rice exporters, said declines in Cambodia’s jasmine variety will squeeze margins for all involved.

“Cheaper prices of milled rice also mean cheaper prices of paddy rice that the miller will buy from farmers too,” Bun Heng said, adding that “we cannot buy expensive paddy rice and sell it at a lower price”.

Export volumes are also decreasing as buyers look for cheap stockpiled product. Bun Heng said his company experienced a 30 per cent decrease in exports over the first two months of this year.

“The Thais are selling their rice very cheap, so the buyers are switching to Thailand,” he said.

Last year was a time of enormous gains for the rice industry, as export volumes doubled. But the rice scheme has upended the global market, setting back not just Thailand, which used to be the world’s largest exporter, but its neighbours, too.

In January of 2012, Cambodia exported 9,700 tons of rice. Exports for the same period in 2013 jumped to 25,700 tons. But in January, the pace slackened, with only 21,500 tons sent out of the country.

Exporters and rice millers should keep their fragrant rice paddy and wait until the supply in the global market declines, advised Srey Chanty, an independent economist who focuses on agriculture issues.

“I think in the next three or four months, the fragrant rice price will bounce back to normal,” he said.

Cambodian rice trade hit by Thai sales

Thailand's rice sales are quickly pushing down world prices, affecting Cambodia's industry and farmers, according to a report.

New figures from rice industry publication Oryza show the price for Cambodia's jasmine rice has declined sharply in recent months, in line with falling prices in Thailand brought on by the failed rice-pledging scheme.

"This is a concern for everyone in the rice industry now," Khan Kunthy, CEO of Battambang Rice Investment Company, told the Phnom Penh Post, adding sales have also dropped.

Mr Kunthy said export volume for the first few months of this year was largely based on orders from 2013. “There is no good sign of orders for this new year yet,” he said.

But stockpiles have accumulated to record levels, flooding the global market with new quantities of supply and driving down prices.

Thai officials estimate there are 15 to 18 million tonnes of stockpiled rice. Oryza reported that the Thai government planned to offload at least one million tonnes per month from January to March.

Thai hom mali rice is now at $955 a tonne, a decline of 17% compared to the price in December last year, when it stood at $1,163.

The latest figures from Oryza show that, at the end of February, Cambodia’s jasmine rice cost $885 per tonne, a 7% decrease from $950 in December.

“We have no other choice besides lowering our rice price, even if we have to put up with the loss if prices went even lower than they are now, or no one will buy from us,” Mr Kunthy of Battambang Rice Investment Company said.

Mr Kunthy, who runs a newly established rice milling operation, is also under pressure to repay the bank for a loan he took out to help set up the mill.

Lim Bun Heng, owner of Loran Company, one of the country’s largest rice exporters, said declines in Cambodia’s jasmine variety will squeeze margins for all involved.

"Cheaper prices of milled rice also mean cheaper prices of paddy rice that the miller will buy from farmers too," Bun Heng said, adding that “we cannot buy expensive paddy rice and sell it at a lower price".

Export volumes are also decreasing as buyers look for cheap stockpiled product. Bun Heng said his company experienced a 30% in exports over the first two months of this year.

"The Thais are selling their rice very cheap, so the buyers are switching to Thailand," he said.

Last year was a time of enormous gains for the rice industry, as export volumes doubled. But the rice scheme has upended the global market, setting back not just Thailand, which used to be the world’s largest exporter, but its neighbours, too.

In January of 2012, Cambodia exported 9,700 tonnes of rice. Exports for the same period in 2013 jumped to 25,700 tonnes. But this January, the pace slackened, with only 21,500 tonnes sent out of the country.

Exporters and rice millers should keep their fragrant rice paddy and wait until the supply in the global market declines, advised Srey Chanty, an independent economist who focuses on agriculture issues.

“I think in the next three or four months, the fragrant rice price will bounce back to normal,” he said.

Egypt negotiations over resumption of rice exports to begin within next two weeks

Discussions with the Ministry of Supply over resuming rice exports will commence this week or next week, with the aim of reaching an agreement on the “best” possible solution to export rice while benefiting all parties involved, Vice Chairman of the Rice Division in the Federation of Egyptian Industries Mostafa Atallah said on Monday.

