MY2012/13 main-crop rice production is revised down due to deficient rainfall in the northeastern region.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
Required Report - public distribution
GAIN Report Number: TH2116
Grain and Feed Update
Rey Santella, Agricultural Attaché
Ponnarong Prasertsri, Agricultural Specialist
MY2012/13 main-crop rice production is revised down due to deficient rainfall in the northeastern
region. Participation in the MY2012/13 Main-Crop Paddy Pledging Program started strong and the
government is likely to speed up the sale of its rice stocks due to public debt concerns.
Bangkok Rice, Milled
1. MY2012/13 Main-crop Rice Production Down Due To Drought
MY2012/13 main-crop rice production is revised down due to deficient rainfall in the northeastern
region, which is the major growing area for fragrant and glutinous rice (Table 1 and 2). This region
accounts for approximately 80 percent of total fragrant and glutinous rice production. According to the
Thai Meteorological Department (TMD), precipitation during January – September 2012 was nearly 7
percent below average in the northeastern region, particularly in the central and lower parts of the
region. Precipitation in this area is also likely to be far below the normal average in October 2012
(Figure 1 and 2) due to the lack of storms this year. Tropical storm Gaemi in early October marginally
prevented severe drought damage to the fragrant rice crop as it caused more rain in the western than in
the northeastern region.
The Ministry of Agriculture and Cooperative estimated the drought damage in the region between May
1- October 19, 2012 to be around 0.6 million rai (0.1 million hectares), of which 0.5 million rai (0.08
million hectares) are rice crops. Meanwhile, flood damage to the MY2012/13 main crop rice paddy is
minimal at around 5,500 rai (880 hectares). However, Post estimates drought damage area is likely
increase to 1-2 million rai (0.2 million hectares) as another tropical storm Prapiroon is expected to move
away from Thailand. In addition, current tropical storm Sontinh, in the South China Sea, is expected to
cause heavy rain in northeastern Thailand by the end of October, but it will likely be too late to improve
the average yield of the fragrant rice crops, which account for around 60 percent of total main-crop rice
production in the northeastern region.
The average yield for fragrant rice is likely to decline to 370 kg/rai (2.31 tons/hectare), down
approximately 10 percent from the previous year, due to insufficient rainfall during September and
October (milk and dough stage). Total MY2012/13 main-crop rice production is revised down to 21.5
million metric tons of paddy (14.2 million metric tons milled equivalent) (Table 2), which is still
slightly above last year as main-crop rice production in the northern and the central plain regions are
better than average due to sufficient rainfall and adequate water reservoir levels.
MY2012/13 off-season rice production forecast remains unchanged from the previous forecast as water
reservoir levels are likely to be able to provide enough water for the off-season rice crop, particularly in
the lower northern and central plain regions. These regions account for around 80 percent of the total
off-season rice crop production. Presently, reservoir levels are around 75 percent of capacity
nationwide, which will likely be enough to irrigate the off-season crop. However, there is a possibility
that the off-season crop production could be lower than expected if the reservoirs unexpectedly
dropped. The major dams in the northern region are presently at 60-70 percent of capacity (Figure 3).
In addition, the TMD expects warmer and drier conditions between November 2012 and January 2013.
2. Better Prospect For Rice Exports In 2012 - 2013 Due To Stock Releases
MY2011/12 rice exports remain unchanged from the previous forecast of 6.5 million metric tons, down
39 percent from the previous year as Thai rice prices remain much higher than competitors’ prices like
Vietnam and India as a result of its Paddy Pledging Program. Presently, prices for Thai 5% grade white
rice remain $100/MT above Vietnamese rice despite a reduction from an average price difference of
$140/MT during January through September 2012. Prices for 100% grade parboiled rice are $175/MT
above Indian rice prices.
In the first nine months of this year, Thai rice exports totaled around 5.0 million metric tons, down 44
percent from last year. White and parboiled rice exports have been adversely affected by the high
intervention prices set by the paddy pledging program. White and parboiled rice exports are down
approximately 50 percent from last year to around 2.1 million metric tons and 1.5 million metric tons,
respectively. In addition, fragrant rice exports dropped 24 percent from last year to 1.4 million metric
Prices for Thai white rice have been falling since July 2012 due to the sale of government rice stocks.
(Figure 4). Monthly rice exports during October – December 2012 will likely reach 0.5 million tons as
the government sells its rice stocks to help finance the new MY2012/13 Main-Crop Paddy Pledging
Program. The government is likely sell its new-crop fragrant rice stocks of around 0.3 – 0.5 million
metric tons during November 2012 – January 2013, mostly destined for the export market. In addition,
government rice stocks are expected to fall even more as Nigeria continues to purchase Thai parboiled
rice before its new import tariffs double the cost of imported rice.
MY2012/13 rice exports are expected to increase to 8.0 million metric tons, unchanged from the
previous forecast, in anticipation of government stock releases. The government will likely speed up
the sale of old-crop rice stocks in 2013 to exporters through open or closed tenders, which will enable
them to compete with Vietnamese rice crops. Meanwhile, the Thai Government’s memorandum of
understanding (MOU) to sell 7.3 million metric tons of rice in 2012-2013 (valued at approximately 114
billion baht ($3.8 billion) to China, Indonesia, Bangladesh, and Cote d’Ivoire is likely to take years to
finalize. The MOU is being challenged in court by a group of Thai senators who claim that the
government has not been transparent in developing the agreements, and consequently should not be
allowed to finalize the sale.
