Rice Policy in Thailand: Production and Economic Issue

Assc. Prof. Somporn Isvilanonda

Knowledge Network Institute of Thailand

Third Country Training Program(TCTP) Cultural Practice, Technology and Management for Subsistence Rice Production, Office Extension and Training

Kkamphaengsaen, Kasetsart University June 20,2017

E-mail address: somporn@knit.or.th

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Outline

1. Thailand in the World Rice Trade 2. Rice Production Economy of Thailand and Success

Factors 3. Government Rice Price Policy: Past and Present

4. Creating a New Platform for Rural Rice Production Economy: A Challenge

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Third Country Training Program(TCTP) Cultural Practice, Technology and Management for Subsistence Rice Production, Office Extension and Training Kkamphaengsaen, Kasetsart University, June 20,2017

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3

1. Thailand in the World Rice Trade

Third Country Training Program(TCTP) Cultural Practice, Technology and Management for Subsistence Rice Production, Office Extension and Training Kkamphaengsaen, Kasetsart University, June 20,2017

World rice production and Major producers

World production in term of milled rice 471.83 million ton in 2016/17. The world top three production countries are China, India and Indonesia.

1.1 World Rice Production and Consumption in Brief 1. Thailand in the World Rice Trade

Country

Production 2016/17 (million ton)

%

China 145.77 30.89

India 104.41 22.13

Indonesia 36.20 7.67

Bangladesh 34.50 7.31

Vietnam 27.58 5.85

Thailand 15.80 3.35

Philippines 11.00 2.33

Myanmar 12.16 2.58

Others 84.41 17.89

Total 471.83 100.00 Source: Grain: World Market and Trade, USDA, May 2017

4

World rice consumption is around 471.17 mil. Ton in 2016.

Three major rice consumption countries are China, India, Indonesia which shares about 59% of global rice consumption.

World Rice Consumption

Production, Consumption, Stock and Prices in 2007/08-2016/17

1.2 World Rice Price Determination

World rice trade is very thin( around 40.62 million ton or about 8.61% of global rice production). High world rice stock depresses world rice price.

ทีม่า : Grain : World Markets and Trade, USDA various issue

1. Thailand in the World Rice Trade

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1.3 Where is Rice Deficit Regions?

Source : 1/ World Food Statistic and Kyushu University, Faculty of Agriculture; 2/ Grain : World Markets and Trade , May 2017

World Region Population(million person)1/

consumption (Mil. ton)2/

production (Mil. ton)2/

Sur./ Defi. (Mil. ton)

1.Asia 3,755.87 400.52 428.18 +27.66 -East Asia 1550.67 159.63 159.49 -0.14

-South Asia 1610.60 138.82 153.33 +14.46

-Southeast Asia 594.60 102.07 115.36 +13.29 2.Middle East 276.90 8.56 2.39 -6.17 3. North and middle America 503.6 8.25 7.28 -0.97 4. South America 387.5 14.81 15.40 +0.59 5.EU 520.20 3.55 2.05 -1.50 6.Former Soviet Union 284.80 1.51 1.26 -0.25 7.Africa 989.50 31.16 18.88 -12.28 -North Africa 4.27 4.04 -0.23 -Sub-saharan Africa 26.89 14.84 -12.05

8.Other 84.60 3.50 1.21 -2.29

Total 6,838.20 471.86 471.83 -0.03

Population, Rice Production and Consumption By Region 2015/16

1. Thailand in the World Rice Trade

Source: Calculated from USDA: Grain world markets and Trade various issues

Period Production Consumption Import

Average per annual (million ton of milled rice)

2000-2002 10.94 16.72 7.27

2003-2005 11.99 19.20 7.39

2006-2009 14.40 22.83 8.03

2010-2012 16.60 25.59 10.41

2013-2015 18.57 29.67 12.13

1.4 Africa is a Major Rice Deficit Region

1. Thailand in the World Rice Trade

During nearly the past two decades, rice production in Africa rose 69.74% but the consumption increased 77.45 %

