Prime Minister-elect, Yingluck Shinawatra, had pledged to buy unmilled rice or paddy from growers at 15,000 baht, about 50 per cent above current prices. This is part of the key policy changes expected when she comes into office. She vows to give farmers more earnings by guaranteeing them higher prices and a minimum price to sell their rice, come year end.
These new policies are now worrying importing countries like Singapore as it would mean an increase in the price of rice exports from Thailand in the future. Some industry players said this might drive prices up by around 50 per cent, but other analysts said there is no need to panic yet because the eventual impact from the plans may not be significant.
One such player is Mr Andrew Tan, Chairman of Singapore General Rice Importers Association, who spoke to Channelnewsasia. He said: ‘A lot of rice millers in Thailand are anticipating this price increase. So they are keeping their paddy, resulting in a (lesser) supply of rice in the market, and causing prices to increase.’
‘So far rice prices have been going up by about 5 to 10 per cent from the Thailand side. And Singapore importers are currently absorbing this cost; two reasons – because of the strong Singapore dollar, and second, we have been buying rice and stockpiling them in the warehouse before this announcement.’
According to the Thai Rice Exporters Association, Thailand’s rice-export benchmark was set last week at US$555 a tonne. But these prices are said to have the potential to surge to about US$810 a tonne by the end of the year, according to the median estimate of six millers, exporters and traders in a survey by Dow Jones.
However, an economist at Credit Suisse, Satitarn Sathirathai, begged to differ. He said the only way for it to make a big impact on the price is if the government buys a large share of produce each year. Considering that Thailand produces nearly 30 million tonnes a year that would take up a sizable amount of government expenditure. It is also uncertain that the government would bump up the market r=price of rice too much. With many of Thailand’s net buyers consist the poor; it would hurt them as well. It is more likely that the new government would choose to act as an intermediary. Buying rice at a higher price but selling it to wholesalers and exporters at a lower price in a bid to subsidize farmers and consumers.
As a precaution, Singapore retailers such as Sheng Shiong Supermarket are monitoring the situation closely. “It is too early to tell whether prices of Thai rice will be affected. We also source our rice supplies from Vietnam,” said a spokesperson for Sheng Siong Supermarket
There will be a clearer picture when Thailand reveals more details of its policy, which is not expected to be in effect at least until November.
As worrying as the situation sounds, Singapore’s rice export does not only come from Thailand. Instead, we have a slew of sources from India, Bangladesh, Vietnam, Cambodia and Malaysia. Prices for a 5kg sack of rice are now retailing at around $12 – $17. Will these prices remain the same by early next year or would we all have to bear the cost of the rise? Let’s wait and see.
Share with us your thoughts. Here in Asia, rice plays a big role in our diet. How would it affect your finances if the price of rice increases. How would you cope with it?
Source: Channelnewsasia
Photo credit: Flickr.com by paperfacets
