Blog
Unit 1 Micro: Revision on Rice Prices
13th May 2012
A revision blog on developments in international rice prices
Thai launches price guarantee scheme
In the autumn of 2011, Thailand (the world’s biggest exporter of rice) introduced a new intervention buying scheme designed to boost the incomes of their rice farmers. For some time the Thai government has believe that the international price of rice has been too low and they pledged to pay above-market rates to provide aid to farmers. The scheme involves buying rice at a premium to the world market price and storing any surplus. Thailand has accounted for between 25% to 30% of world rice exports in recent years. The Thai government is buying the unmilled, or unprocessed, grain from growers at an artificially high rate of around $487 a ton
Click: Thailand launches new rice price policy
India - rice export controls 2008-2011
India is another major rice producer and for the last three year it has been limiting exports of rice to world markets because it wants there to be enough rice within India to provide ample domestic supply and keep home prices low for what is a hugely important part of the Indian staple diet. Indian rice is about $100 cheaper than supplies from Thailand. One key reason behind the relaxation of Indian rice export controls is that they have run out of places to store their unsold rice. In the last year in India there was a record grain crop, estimated at over 252 million tons. The Indian government buys rice and wheat at a guaranteed price that tends to be at or near the global price. This ensures that farmers won’t switch to other crops and builds stockpiles in case of domestic shortages
Other countries are looking to expand their exports of rise including Vietnam, Brazil, Uruguay, Pakistan, Cambodia and Myanmar. They see opportunities in the world market from both the Thai price guarantee scheme for producers and Indian export controls.
High levels of rice production coupled with weaker demand has created downward pressure on international prices, especially after India lifted its ban on regular rice exports.
Falling rice prices in India hits farm incomes
Thailand’s tough rice choices
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.