Rice Exporting Countries

1.4 Major Rice Import and Export Countries 1. Thailand in the World Rice Trade

Selected importing countries

Countries 2014 2015 2016

Unit: million ton

China 4.45 5.15 4.60

Nigeria 3.20 2.20 2.40

philippins 1.80 2.00 0.80

Indonesia 1.23 1.35 1.00

EU 1.56 1.79 1.82

Saudi Arabia 1.46 1.60 1.30

Senegal 0.96 0.99 0.98

Corte d’ Ivoire 0.95 1.15 1.30

Malaysia 0.99 1.05 0.82

South Africa 0.91 0.91 0.95

Ghana 0.59 0.50 0.70

Japan 0.67 0.69 0.69

USA 0.76 0.76 0.77

Others 24.63 22.56 22.49

Total 44.16 42.70 40.62

Countries 2014 2015 2016

Million ton

India 10.90 11.05 10.04

Thailand 10.97 9.78 9.87

Vietnam 6.70 6.61 5.09

Pakistan 3.40 4.0 4.30

USA 3.04 3.36 3.54

Other 8.21 7.88 7.78

Total 43.22 42.68 40.62

Source: Grain: World Market and Trade, USDA, May 2017

Top three rice exporting countries are in Asia; India, Thailand, Vietnam.

India is a leader in Basmati and parboiled rice export but Thailand takes a lead in export of aromatic rice.

Vietnam exports white rice 5% and 25%, particularly in ASEAN market.

1.5 India Is a Leader in the World Rice Trade

ทีม่า : Grain : World Markets and Trade , February 2017

Since 2011, India is the top exporter

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1. Thailand in the World Rice Trade

FOB prices for different grades of rice and different export countries

1.7 Rice Export Price Movements in Selected Countries

Source: USDA, Grain: World Markets and Trade, May 2017

1. Thailand in the World Rice Trade

1.8 World Rice Market by Type of Rice

ทีม่า : Grain : World Markets and Trade , February 2017

World market rice trade is around 40 million ton or about 8.48 % of total world rice production.

Rice trade by type of rice

Aromatic rice 3.5 mil. ton Parboiled rice 6 mil. ton Glutinous rice 1.2 mil. ton Basmati 4.5 mil.ton Japonica rice 2.5 mil.ton Milled and broken rice 22.3 mil. ton

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1. Thailand in the World Rice Trade

FAO rice price export by type of rice

1.9 Rice Market Differentiation by Quality

Source: FAO Rice Price Data, FAO

In international rice trade, market differentiates high quality from low quality rice

1. Thailand in the World Rice Trade

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U.S.Lomg grain 2.4 % Thai 5% Viet 5%

India 25% Thai 25% Viet 25%

Pak Basmati Ordinary 3/ Thai Fragrant 100% thai parboiled 100%

Half of the country production is exported. Last year, Thailand is one of major exporters. Its export shares about 24.30% (9.87 mil. ton) of the world rice trade (40.62 mil. ton).

1.10 Share of Thai rice in Export market and Destination

Thai rice is mostly export to Africa continent.

Destination of Thai rice by regions

Siurce: Calculated from data available by Thailand Rice Exporter Association

1. Thailand in the World Rice Trade

Countries Market share of 5 Major exporters

2009 2013 2015 2016

Thailand 29.21 17.01 22.91 24.51

Vietnam 20.28 16.97 15.49 12.66

India 7.23 26.54 25.91 25.33

Pakistan 10.84 10.46 9.37 10.68

USA 10.29 8.36 7.87 8.79

5 Countries 77.85 79.34 81.54 81.97

Other 22.15 20.66 18.46 18.38

Total 100.00 100.00 100.00 100.00 World rice tarde (mil.ton)

