Thai floods will have minimal impact on global rice market, according to industry expert

By Kacey Culliney

- Last updated on GMT

Thailand floods not the rice industry's biggest problem
Thailand floods not the rice industry's biggest problem

Related tags: Rice

The severe flooding in Thailand is merely a second blow to its already unsteady rice market, an industry expert has said.

Dr Samarendu Mohanty, senior economist for the International Rice Research Institute (IRRI) told FoodNavigator-Asia that Thailand has already faced other challenges this year that have had a stronger bearing on its rice market and so “nullified some of the impact of the floods.”

Mohanty explained that the Thai government’s rice mortgage scheme has impacted heavily on both the domestic and export market, and that India’s strengthening presence in the global rice market has added pressure.

Thai rice mortgage scheme and a strengthening India

The government’s rice mortgage scheme was introduced two weeks ago and sees farmers paid a set price for their paddy by the government, almost 50% higher than the market price.

Mohanty explained that it has impacted the country’s rice industry hugely.

Globally, the market has been anticipating the effects and reacting already to the higher pricing of Thai rice and this has been on-going for several months, he explained.

“The government are pricing them [Thai rice farmers] out of the market,”​ he added.

Much of the flood-damaged paddy wouldn’t have come to the market anyway due to prices being driven higher and less trading as a result of the mortgage scheme, Mohanty explained.

“Also acting against Thailand, is the Indian entrance into the market. India looks good and has very strong and promising rice crops. It currently exports an average of nearly three million tons every year and has plans to expand and it can also sell its rice at a lower price that Thailand,” ​he pointed out.

Mohanty added: “India are filling the void and capturing the market that Thailand has lost.”

The flooding has affected 23 provinces out of Thailand’s 76, with central and northern parts of the country, predominant rice production areas, facing the worst damage.

“Estimates of the damage are preliminary but at the moment, I estimate that the floods have damaged three to five million tons of paddy rice…. it is almost certain that rice production in Thailand will be lower than last year,” ​Mohanty explained.

A speedy recovery and strong dry season

“We are expecting Thailand to recover very quickly, within three to five months for some regions, particularly the North-East,” ​Mohanty said.

He explained that Thailand’s dry season crop, planted in January and harvested at the end of April, will be very strong this year as a result of the floods.

He added: “The North-East is usually an extremely dry rice area, but for next season, the ground will be full of moisture from the floods and will be a good area for paddy production.”

Mohanty also explained that the government rice mortgage scheme has incentivised farmers to continue strongly in rice farming and has also led some other farmers to change to growing rice.

As a result there is a strong surge in rice farming in Thailand that will help with the country’s recovery.

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