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Thai rice farmers work in the field. Higher global supply and weak demand are pushing down crop prices.
Crop price declines remain a persistent challenge for Thailand, with rice a concern this year given its prominence in the agricultural economy.
Each year the complexities surrounding crop prices expand, making new and effective measures essential to deal with the issue sustainably.
What is causing rice prices to decline?
Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said the dip in rice prices has only affected white rice, with no immediate impact on Thai hom mali rice.
He attributed this trend to global market mechanisms following India’s lifting of its export ban on white rice. This shift is expected to lead to lower prices for white rice this year than last year.
The issue is compounded by a reduction in global rice demand, while global rice production increased due to last year’s La Niña phenomenon, which brought more rainfall to rice-producing and importing countries, enabling both importers and exporters to increase production.
For instance, Indonesia is not expected to import rice in the first half of this year due to its self-sufficiency policy, while the Philippines is restructuring its rice import system.
Vietnam, a major exporter, is set to release its winter-spring crop and second-crop harvests to the market in March. The nation’s second-crop yield will be higher, driven by last year’s high prices, said Mr Chookiat.
He said these factors led to a decrease in Thailand’s rice exports, with January’s export volume at 700,000 tonnes, expected to fall to more than 500,000 tonnes in February.
This decline caused domestic rice prices to fall, with paddy prices dipping to 7,500 to 7,800 baht per tonne, down from 11,000 to 12,000 baht per tonne the previous year.
Despite the reduction in export volume, Thailand’s rice shipment prices remain higher than competitors due to higher production costs.
The free on board price for Thai rice is US$420 per tonne, compared with $380 per tonne for Vietnam, $385 for Pakistan, and $390 for India.
Are there any short-term measures that could help farmers?
Mr Chookiat said government intervention could help by encouraging rice mills to stockpile rice through interest compensation, while also providing direct support to off-season farmers by reducing their costs, offering 500-1,000 baht per rai.
However, income guarantees and rice pledging schemes are unlikely to be implemented because of their large budgets, he said.
Regarding export promotion, Mr Chookiat said China is likely to increase rice imports to around 3 million tonnes this year, up from 1 million tonnes sourced from other countries.
Domestic rice prices in China have risen to roughly $500 per tonne, creating an opportunity for Thailand to export rice.
He said some offers to China have already been made, and Thailand still has around 280,000 tonnes of a government-to-government (G2G) rice deal pending delivery, which could lead to additional sales to the mainland if negotiations are successful.
However, Mr Chookiat said challenges to rice exporters remain, including increased competition from higher global supply, especially from China, India and Indonesia.
Exchange rate volatility, which can vary from 20 to 30 satang on a daily basis, is another obstacle for traders, he said.
To sustain Thailand’s rice industry and its farmers, Mr Chookiat said production costs must be lowered, while the nation needs to develop rice varieties that meet market demand and increase yields per rai.
Furthermore, he advocated for the development of low-carbon rice to combat climate change, encouraging farmers to reduce field burning through continuous, market-integrated practices.
What other government efforts are expected to help rice farmers and traders?
According to the Department of Internal Trade, the off-season rice output is expected to reach 7 million tonnes in 2025. About 10% of this output has been released to the market.
On Feb 20, the National Rice Policy and Management Subcommittee on Marketing approved three measures to support off-season rice farmers.
First, farmers can receive 1,500 baht per tonne for storing rice in their own granaries. If farmers opt to store their rice at cooperatives, they receive 1,000 baht per tonne, while the cooperatives earn 500 baht per tonne to cover storage costs.
Rice must be stored for 1-5 months, with a target of handling 1.5 million tonnes.
The second measure offers rice mill operators a 6% interest subsidy for keeping their stock for 2-6 months. To qualify, they must purchase rice that is at least 200 baht per tonne above the market price. This measure targets 2 million tonnes.
Third, the government plans to support rice purchasing points by covering management costs of 500 baht per tonne. Operators are required to buy rice that is at least 300 baht per tonne above the market price, with a target of 300,000 tonnes.
These measures have a total budget of 1.89 billion baht, aiming to manage 3.8 million tonnes of output.
The proposals are slated for presentation to the National Rice Policy and Management Committee for approval next week.
In addition, the authorities plan to collaborate with retail chains, local shops, and modern trade operators to sell rice for a maximum of 100 baht per five-kilogramme pack, aiming to distribute 500,000 tonnes of rice.
Meanwhile, this week the Commerce Ministry announced measures it expects to lift rice prices.
The ministry organised paddy market fairs in 20 provinces across the Chao Phraya River basin to enable farmers to sell rice at better rates. These events are expected to lift prices by 100-200 baht per tonne.
The first fair was in Ayutthaya Feb 16-20, with 14 more planned through April.
For help expand exports, the commerce minister is scheduled to visit South Africa in March to sign a memorandum of understanding on a shipment of 300,000 tonnes of rice valued at more than 5.25 billion baht.
The ministry also has a G2G agreement with China, as it seeks to export another 280,000 tonnes of rice to address a glut.
In addition, specialised credit support is being offered to rice businesses. The ministry is collaborating with the Export-Import Bank of Thailand to offer loans to businesses and rice exporters to facilitate the purchase and storage of more rice from farmers.
The ministry is also promoting Thai rice internationally through the Thailand Rice Convention, which connects global rice importers for networking and business discussions.
For long-term market expansion, the ministry wants to explore new opportunities in the US, Europe and the Philippines, alongside participation in international trade fairs to strengthen confidence in the quality of Thai rice.
What are the forecasts for rice production and consumption?
The US Department of Agriculture (USDA) projects global milled rice production this year could increase to 530 million tonnes, up 1.7% from 522 million tonnes last year.
Consumption is expected to rise by 1.3% to 528 million tonnes, while global rice trade is forecast to have a modest 0.03% increase to 56.3 million tonnes, according to the USDA.
As a consequence, global rice stocks are expected to expand by 1.3% from last year, tallying 182 million tonnes of milled rice.
Thailand’s rice exports totalled 9.95 million tonnes in 2024, valued at 226 billion baht, a 13% increase year-on-year in terms of volume and the highest value in six years.
Thailand’s top five export markets were Indonesia, which imported 1.33 million tonnes, followed by Iraq (1 million tonnes), the US (850,000 tonnes), South Africa (830,000 tonnes) and the Philippines (620,000 tonnes).
The most popular exported type was white rice at 5.99 million tonnes, followed by Thai hom mali (1.74 million tonnes), parboiled rice (1.27 million tonnes), Thai fragrant rice (630,000 tonnes), white glutinous rice (300,000 tonnes) and brown rice (20,000 tonnes).
For this year, the Department of Foreign Trade and the Thai Rice Exporters Association forecast Thai rice shipments to decline to 7.5 million tonnes based on competition from India, following the removal of its export control measures on white rice and parboiled rice. India has resumed its rice exports with competitive prices.
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