29.34 39.49 42.68 40.62

Market share of Thai rice

Asia 32%

Middle East 4%

America 6% Europe

4%

Africa 52%

Oceania 2%

Africa is the largest destination of Thai rice export

1.11 Destination of Thai Rice Export

Source: Data from OAE with the courtesy by Department of Custom

Unit: ton

1. Thailand in the World Rice Trade

Region Aroma 100% 5% 10% and other

Parboiled Total share

Unit: ton % N. Africa 31,037 395 4,572 - 17,318 55,714 1.18

W. Africa 558,530 22,350 530,534 284,799 1,249,886 2,739,870 58.02

C. Africa 83,875 22,424 707,614 106,646 62,213 982,773 20.81

E. Africa 12,473 11,388 298,590 34,466 14,909 373,844 7.92

S. Africa 9,771 11,244 4,882 2,442 539,872 569,957 12.07

Total 695,687 69,801 1,546,192 428,353 1,884,197 4,722,158 100.00

1.12 Distribution of Thai Rice in African Markets

In Africa Market, West Africa is a major destination of Thai rice in 2015

Top 5 of Thai rice importers are Cameroon(379,533 ton), Angola (313,597 ton), Mozambig(303,717 ton), Ivory Coast(303,344 ton) and Benin(283,557ton).

Source: Data from OAE with the courtesy by Department of Custom

1. Thailand in the World Rice Trade

Asia is a major rice consumption region. Consumption demand for rice in Asia will increase at slowly pace. This is because a per capita rice consumption in most Asian countries tend to decline.

In 2016 the global rice production be little ahead of the global rice consumption around 1 million ton (excluding stock).

1.13 Summary

World rice trade is very thin around 8-9% of the production. Southeast and South Asia are major rice export region. On the other hand, Africa and Middle east are major import region.

1. Thailand in the World Rice Trade

The major export region of Thai rice is in African continent.

In recent years, market differentiates high quality from Low quality rice in international rice trade.

2. Rice Production Economy of Thailand and Success Factors

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Third Country Training Program(TCTP) Cultural Practice, Technology and Management for Subsistence Rice Production, Office Extension and Training Kkamphaengsaen, Kasetsart University, June 20,2017

Rice has long been Thailand exported commodity for nearly two centuries ago and mostly exported to a deficit countries in the Asian region.

2.1 Factors Stimulating Rice Area Expansion in Thailand before 1960

Ingram (1955) indicated that rising demand for rice export in those time encouraged the country extensive development in canal system and induced rice area expansion, essentially in Central Plain.

2. Thailand Rice Production Economy and Success Factors

Fluctuation and shortage of world rice supply with the rising in consumption demand pressured the fluctuation in rising price.

2.2 Six Decades of Thailand Rice Production Economy Development

Before NESDP (before 1961)

Agr. infrastructure improvement and green revolution technology adoption

NESDP 1-3 (1961-1976)

Policy shift toward producer led food policy

NESDP 4-7 (1977-1996)

Expansion of irrigated areas. Improving the market access. Rapid adoption of MVs in irrigated areas. Rice yield and production increased.

Producer subsidy policy. Improving paddy market facilities. Improving farm credit access.

Policy toward reducing poverty, competitive enhancement, and rebalancing the country’s rice D and S for sustainable growth

NESDP 8-12 (1997-present)

Traditional rice farming Rice is a main source of the country export income. Established Rice Department in 1953. Highly government intervention in the export market. Consumer led food policy.

Note: NESDP means national economic and social development plan

2. Thailand Rice Production Economy and Success Factors

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2.3 Thailand Rice Utilization

Domestic use of rice is about 17 million ton of paddy which is about 12 million ton in term of milled rice). This is for consumption, seed use, processing industry and feed milled industry).

HH rice consumption is about 101 kg/person/annual in 2008.This amount reduced from 115 kg/person/annual in 1992

In 2557(2012) population in Thailand was around 70 million. It is estimated for consumption about 7 million ton of milled rice.

Half of rice production was export. Thailand was ranked first in the export rice market for nearly 2 decades. However, last year(2016) it was the second after India.

For seed use is about 2 million ton of paddy.

2. Thailand Rice Production Economy and Success Factors

In recent year, rice production in Thailand was around 32 million ton of paddy(or 21 million ton of milled rice). Thailand is a rice surplus country.

2.4 Rice Sector Profile of Thailand Rice is the Thai’s staple food crop. Rural people planted rice for their owned food supply and sold the surplus to the market. About 3.7 million hh. (or 78%) are rice farming hh. Most of them are small-scale rice farmers. Ave. farm area is about 3.52 ha/hh.

App. 47% of agr . Land is used for rice production.

