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28 Aug 2015


Rice Prices Surge to 1-Year High, But Concerns at Low Irrigation Reserves (Current Issue No. 2653 Full Ed.)

Signs of a rice price recovery were evident during the first two weeks of August as it averaged THB8,160/ton – the highest in one year – suggesting a somewhat brighter outlook for farm income. This improvement, however, will not likely counterbalance a lower harvest yield due to drought that may cause Thai farm income to lag for the fourth consecutive year in 2015 at a rate perhaps greater than that of 2014.
KResearch projects that rice prices will remain high, reaching an average of THB8,000/ton for paddy with 15% moisture content, versus 2014's THB7,713/ton, representing a 3.7 percent YoY increase. Granted, we will need to keep watch on dam levels during the dry season this yearend, and whether irrigation water will be sufficient for the off-season rice farming.
However, such higher prices could be a temporary result of drought, thereby underscoring the need to monitor other contributing factors, e.g., how successful Thailand will be in releasing existing rice inventories, and how good the harvest will be amid falling water reserves and drought.

In response to the ongoing plight of Thai farmers, the government's new economic team envisions plans to hasten aid to low-income earners – farmers included – to boost their purchasing power and relieve them of some of their income burdens. To this end, the government will accelerate disbursements on the state budget, as well as borrowings from various financial institutions, to distribute funding across the rural sector as quickly as possible.

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