Newly-appointed Minister of Supply Khaled Hanafy said Sunday that he would reconsider a decision suspending rice exports, state-owned news agency MENA reported. Hanafy explained that there have been calls to resume rice exports “in order to open new rice markets abroad, and contribute to revitalising the economy”.

Minister of Industry and Foreign Trade Mounir Fakhry Abdel Nour announced last November a bid to export 100,000 tonnes of rice, set to take place from mid-November to January 2014. Abdel Nour said at the time that exporting rice would be “beneficial”, as global prices are high.However, rice exports were suspended in November due to a shortage in quantities “intentionally” created by merchants who had attempted to monopolise the rice market, Atallah explained.According to Atallah, rice exportation was set to begin in September; however, “merchants requested to postpone it to November”. During those two months, merchants collected high quantities of rice in the market in order to control prices, he added. The Ministry of Supply could not determine an adequate quantity for exporting, Atallah said.

Former Minister of Supply Mohamed Abu Shady, under Prime Minister Hazem El-Beblawi’s cabinet, announced in October that rice exports will be halted “until all ration needs of the grain are met”.The government sells 1.4m tonnes of subsidised rice per year, at EGP 1.5 per kilogram, according to Abu Shady.
“I will not pay heed to the interests of a few dozen rice exporters at the expense of domestic markets,” Abu Shady told the Daily News Egypt in a November interview. The minister stated that rice exports will resume, adding that prices of rice hiked from EGP 1,800 a tonne to EGP 2,000.
Egypt produces 6.5m tonnes of rice, of which it uses up 3.5m to 4m tonnes, according to Abu Shady.

In 2012, Egypt exported 650,000 tonnes of rice to 58 countries in Europe and the Arab region, Atallah stated.

Before leaving the ministry, Abu Shady decided on 22 February to refer the head of the central import administration at the General Authority for Supply Administration (GASC) to administrative prosecutors on charges of “corruption”.

Rice Exports From India Climbing to Record on Mideast Demand

Rice shipments from India, the world’s largest producer after China, will probably expand to a record as buyers from Iran to Saudi Arabia boost purchases of aromatic basmati grain used in biryani and pilaf dishes.

Exports are set to increase 7.8 percent to 11 million metric tons in the 12 months through March from a year earlier, said M.P. Jindal, president of the All India Rice Exporters Association. Sales of basmati may jump 14 percent to 4 million tons as cargoes of non-basmati varieties advance 4 percent to 7 million tons, he said in a phone interview.

Shipments are increasing from India as Thailand, once the world’s biggest supplier, is also set to boost exports. The Southeast Asian country has built record stockpiles big enough to meet about a third of global import demand under a buying program that started in 2011. Farmers are demanding the government sell the reserves to pay for their crop.

“India has an edge over other countries because of quality and price competitiveness,” said Faiyaz Hudani, an associate vice president at Kotak Commodity Services Ltd., a Mumbai-based broker. “When the output is high and the pace of growth is stable, there is no cause of concern.”

Rising sales may benefit Indian shippers such as KRBL Ltd. (KRB), LT Foods Ltd. (LTFO) and Kohinoor Foods Ltd. (KFL)

India is targeting production of 106.3 million tons in the year through June, compared with a record 105.3 million tons in 2011-2012, according to the Agriculture Ministry. The harvest would add to global inventories estimated at 109 million tons in 2013-2014 by the London-based International Grains Council.

Thai Stockpiles

The price of Thai 5-percent broken white rice, a benchmark grade, fell 23 percent in 2013, the most in at least five years, and was at $460 a ton yesterday. A slump to $370 by March is possible as grain is offloaded from state granaries, according to Chareon Laothamatas, president of the Thai Rice Exporters Association. Rough-rice futures on the Chicago Board of Trade rose 0.6 percent to $15.625 per 100 pounds yesterday.

Thailand may not be able to find enough buyers for its stockpiles because major importers in Africa and the Philippines increasingly prefer grain from Vietnam and India, according to Darren Cooper, a senior economist at the council.

“Thailand will try to dispose of the stockpiles at whatever price it gets,” said B.V. Krishna Rao, managing director of Pattabhi Agro Foods Pvt., an Indian exporter. Shipments may not be affected by rising Thai sales as the two countries catered to different markets, he said.

Basmati Demand

The U.S. Department of Agriculture expects Thai inventories to reach a record 14.7 million tons this year, compared with 6.1 million in 2010. Shipments will probably be 8.5 million tons, the USDA forecasts.