Share of Planted area 2014

Rice 46.88

Upland crop 20.85

Vegetable 0.98

Fruit and tree crop 23.40

Other agr. Land use 2.92

Total 100.00

Total ag land (mil. Ha) 23.84

9.83 million people is in rice labor force or about 27% of agr. labor force.

Source: calculated from OAE data

Rice export is the second after para rubber.

Items 2016 (mil.baht)

1. Rubber 155,753.0

2. Rice 154,433.9

3.Cassava product 103,128.8

4. Processed chicken 71,680.2

5. Frozen shrimp 34,191.5

6.Fresh, frozen, and dried fruits 54,627.3

7. Fresh and frozen squid 10,004.2

8.Fresh and frozen fillet 9,942.3

9. Fresh and frozen chicken 17,571.6

10.Livestock products 9,580.1

Source: Ministry of Commerce

Export value of some selected commodities

2. Thailand Rice Production Economy and Success Factors

2.4(continued) Rice is grown in all regions in Thailand. Rice area is around 10 million ha. Wet season rice share about 80% of the total rice planted area. Only one–fifth is dry season rice area.

N.E. is the largest share of planted rice area, following by N. and CP.

A commercial rice areas are in CP. and LON. A larger share of irrigated areas in these region has resulted in a better yield and a larger share of production

Year

Planted area by Rgion

Total NE N C S

Planted area (mil.ha)

2003-07 5.37 2.54 2.43 0.37 10.71

2008-12 6.30 3.16 2.57 0.29 12.32

2015 6.08 2.48 1.68 0.19 10.43

Ratio of planted area (%)

2015 58.29 23.78 16.11 1.82 100

Planted area by regions

Source: Calculated from OAE data set

2. Thailand Rice Production Economy and Success Factors

Rice Production in Thailand is around 30-34 million ton. The wet season share is around 71%. The rest is dry season.

Ensuring for good rice quality in production process a GAP has been introduced including organic production in some areas.

2.4(continued) Irrigated rice area is around 4 million ha or 32.65 % of planted rice area. Most of rice area in Thailand is in rain-fed environment.

High quality or aromatic rice is mostly grown in rainfed environment

Year

Production by Region

Total NE N C S

Production (ton/rai)

2003-07 9.61 8.85 9.25 0.90 28.65

2008-12 13.34 10.97 9.88 0.75 34.94

2015 14.17 8.85 6.56 0.48 30.06

Ratio of Production (%)

2015 47.14 29.44 21.82 1.60 100

Production by regions

2. Thailand Rice Production Economy and Success Factors

2.5 Previous Key Driving Force in Thailand’s Rice Production Economy Development

Agr. basic infrastructure development plans since early 1960s stimulating changes in farming systems toward relatively more commercial production.

Progress in irrigation improvements in combining with a dissemination of MVs induced modern technology adoptions . Ensuring the private land ownership creating a development in farm land market and smallholder response

Developing formal farm credit at reasonable interest rate

Non-farm sector Development in later period stimulating rural labor migration and inducing machinery adoption.

Marketing infrastructure development inducing more competition in paddy and milled rice markets

2. Thailand Rice Production Economy and Success Factors

Since 1969 (2512) , a wide spread of MVs adoption has induced rice cropping intensification from one crop a year to be at least two crops a year in irrigated area.

Period Irrigated area(Million ha) Rice planted area(mil. rai) Ave.

production(mil. Ton/year) 1st crop 2nd crop

1966-1970 1.72

(2nd Develop. plan) 5.67 0.08 12.87

1986-1990 4.35

(6th Develop. plan) 9.26 0.73 19.11

2002-2006 4.48

(9th Develop. plan) 9.19 1.49 27.62

2007-2012 4.56

(10th develop. plan) 9.91 2.41 34.95

2013-2015 4.84

(11th Develop. plan 9.56 2.10 34.07

Source: calculate from OAE data set

2.6 Irrigation Improvement and increasing Rice Cropping Intensification

2. Thailand Rice Production Economy and Success Factors

2.7 Ensuring Land Property Right spurring farm Land Market Development and Area Expansion

A development of private property rights for ensuring land ownership more than a century ago encouraged smallholder farmers to settle in further away areas and occupied new land for farming.

