Thailand's rice production to return to historical levels

by Susan Reidy
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The Thai government is expected to sell the remaining 2.9 million tonnes of food-quality rice stocks, which will help maintain export volumes. 
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WASHINGTON, D.C., U.S. – Thailand’s rice production is expected to return to historical levels in 2017-18, reaching 19.5 million tonnes, according to a report from the U.S. Department of Agriculture’s Foreign Agricultural Service (FAS). 

That total is 5% higher than production in 2016-17, which was hindered by critically low reservoir levels. Planted acreage is likely to increase 3%, especially in irrigated areas. Unlike in 2016, it is unlikely that irrigation supplies will be restricted in May, the month when farmers begin planting main-crop rice.

Water supplies for irrigation during the dry season and early rainy season in 2017 totaled 9.7 cubic meters, a significant increase from a record low of 4.2 billion cubic meters in 2016.

The Thai government is expected to sell the remaining 2.9 million tonnes of food-quality rice stocks, which will help maintain export volumes. Rice exports in 2016-17 and 2017-18 are forecast to increase to around 10 million tonnes, up slightly from around 9.9 million tonnes in 2015-16. Government stocks are expected to decline to 1 million to 2 million tonnes by the end of 2017-18.

Corn production in 2017-18 is forecast to decline to 4.9 million tonnes, a drop of 6% from 2016-17. The decrease is due to reduced acreage in deforested areas, where farmers are having difficulty selling 2016-17 corn. Feed mills are concerned about the E.U. potentially banning corn and corn-based feed from forested areas.

Exports will likely decrease significantly due to strong domestic demand, driven by domestic corn purchase requirements under the new feed wheat import regulations. Since Jan. 19, import permits are required for feed wheat. To get a permit, the importer must show that for every tonne of imported feed wheat, it will use 3 tonnes of domestic corn.

The government also set a minimum purchase price for domestic corn at $227 per tonne for feed mills. Eligible feed wheat importers must be feed mills owners and will be required to buy domestic corn prior to being allowed to import feed wheat. Additionally, feed mill owners are prohibited from reselling the imported feed wheat. Finally, feed wheat shipments will be also be checked for aflatoxin and radiation contamination under the Feed Quality Act 2558 (2015).

This new import regulation is likely to increase the volume of corn smuggled into Thailand from neighboring countries, the FAS said.

Strong feed demand, insufficient domestic corn production, and the new regulations on feed wheat imports are expected to result in increased imports of alternative feed ingredients such as distiller’s dried grains with soluble (DDGS).

Wheat imports in 2016-17 and 2017-18 are likely to decline significantly in response to the new government import restrictions on feed wheat. As milling wheat is not subject to these new import regulations, 2016-17 and 2017-18 imports of milling wheat are expected to trend upwards in response to growing demand from the baking and food processing industries. 
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