A promise by the government of 50 percent more for their crop has made rice farmers in Thailand happy, but consumers are up in arms over the higher cost for their staple food.
Farmers in Thailand may be happy that they are finally getting more money for their rice crop, but besides consumers being angry at higher prices, the Thai government is now finding itself in a bind. The country has slipped to third place in the global rice export ranking. As a result, warehouses in Thailand are overflowing with over-priced rice that has become hard to sell.
The rice harvest in the provinces is in full swing. In towns like Pathum Thani, north of Bangkok, time is money because the crop has to be harvested before the floods come. There has already been a lot of rain in recent weeks due to the start of the monsoon season. "We are used to it," says rice farmer Sulasak Muntimoh, "it happens every year. The government has improved the protective measures but still, Nature decides."
Good for farmers – bad for business
Even so, Muntimoh is confident he will get a good harvest. Ever since the government of Prime Minister Yingluck Shinawatra took office, he has been earning 50 percent more than the market would normally pay for every ton of Thailand's staple food.
"That is really good because now the money comes directly to us and not to the traders," says Muntimoh.
With its promise, Shinawatra's Phuea Thai Party has appeased the rural population and turned them into voters. The government currently pays farmers around 12,000 baht, or about 300 euros, for every ton of rice delivered to the mills, and which then lies unsold in government warehouses.
Thailand's rice exporters, on the other hand, are pulling their hair out. They don't have much else to do, since almost no rice is being delivered to them. The current market price for a ton of rice is around 16,000 baht (400 euros). Last year, farmers earned 200 euros a ton. Chookiat Ophaswongse heads Thailand's Rice Exporters Association in Bangkok:
"With the 50 percent mark-up we have a huge problem. It is endangering our ability to compete. Thailand produces some 20 million tons of rice annually and consumes 10 million tons itself. The rest is exported, but not at this high price. We have strong competitors in the market, such as Vietnam or India, which have already passed us," he says.
Rice is politics
Ophaswongse is deeply concerned that the government's policy is wrecking the market. We have nothing to sell, he moans, and the government can't sell the rice at the price it paid for it, except domestically and that means higher prices for consumers.
Thailand's exports are dropping dramatically – by 44 percent since last year – and the rice in the warehouses can't even be sold cheaply because the quality is bad.
Turning rice into a problem is dangerous in Thailand, warns the political analyst Kwanchai Gomez. "Rice is important. We earn a lot of money with it. But this is also about Thailand's soul. Thais love rice and live with rice, every day in this country." That's why in Thailand a rice crisis can quickly turn into a government crisis.