Thailand water restrictions expected to affect rice production

by World Grain Staff
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WASHINGTON, D.C., U.S. — Thailand’s forecast for market year 2015-16 off-season rice production remains unchanged as the Royal Irrigation Department (RID) is still expected to restrict irrigation water supplies in the coming months, according to a report from the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) released on Oct. 30.

Water supplies for all uses for the dry season (November 2015-April 2016) are 35% lower than in 2014 and 64% lower than the 10-year average. The government is expected to sell 500,000 – 700,000 tonnes of its rotten rice for feed and ethanol production in 2015. Also, the Thai cabinet approved a program for interest rate compensation to farmers. Under this program, the Bank for Agriculture and Agricultural Cooperatives will provide soft loans to farmers and or farmer institutions. In addition, an on-farm pledging program for fragrant rice was announced to help prevent possible falling domestic rice prices during market year 2015-16 main-crop rice harvest.

The forecast for market year 2015-16 rice production remains unchanged at 16.4 million tonnes, which is down 15% from market 2014-15. This is due to a reduction in main-crop and off-season crop rice production due to drought in the northern region and central plains.

The government has announced bans on off-season rice cultivation due to limited water supplies, which will be mainly reserved only for household consumption. The RID has taken a hard line since September that no irrigation stations will be authorized to supply water for the off-season rice crop. Despite these announcements, some area will be planted but it will be much lower than in previous years. Farmers in upstream areas in the central plains have already prepared the land for planting off-season rice.

The forecast of rice exports in 2015 remains unchanged at 9 million tonnes, down 18% from 2014. According to the Thai Custom Department, rice exports from January–September 2015 totaled 6.6 million tonnes, down 13% from the same period in 2014. This was mainly due to increased competition from Vietnam and India. Parboiled rice exports declined to around 1.7 million tonnes, down 30% from the same period in 2014. Also, white rice export fell to 3.5 million tonnes, down 7% from the same period in 2014.

In the last quarter of 2015, monthly rice exports are expected to increase to 750,000–800,000 tonnes, compared to an average of 735,000 tonnes per month in the first nine months of 2015. This will be driven by the shipments of new-crop white rice under the government-to-government agreements with the Philippines and China. Also, Thai white rice is becoming more competitive as the price difference with Vietnam is currently smaller than earlier in the year. The increase in Vietnamese rice prices is driven by strong demand from the Philippines and Indonesia where rice production is reportedly adversely affected by natural disaster.



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