Basmati rice exports from India are climbing as Iran is building reserves, said Jindal at the exporters association. Sales to Iran jumped to 1.28 million tons in the nine months through December, exceeding the 1.07 million tons for whole of 2012-2013, according to the association. The country is India’s biggest buyer of basmati and imports 1.5 million tons annually.

“The price of basmati was good this year and overseas demand was more throughout the year from all countries including Iran and Saudi Arabia,” Jindal said on Feb. 4. “Exports to Iran are higher as it buys for keeping certain reserves.”

India supplies 65 percent of the overseas basmati rice market, while Pakistan accounts for the rest, according to the state-run Agricultural and Processed Food Products Export Development Authority. Saudi Arabia and Iran are the two major buyers of Indian basmati, while Africa is a major destination for non-basmati varieties.

Myanmar rice companies benefit from Thai expertise

Rice in Myanmar is not just a staple food for its people, it is also one of the country's key industries.

It is believed that in 2011 alone, Myanmar's rice sector contributed about 13 per cent of the country's GDP. That GDP figure will only grow provided Myanmar partners other reputable international rice firms, like those in neighbouring Thailand.

Nay Lin Zin, joint secretary of the Myanmar Rice Millers' Association, said: "Nowadays, Thailand people very interested to invest in Myanmar and to cooperate with us because of Thailand's political instability and the price of Thai rice, (which is) higher than other competing rice exporting countries."

In recent months, many Thai rice exporters have been introducing their clients to Myanmar companies.

Kyaw Myo Htoon, director of the Ayeyar Hinthar Group of Companies, said: "Their motivation for Thai traders is they want to maintain relationship with buyers like the Chinese, because they are very big... So in order to do that, they bring their buyers here to introduce Myanmar rice to them.

"They help us to introduce the Myanmar rice variety to the world market... Especially Chinese buyers, they buy the Myanmar rice for industrial usage like making rice noodles, making rice wine as well as they're mixing with other varieties of rice. They mix and sell it to Chinese consumers."

Such collaborative efforts will also enable Myanmar to learn from their Thai partners' technological know-how, paving the way for them to tap onto their neighbour's existing pool of rice consumers.

Nay Lin Zin added: "If the Thailand business can cooperate with us, we can give more money to our people, to our Myanmar farmers and we can produce quality rice for a new market.

"I think after 2015 by cooperating with Thailand business people, especially in the rice sector, I think we can promote our rice export and we can increase our world ranking very soon."

Rice traders said many are happy that Myanmar is now starting to export more rice overseas. That is because 70 per cent of Myanmar's population live in rural areas and they are closely associated with the rice industry.

They say that if rice farmers are happy, that will snowball into other benefits, such as the ability to purchase more expensive goods and in greater quantities.

China pulls out of Thailand rice deal

China has cancelled a deal to buy 1.2 million tonnes of Thai rice, about 14% of the country’s annual exports, amid a corruption probe into Bangkok’s troubled agricultural subsidies scheme, Financial Times reported. Beijing was spooked by the Thai national anti-graft agency’s investigation into the rice price support program, Thailand’s commerce minister said. A Thai bank also pulled its support for the project, whose funding shortages are triggering protests from unpaid farmers. The rice scheme’s growing problems are piling pressure on Yingluck Shinawatra, the prime minister, as the opposition tries to unseat her.

Myanmar Rice exports falter on illicit China trade

Rice exports this year are set to fall to less than half of the government target of 3 million-tonnes as traders are withholding stock from its trading partners in an attempt to secure more favourable prices being offered by illicit Chinese importers, officials said.

U Lu Maw Myint Maung, joint secretary general of the Myanmar Rice Federation, told The Myanmar Times, that Myanmar exported nearly 1 million tonnes of rice through the first nine months of the fiscal year at the end of January, falling short of the 1.01 million tonnes of rice exported during the same period last year.

“Because of an unstable local rice price, we have not been able to speed up exports during the rainy season, he said. “If we had, Myanmar would probably have been able to export about 2 million tonnes this year, because there is enough reserve.”

He said that traders are increasingly looking to sell rice through Shan State’s Muse border, alongside China’s Yunnan Province, where they can earn as much as 28 percent more profit by dealing with tax-dodging Chinese

importers.

