Thailand’s grain sector is all about rice, which dominates its agriculture, its food processing sector and the diet of its people. Rice is a staple food and a political issue, and rice exports are vital to Thailand’s economy.
The International Grains Council (IGC) has predicted Thailand’s 2009-10 rice crop at 19.7 million tonnes, compared with 19.4 million in 2008-09. "Paddy intervention buying by the Thai government has considerably boosted state reserves, and with this year’s main crop likely to be of a good size, pressure to make significant stock releases will persist," the IGC said in a recent edition of its Grain Market Report.
It predicted a rebound in Thailand’s export shipments to 10 million tonnes, up from 8.6 million, "assuming supplies are competitively priced." The Thai Rice Exporters Association has 191 members.
Thailand is also a big importer of barley malt. The IGC expects it to buy 250,000 tonnes this year, a decrease of 5,000 from a year ago.
Thailand’s livestock industry is a big user of distillers dried grains. The IGC puts total usage this year at 300,000 tonnes, with imports of 222,000 recorded in January to September of 2009 from the U.S. alone.
"Thailand is by far the leading supplier of rice to sub-Saharan Africa, chiefly parboiled and high-quality white varieties such as benchmark 100% B," the IGC said. Although there was a decrease in deliveries to the area of 12% in 2008, reaching a four-year low of 9.1 million tonnes, imports from Thailand increased to 4.6 million tonnes from 3.9 million.
"Sub-Saharan Africa’s rice imports appear to have increased slightly in 2009," the IGC said, forecasting a total of 9.4 million tonnes. "Official data for Thailand show that shipments of all semi- and wholly-milled varieties to the region declined during the first nine months of 2009, but this was mostly offset by larger deliveries of broken grades." "If the government manages its stocks well, I think we could export a record 10 million tonnes this year," Thai Rice Exporters Association President Chookiat Ophaswongse said in an interview with the Reuters news agency in January. "Our conservative forecast is 9 million tonnes," he said. The government holds an estimated 6 million tonnes of rice.
The new president of the Thai Rice Exporters Association, Korbsook Iamsuri, recently called on the government to speed up government-to-government sales deals to take advantage of low tariffs in the ASEAN Free Trade Area.
Thailand is also a major exporter of parboiled rice. In 2008, according to the IGC, a marked reduction in parboiled rice exports by India was partly offset by increased sales by Thailand, which rose by 45%, to a record 2.72 million tonnes.
Thailand’s largest rice exporter is Asia Golden Rice Co. In the first nine months of 2009, it led with exports of 1,036,886 tonnes, followed by Capital Rice (1,009,228 tonnes), Chaiyaporn Group (425,767 tonnes), C.P. Intertrade (379,508 tonnes) and Chia Meng (343,446 tonnes).
Apart from rice, Thailand’s grain production consists entirely of maize. Indeed, the IGC’s figure for Thailand’s maize production (4.3 million tonnes in 2009-10) is the same as its figure for total grains production, although it lists sorghum production at close to 100,000 tonnes. Thailand’s wheat imports come to 1.1 million tonnes, says the IGC.
The IGC has forecast Thailand’s imports of wheat flour at 230,000 tonnes in 2009-10.
NEW SUPPORT SYSTEM
The government has come up with a new approach to agricultural support. "A direct payment program based on price insurance is replacing indirect support for rice, corn and tapioca," the USDA’s Bangkok office explained in a report on the changes. "Early indications are that farmers do not yet understand the program very well and lower-than-expected compensation could generate challenges for the new program," the U.S. officials suggested.
The rice sector accounted for 90% of the government’s farm support program operated through the rice milling industry to support prices by buying rice at well above world market levels. "In the process, the government accumulated and stored huge stocks and incurred large losses as they worked through Thai rice exporters to move the stocks into the world market," the report said. "In addition to the budgetary burden estimated at over $3 billion in 2008, few of the benefits fell to the farmers."
The old system suffered from what the USDA called "slippage." It made "illicit cross-border trade very attractive, and invited public and behind-thescenes political wrangling," the report said. "Finally, the immediate prospect of an open ASEAN rice market in 2010 prompted Thai policy makers to shift to the price insurance scheme."
Under the new price insurance scheme, income support is paid directly to farmers. "Payments to farmers will be based on the difference between insured prices and benchmark prices," it said. "Before the program was implemented, farmers registered to participate in the program based on their historical production. In addition to the revenue earned on the sale of their crop to the market, farmers will receive a payment directly from the government based on their registration commitment."
"The program is being funded at a lower level than the mortgage scheme (estimated at $1 billion annually), but hopes to target farmers more directly," it said.
Thai government policy was sharply criticized by local experts quoted in an article published by the BBC in June of 2009. They complained of a chronic lack of investment in rice farming and in particular a severe lack of investment in irrigation in heavily populated northeast Thailand. The rice mortgage scheme was attacked for benefitting only a minority of farmers.
"Most of them, unfortunately, are rich farmers with irrigation," it quoted economist Nipon Poapongsakorn of the Thailand Development Research Institute as saying. "Poor farmers in the northeast don’t have a surplus of rice to sell, so they don’t benefit from this policy at all," he said. "It is a pro-rich, pro-business policy."
SMALL-SCALE FLOUR INDUSTRY
According to the Asian Development Bank, there are only eight large-scale wheat flour millers in Thailand, with an annual production of around 500,000 tonnes, using imported wheat. It put average flour consumption at 24.3 grams a day.
According to the Flour Fortification initiative, the eight mills are "modern and sophisticated." The best known companies are United Flour Mill Co. Ltd., Siam Flour Trading Co. Ltd., Laemthong Corporation Ltd., Thai Flour Mill Industry Co. Ltd., Bangkok Flour Mill Co. Ltd., Nisshin-STC Flour Milling Co. Ltd. and Kerry-Glory Flour Mill Co. Ltd.
Thailand is also home to a large poultry industry which was forecast by the USDA to produce 1.2 million tonnes of broiler meat in 2009. The sector has benefitted from investment, according the USDA’s most recent annual report on it. "The Thai broiler industry has successfully improved farming systems to encounter animal health and food safety challenges," it said. "Integrated producers have also invested money to introduce or improve their broiler meat processing facilities from slaughtering to cooking processes. Accordingly, Thailand is currently considered one of the premium suppliers for cooked chicken meat products to Japanese and E.U. customers." The E.U. and Japan account for 85% to 90% of exports of Thai chicken.
At the time of the September 2009 report, international prices for corn and soybean meal, which account for 85% to 90% of the broiler feed ration, had fallen, triggering lower costs for the industry.
The USDA’s office in Thailand predicted a modest, 4% increase in broiler meat production in 2010, "in anticipation of higher demand both domestically and internationally and assuming that there will be no serious disease issues, especially Avian Influenza, in the country."
Chris Lyddon is World Grain’s European editor. He may be contacted at