Thailand to dispose 5m tones of rice from its stockpile

Thailand is the world’s largest rice exporter and the country has decided to sell upto 5m tonnes from its stockpile. This amount is equal to a fifth of the world’s annually traded rice. The stockpile has built up as a result of its policy of buying surplus production at above market prices in an effort to protect agricultural incomes.

Now, the question arises here that such a large disposal could lower the price further, which have already halved since hitting an all-time high of about $1,100 a tonne last year.

Supported by fresh demand from importers in Africa, Thai medium quality rice, at present, trades at $580 a tonne, more than double the price in 2007.

The ministry of commerce, which controls the rice reserve, has yet to decide whether to release the stocks on to the open market, which could hit world prices, or try to dispose of it in a government-to-government deal.

Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said that if Bangkok decided to sell rice from the stockpile, the government would have to absorb the losses, estimated at a minimum of $100 per tonne.

“The question is, are they willing to lose that sort of money?” he said.

However, Mr Chookiat said a sale might be the best option in the long term because the existence of the stocks was capping prices. “If the government keeps the rice in Thailand, I don’t think the world price will increase,” he said.