Though there is nothing illicit about local rice sellers trading over the borders, many Chinese traders are subject to a 17pc import tax on all rice bought from Myanmar, a tax many choose not to pay, he said. While they are then able to offer a better premium on imports, they also tend to not honour contacts and pay significantly less than promised.

“Local traders would not easily be able to reclaim their rice back because of the high transportation charges and would have to sell at the lower price,” U Lu Maw Myint Maung said. “This led to fluctuations in the local price, so that big exporters could not draw up contracts for as much as we

wanted.”

He said that the price of 25pc broken rice on the international market goes for US$315-$320 per tonne. That is compared to the 2480 yuan ($404) the same rice is sometimes sold for through the Muse border. Five percent broken rice, meanwhile, is sold for $405-$415 per tonne in the international markets, well short of the 2740 Yuan (about $446) per tonne it fetches along the Yunnan border.

In an effort to deal with the problem, the government has been in talks with Chinese authorities to try and formalise the rice trade, U Maung Aung, an adviser to the Ministry of Commerce he told The Myanmar Times.

“We have been trying to sign an MOU [memorandum of understanding] with regional governments in China to permit importing rice from Myanmar legally,” he said.

“Although they have not permitted rice imports, market demand is very big, so they seize illicit rice imports from Myanmar only sometimes,” he said.

As a result, experts believe that the price being offered by illicit traders in China would likely not begin to decrease until the end of the high trading season.

“The price [of rice exported to China] is not likely to go down until March as we are now exporting 3000 to 3500 tonnes of rice through Muse a day,” said U Thauk Kyar, an executive member of the Muse rice traders’ association.

The fiscal 2012-2013 total of 1.6 million tonnes was the highest in 46 years, thanks to the demand from China for exports via the newly booming Muse border post, which accounted for 60pc of the total 1.6 million tonnes exported last year, said U Lu Maw Myint Maung, adding that China has faced in increased demand for quality rice over the past year.

However, with Myanmar’s entry into the EU generalised system of preferences last year, Myanmar traders have started to export to Europe, said U Lu Maw Myint Maung.

“EU traders can import rice from Myanmar without paying import taxes if they can prove the country of origin,” he said.

Former joint secretary of the Myanmar Rice Federation and rice exporter U Myo Thura Aye said that 10 EU countries, including Spain, Portugal, Belgium and the Netherlands, are now buying rice from Myanmar.

“We’re exporting 5000 tonnes a month to Europe and 20,000 tonnes to Africa,” he said, adding that a smaller amount is going to the Philippines and Malaysia.

In addition, Myanmar Agribusiness Public Corporation (MACPO) announced last week that come May they will export up to 8000 tonnes of rice to Japan this year, said U Soe Tun, the company’s director.

“MAPCO is going to export … rice to Japan jointly with Japanese firm Mitsui & Co after it won a tender of Japanese government to import rice,” he said, adding that they would start importing 5pc broken rice at $470 per tonne.





By Zaw Htike

Vietnamese rice faces barriers in biggest markets

Indonesian Minister for Economic Affairs Hatta Rajasa has requested the Ministries of Trade and Agriculture to take a probe against the illegal rice imports from Vietnam.

