The World's Biggest Rice Exporter Is About To Take A Huge Risk

rice

Photo: tamaki on flickr

The Thai government is about to become a major player in the global rice market.On Friday, Thailand, which controls a third of the world’s rice exports, will start fixing rice prices at close to a 50% premium over the current market rate.

“This is a significant policy of the government to boost crop prices and increase rural income, which will help spur domestic spending and stimulate economic growth,” said Prime Minister Yingluck Shinawatra according to Bloomberg.

The effort is intended help Thailand’s struggling rice farmers.

Under the plan, rice farmers will be free to sell their crop at the market price.  But the Thai government will be offering 15,000 Thai baht per metric ton of white rice, which farmers can take advantage of should the market price fall below that level.

The losers in this deal are likely to  be Thailand’s rice exporters as foreign rice importers turn to countries offering a lower prices.

India, which lifted a ban on certain rice exports in September, could really clean up.  Especially if a spike in demand for non-Thai rice boost prices for Thailand’s foreign competitors.

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