Global factors, strong baht hurt Thai rice prices
The price of rice and paddy in Thailand has experienced a significant decline in recent months, driven by a combination of global market factors and the strengthening Thai baht.
The Thai Rice Mills Association reported that the average price of paddy rice has decreased by 1,000 baht per ton, while the price of rice has dropped by 2,000 baht per ton, compared with August and September.
Rangsan Sabaimuang, president of the Thai Rice Mills Association, said the global market has reduced its rice purchases.
"Now, the main factor causing the price decrease is that foreign countries have a lower demand for rice, including competitive prices, and the strengthening of the Thai baht has an impact because our rice prices are higher than other countries’," he said.
The situation has led to increased price competition with other rice-exporting nations, particularly Vietnam. He noted that the quality of rice from various countries is similar, so buyers are primarily motivated by price.
He then highlighted the challenges faced by Thai rice exporters.
- Liquidity Issues: Rice-mill operators are struggling with liquidity, which affects their ability to purchase paddy from farmers.
- Strict Lending Policies: Financial institutions have tightened their lending criteria for mill groups.
- High Production Costs: Despite relatively good crop prices this year, farmers' profits are being squeezed by high production and maintenance costs.
Rangsan has called on the government to assist mill operators by encouraging banks to ease credit restrictions.
"I want the government to help mill operators to have good liquidity by allowing banks to release credit to entrepreneurs so that they can have a reserve to buy rice, reduce various conditions, and increase the credit limit," he said.
The future outlook for rice prices remains uncertain, as it depends on various factors, including global demand, competition from other countries, and domestic conditions.
"It's currently impossible to predict how much Thailand's rice volume will increase next year, with industry experts waiting to assess future conditions," Rangsan said, adding that the Thai Rice Mills Association is closely monitoring these developments and advocating for government support to mitigate the challenges faced by rice-mill operators and farmers.