According to the Vietnam News Agency, the minister said there are some evidences about the importers’ license abuse.
The request has been made following the information that the illegal rice imports from Vietnam are being wholesaled in Cipinang or Baten province in eastern Jakarta on January 30, estimated at 16,900 tons.
The volume of rice was sold more cheaply than the domestic products. Sources said the rice has been imported to Indonesia with the legal license granted by the Indonesian Ministry of Trade.
Hatta Rajasa emphasized that the Indonesian government never allows individuals to import rice, and that it has authorized Bulog, an agency of the country, to import rice to stabilize the market prices. Therefore, it is highly possible that Vietnam’s rice has penetrated the Indonesian market through legal channels.
Prior to that, in October 2013, NFA, the Filipino food agency, warned that the contract on importing 120,000 tons of rice signed between the Filipino private import firms and the Southern Food Corporation (Vinafood 2) is invalid, and that the imports will be blocked by the country’s customs agencies.
According to NFA, under the country’s national quota program, Filipino businessmen can only buy rice from Thailand, India, China and Australia. The importers must obtain the special import licenses from NFA before they import rice from other countries.
Vietnam’s rice exports to the loyal markets of the Philippines, Indonesia and Malaysia have dropped dramatically recently, thus leading to the sharp fall of the total rice exports.
The rice exports to the Philippines dropped by 63 percent in the first nine months of 2013, while the exports to Malaysia dropped by 35 percent. Especially, Indonesia did not import rice from Vietnam.
In the context of the sharp falls in the exports to the loyal markets, the Vietnam’s rice production was “saved” by the strong rise in the exports to China. The export volume to the market in 2013 was four times higher than that in 2012, about 1.6 million tons.
China consumed 32 percent of Vietnam’s total rice exports, while African markets bought nearly 30 percent.
However, Vietnam has been warned against the reliance on China as the main export market. The unstable market would upset Vietnam’s rice export strategy one day if Vietnam does not follow a reasonable business development plan.
Nguyen Dinh Bich, a well-known rice expert, on his article on Thoi bao Kinh te Saigon--while noting that Vietnam had to lower the export prices sharply in 2013, which was a big bitterness, has warned that the same scenario may repeat in 2014.
The US Agriculture Department has predicted that the demand from the three Vietnamese loyal markets would soar in 2014 to 4 million tons, while the demand from eight Asian big rice importers would increase by 20.1 percent to 9.22 million tons. However, Bich commented that it would be not easy to boost exports to the markets.

Myanmar to export high-quality rice to Japan

Myanmar will export 6,000 tonnes of high-quality rice to Japan for second time in May, according to the Myanmar Agribusiness Public Corporation (MAPCO).
“We are now preparing to export 6,000 tons of rice that have already been tender awarded. Japan is going to buy native paddy strains and Myanmar is now test exporting high-quality rice to European countries,” said Soe Tun, director of the MAPCO.
Myanmar is also exporting 25-mark high quality rice to China and Africa. MAPCO exported 5,000 tonnes of high-quality rice to Japan for the first time in 45 years and is working to export more.
Japan examined Myanmar paddy strains in all 257 kinds of laboratory tests, including insecticide tainting and samples with or without chemical substances.
Ye Min Aung, managing director of MAPCO, said that Myanmar rice dealers are now preparing to export high-quality rice to the international market. That is why rice dealers should prepare for an emerging market that specializes in quality.
“We will export r200,000 tonnes of rice to Japan in this fiscal year, cooperating with Japan’s Mitsui Company. We have a plan to export rice to Africa and other international markets,” said Ye Min Aung.
Myanmar has also begun exporting rice to European markets under an advantageous EU trade scheme.

Rice Market: More Medium Grain Planted if California Stays Dry

Export sales are picking up, with this week’s postings totaling 65,100 tons. Long grain took the lion’s share.

There were also 2,000 tons of medium/short milled sold to Jordan and 600 tons sold to Australia out of the 2014/15 crop. This is the second time we have seen very early sales of medium/short sold out of next year’s production, and we wonder if these are buyers trying to assure supplies out of next year’s potentially water-deficient planting in California.

India's wheat, rice exports raise hackles at WTO

The US, Canada and Pakistan have questioned India's export of wheat and rice, suggesting that subsidized grains have been shipped out providing gains to local traders.

The queries at the World Trade Organization (WTO) come weeks after these countries reluctantly agreed to India's demand for renegotiating the agreement related to food subsidies that turned into a make-or-break issue at the Bali ministerial meeting in December.

The government has denied the suggestions and said that India is complying with all international norms. "We are on the right track," said a top government official, dismissing the charges.

Japan Abe’s deceptive rice reform

At a press conference Dec. 9, shortly after an extraordinary session of the Diet adjourned, Prime Minister Shinzo Abe emphatically declared, “We have abolished gentan, a feat many said could not be accomplished by our Liberal Democratic Party.” Gentan refers to the government’s decades-old policy of curtailing rice production by encouraging farmers to reduce the acreage of their rice paddies in exchange for subsidy payments.

Apparently realizing that he was addressing a press corps rather than making a speech at a political rally, he corrected his statement by saying, “We have decided to abolish gentan.” Nothing symbolizes the Abe administration’s rhetoric on the subject better than this “minor correction.”

Although the prime minister’s headquarters stresses a shift in the nation’s agricultural policy, what the government has actually done is make a broad decision to abolish gentan five years from now. This is just putting off a true decision and in fact means that the existing gentan scheme will be strengthened, instead of being abolished.