MY2011/12 and MY2012/13 rice imports are revised up to 0.4 million due to an increase in broken rice
imports and rice paddy smuggling along the border. During January – August 2012, rice imports
doubled from the previous year, particularly from Myanmar and Cambodia. The increase reflected tight
supplies of domestic broken rice caused by the changes instituted by the MY2011/12 Paddy Pledging
Program, which requires millers to deliver both head rice and broken rice to the program. The attractive
intervention prices of the pledging program are encouraging more rice smuggling from neighboring
countries along the border, particularly along the Thai-Cambodia border. Cambodian paddy is normally
traded along the border between December and May. Around 70 percent of Cambodian paddy traded
on the border is fragrant rice and the balance is low-quality white rice. Cambodian fragrant rice paddy
prices are approximately 50 percent below Thai fragrant rice prices, but the quality is just as good, if not
better than Thai fragrant rice.
3. Controversial Paddy Pledging Program
The MY2011/12 Paddy Pledging Program has received pledges of about 21.5 million metric tons
(MMT) of paddy, of which approximately 70 percent are off-season-crop rice paddy (Table 3). White
rice paddy accounts for around 80 percent of the program. As of October 3, 2012, millers participating
in the program delivered around 11.0 MMT of milled rice to government warehouses, of which 4.1
MMT are main-crop rice and 6.9 MMT are off-season-crop rice (Table 4). There are pending deliveries
of off-season-crop milled rice and paddies of around 1.2 million metric tons each. The state-run Bank
for Agriculture and Agricultural Cooperative (BAAC) has provided loans worth 304 billion baht ($10
billion) to farmers, of which 214 billion baht ($7 billion) have been covered by loans from government
banks other than BAAC. Farmers are unlikely to redeem the full value of their rice under the pledging
program as current market prices are presently 20-30 percent below the intervention prices.
Overall the pledging scheme props up farm-gate prices. Under the program, prices for fragrant rice
paddy are 18 percent higher, main-crop rice paddy is 15 percent higher and off-season crop paddy is 10
percent higher (Figure 5 and 6). Sources report that the program is reportedly biased against large
farmers as they receive 80-90 percent of the benefit from the pledging program due to their large farm
land holdings. The Thailand Development Research Institute (TDRI) estimated that smaller farmers
received 20 percent of the benefit from the main-crop rice paddy program and only 8 percent for the off-
season-crop rice paddy program. Around half of Thailand’s main-crop rice farmers and one-third of the
off-season-crop rice farmers come from low-income households.
Furthermore, the pledging program is likely to incur losses of at least 113 billion baht ($3.8 billion).
Around 60 percent of the losses are attributed to the sales of rice stocks below its acquisition price and
the remainder from rising administrative costs.
In October 2012, the Thai Cabinet approved a budget of 240 billion baht ($8 billion) to fund the
MY2012/13 Main-Crop Paddy Pledging Program. The program will be funded by a 150 billion baht
($5 billion) loan from government banks and 90 billion baht ($3 billion) from government stock sales.
Financing for the new program is structured differently from past programs due to the concern over
public debt levels which are expected to increase to around 48 percent of GDP in 2013. The new main-
crop rice paddy program began on October 1, 2012 and runs until February 28, 2013 with the pledging
target ranging around 15.0 million metric tons of paddy (roughly 10 million tons milled equivalent).
The intervention price remain unchanged for white rice paddy (13,800 - 15,000 baht/tons ($444 –
$482/MT), which is around 40 percent above current market prices. The price for fragrant rice paddy
will range between 18,000 – 20,000 baht/ton ($579 – $643/MT), which is 20 percent above current
market prices. No limit restrictions were imposed on the amount of paddies that could be sold to the
government. The Thai Cabinet is expected to consider funding for the MY2012/13 off-season rice crop
The Thai Government is currently holding an estimated 12.0 million metric tons of rice stocks, down
from prior estimate of 14-15 million metric tons. The government has sold approximately 2-3 million
metric tons of rice stocks, consisting primarily of old rice stocks. Around 60 percent of the rice stock
sales were through closed tenders for exports, particularly to Indonesia and African countries under
government-to-government contracts. Open tenders accounted for approximately 10 percent of the
government’s rice sales. The final bids for the August – September tenders were approximately 10-20
percent below market prices.
Table 1: Thailand's Rice Production, Supply and Demand
T 2010/2011 2011/2012 2012/2013
Market Year Begin: Jan Market Year Begin: Jan Market Year Begin:
2011 2012 May 2012
USDA New USDA New USDA New
Official Post Official Post Official P ost
Area Harvested 10,667 10,667 11,000 11,000 11,120 10,937 (1000
Beginning Stocks 6,100 6,100 5,615 5,615 9,375 9,575 (1000
Milled Production 20,262 20,262 20,460 20,460 21,050 20,507 (1000
Rough Production 30,700 30,700 31,000 31,000 31,894 31,071 (1000
Milling Rate (.9999) 6,600 6,600 6,600 6,600 6,600 6,600 (1000
MY Imports 200 200 200 400 300 400 (1000
TY Imports 200 200 200 400 300 400 (1000
TY Imp. from U.S. 1 1 0 0 0 0 (1000
Total Supply 26,562 26,562 26,275 26,475 30,725 30,482 (1000
MY Exports 10,647 10,647 6,500 6,500 8,000 8,000 (1000
TY Exports 10,647 10,647 6,500 6,500 8,000 8,000 (1000
Consumption and Residual 10,300 10,300 10,400 10,400 10,600 10,600 (1000
Ending Stocks 5,615 5,615 9,375 9,575 12,125 11,882 (1000
Total Distribution 26,562 26,562 26,275 26,475 30,725 30,482 (1000
Yield (Rough) 3. 2.878 3. 2.8182 3. 2.8409 (MT/HA)
End of report