About two weeks earlier, on Nov. 25, a meeting was being held at the Liberal Democratic Party headquarters to decide on the party’s farm policies.

A preliminary decision to raise subsidies for planting rice for use as animal feed from the current ¥80,000 per 10 ares (1,000 sq. meters) to ¥100,000 met strong opposition from legislators representing Akita, Miyazaki and other farming prefectures. The amount of subsidies was eventually raised to ¥105,000 per 10 ares.

This represented recurrence of a scenario dating back to the days before the LDP had to give the reins of government to the Democratic Party of Japan for the 2009-12 period. In those days, the government had first presented tight limits on farm subsidies, only to meet strong opposition from lawmakers representing farming interests, and eventually raised the amount little by little to a level that satisfy them.

Although there have been reports that lawmakers with vested interest in agriculture, forestry and fishery have lost some of their political influence, they still continue to maneuver behind the scenes.

Major news media reported in unison that the gentan scheme would be abolished five years hence. But in reality the government’s decision will only reinforce, rather than abolish, the scheme.

Understanding the misleading rhetoric of the Abe government on this subject requires understanding the difference between gentan and production adjustment. Production adjustment is common not only in agriculture but also in other industrial sectors as a means of preventing excessive production from causing price falls. In the manufacturing sector, this is done by such means as plant closures and shorter operation hours.

In the case of rice production, a large-scale gentan started in the 1970s. It consists of reduction of areas of rice paddies in which rice as staple food is planted, thus idling certain paddies in return for government subsidies.

To use such land more efficiently, measures were taken in later years to encourage use of such idled rice paddies for cultivating other crops like wheat, barley and soybeans. But because there is difficulty in growing dry-field crops in former rice paddies, the government started a new scheme in which farmers can choose the types of substitute crops they want to grow.

The DPJ government (which took power in 2009) began attaching importance to growing rice that is processed into various products or used as feed for animals as a substitute crop for ordinary rice.

Thus it is clear that gentan is just one of means for production adjustment. The Abe regime’s farm policy clearly testifies to this.

Under the Abe regime, subsidies for growing rice as feed for animals will be greatly increased to ¥105,000 per 10 ares. Income compensation for individual farmers introduced by the DPJ government will be halved from ¥15,000 to ¥7,500 per 10 ares. But a new system of making direct payments to farmers will be instituted.

Although Abe claims to have reformed the government’s farm policies, much stronger measures are being taken to curtail production of rice for human consumption by encouraging farmers to grow more rice for use as animal feed.

As if these measures were not enough to protect farmers, the Ministry of Agriculture, Forestry and Fisheries raised the government’s purchase of rice produced in fiscal 2013 for strategic emergency reserves from the original plan of 200,000 tons to 246,000 tons. Even though the increase may look small, it will have the effect of adjusting the supply and demand balance for rice through an increase in the amount of rice the government purchases. This constitutes de facto price support by the government and could trigger condemnation from other members of the World Trade Organization for violating its rules.

Great confusion has resulted from the major news media reporting that gentan will be abolished, instead of reporting that the production adjustment for rice has been shifted toward a policy of producing more rice for animal feed.

With the next elections of both the Upper House and Lower House unlikely to be held for two and a half years, farmers will enjoy generous protection during this period. This in turn will strengthen the farming bloc as a support base for the LDP.

In big cities, the LDP has been trying to create an impression that it is reform-oriented by emphasizing the “Abenomics” — economic policy named after Abe — with its implementation of “three arrows” — an aggressive monetary policy, carrying out a flexible fiscal policy and pursuing a growth strategy to encourage private sector investments.

In rural areas, however, the LDP has pledged to mobilize everything in its power to enrich farmers, foresters and fishermen. This led to its overwhelming victories in the Lower House election of 2012 and the Upper House election of 2013.

Although this may sound like a joke to city dwellers, the LDP distributed posters in agricultural villages that described “15 arrows.” The basic message was that the LDP would do anything for the sake of farmers. This is simply pork barrel politics and has no principles or strategies.

The LDP has been able to act so recklessly because it has continued to command majorities in most local legislatures. Although control of the central government shifted from the LDP to the DPJ in 2009, little change took place on the local level before 2012.

The Abe administration is unscrupulous in deftly using reform and conservative policy lines for different purposes. It is a pity that major news media are incapable of comprehending its true nature and have reported only its reformist side. This is due to a near total lack of reporters who can understand complex agriculture policy. The failure to distinguish between gentan and production adjustment is just one example.

The biggest losers are the taxpayers and consumers. Taxes paid by the sweat of their brow are being showered by the LDP on farming villages to secure votes for its candidates in those rural areas. High import tariffs and virtual price support for farmers will be maintained, thus preventing rice prices and for that matter, other food prices from falling.

What the Abe administration and LDP are spoon-feeding to Japan’s urban residents is merely an illusion of “reform.”

Rice smuggling, WTO and Philippine law

At the hearing on rice smuggling at the Senate last Jan. 22, some senators stated that whether rice smuggling exists or not depends on whether we will follow Philippine Law or the World Trade Organization (WTO).
As we wait for the answer, the Bureau of Customs (BOC) declared that it would release the seized rice shipments because of injunctions from three courts in Davao, Batangas and Manila ordering it to do so.
These injunctions were based on a WTO document that states that Philippine rice import restrictions expired on June 30, 2012. Therefore, all rice shipped to the Philippines after this date do not need import permits and, consequently, are not smuggled.
We will argue here that this is a misguided understanding of WTO. There is no contradiction between our WTO commitment and Philippine law. I know this because of my background as former DTI and DA undersecretary, presidential flagship secretary under the Office of the President, and vice president for Asia of the United Nations Conference on Trade and Development (UNCTAD).
WTO
It is necessary to understand WTO. I will quote here direct statements from the WTO website (www.wto.org). WTO has given us the flexibility to extend this deadline. We have done so, and the import restrictions are now in effect. The 2,000 smuggled rice containers seized by BOC are therefore smuggled. This should not be released back to the smugglers, as what is happening today.
The website states: “WTO is a rules-based, member-driven organization—all decisions are made by the member-governments, and the rules are the outcome of negotiations among members.” There is a special section in WTO called the “Agreement on Agriculture.” It states that this agreement “allows some flexibility in the way commitments are implemented.” How is this done?
The topmost WTO decision-making body is the Ministerial Conference. This “can take decisions on all matters under any of the multilateral trade agreements.” As a private sector agricultural representative of the Philippine delegation to a previous WTO Ministerial Conference held in Hong Kong, I witnessed this firsthand. The most recent one occurred last December 2013 in Bali, Indonesia.
Bali Package
The Ministers “adopted the Bali Package, a series of decisions made at streamlining trade, allowing developing countries more options for providing food security, boosting least developed countries’ trade, and helping development more generally.”
Following the WTO objectives of food security and development, the Philippines notified the WTO that it was extending rice import restrictions beyond the 2012 deadline. We exercised our negotiating flexibility to extend this to 2017. Our official negotiations are now going on. At the Bali Conference, this was recognized. There were no objections made.
Therefore, the import restrictions mandated by Philippine Law currently implemented by the BOC do not in any way contradict WTO. Perhaps, some misguided elements should consult the WTO website, which records the WTO Bali Ministerial Conference agreements to understand this better.
In addition, for us to lift rice import restrictions, a WTO member should bring this issue to WTO Dispute Settlement, secure a decision against our stand, and wait until we amend our law to conform to this decision. Not even one of these three steps has occurred. It is therefore very clear that rice import restrictions in the Philippines fully recognized and accepted by WTO are in effect today. There is no contradiction between WTO and Philippine Law.
Since the three courts that ordered the injunctions may not be aware of this, they should attend immediately to the Solicitor General’s Motions for Reconsideration. The BOC should stop releasing these seized smuggled rice containers, which is making a mockery of the anti-smuggling drive. More importantly, this release that we are witnessing today loses government revenues, endangers our food security, damages the livelihood of three million rice farmers, and puts in reverse mode the inclusive growth strategy of our government.
Competence
“Kung walang corrupt, walang mahirap.” Many rice farmers believe that much corruption has entered both the executive and legislative branches of the government. But in addition to fighting this corruption, the farmers contend that government should increase significantly its competence in dealing with issues such as rice smuggling.
Already, our farmer leaders have submitted documented charges to the Supreme Court and the Ombudsman to protest this travesty of justice shown by the release of smuggled rice shipments back to the smugglers. With increased government competence, it should no longer be necessary for poor farmers to risk their safety and meager resources in fighting for what should have been given them if government competence were at the desired level.


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