Land document or title deed has been previously used as a collateral for borrowing money from informal sources.

Figure: from google.com

Expansion of small scale farm owner throughout the country.

2. Thailand Rice Production Economy and Success Factors

2.8 Improvement in Rural Farm Credit Market Helping Small Farmers Access to Modern Inputs

Establishing the BAAC in 1966 was a crucial change for farm credit market. Since then the share of informal lenders were enormously declined within a few decades. Currently, 65% of farm credit is provided by formal institution.

In 2011, the BAAC has 2,098 branches throughout the country. The bank provided total credit in the amount of 20,610 million US$ covering 4.67 million farm HH. and 1,097 agricultural cooperatives.

Previously farm credit was provided by informal lenders, particularly merchants in villages charging very high interest rate.

Using owned asset as collateral. Using a group guarantee.

2. Thailand Rice Production Economy and Success Factors

2.9 Market Infrastructure Improvement Ensuring Rice Trading Quality and Increasing Market Efficiency

Standard moisture content of paddy sold in the market is 15%. Otherwise, the price will be deducted if the moisture content is above that level.

Milled rice for trading, general standards are white rice 100%, white rice 5%, white rice 25%, broken rice A1, broken rice A2 etc.

Milled rice standards are classified according to grain size (short grain vs long grain; chemical content (high amylose vs low amylose); aromatic (aroma vs non-aroma); glutinous vs non glutinous); milling process (brown rice and white rice); colour (red rice purple rice, fancy rice).

2. Thailand Rice Production Economy and Success Factors

Setting up rice trading standards ensuring trading quality

Farmer Institutions

Paddy distribution

Milled Rice distribution

Modified from Isvilanonda, 2004

Farmers

Local Rice Mill

Retailers

Wholesalers

Rice Mills

Domestic Consumers

Exporters

The Rice Marketing Channels Development

Brokers

Local Assemblers

Central Market

2.9(continued) Improving the rice marketing channel for ensuring the fair exchange

2. Thailand Rice Production Economy and Success Factors

2.10 Open up Market Opportunity for Off-farm and Non-farm Employment

In Thailand, rice is not the only income sources of smallholders . Since rice is an easy crop, many farmers have other off-farm and non-farm activities for their incomes.

Items HH. Income structure(%)

Agriculture 45.1

-Rice 21.3

-other 23.8

Non-agriculture 54.9

-non-farm employment 9.6

-other 45.3

Total 100.00

HH. Annual income(US$) 8,345

Ave.Farm size(ha) 3.5 Note: 1/ survey of farmers in Central plain and Northeast for 240 samples. Source: Sakondhavat ( 2012)

Percentage share of Farm household income in 20091/

A higher development of non-agricultural sector in the past few decades also helped to improve the employment opportunity since significant number of their family member left villages and worked in the non-farm sector, sending the remittance back home.

2. Thailand Rice Production Economy and Source of Growth

Declining trend in agr. And rice labor force

Year B.E.

Total LF

Agr. Setor LF Rice sector LF

(million) (million) (% of LF) (million) (% of LF)

1973-77 22.80 15.28 67.03 10.83 47.50

2003-07 36.29 15.29 42.15 9.83 27.09

Rising in wage rate induced farmer to recently adoption of farm mechanization. Combined harvesters are recently wide spread in particularly commercial rice production areas.

Year B.E. Large tractor Power tiller

(unit) (unit)

1978-82 42,267 262,277

2003-07 3836,790 4,663,299 Source: calculated from OAE data set

Rapid growth of the country non-agr. Sector has continuously driven labor out of agr. sector

2.11 Rural Area Urbanization, Declining Farm labor Supply and Farm Machinery Adoption

2. Thailand Rice Production Economy and Success Factors

3. Government Rice Price Policy: Past and Present

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Third Country Training Program(TCTP) Cultural Practice, Technology and Management for Subsistence Rice Production, Office Extension and Training Kkamphaengsaen, Kasetsart University, June 20,2017

3.1 Types of Government Rice Policy

Non-market policy

Policy response for improving

productivity and farm income

Price and income policy

Market policy Improvement and

development of irrigation systems for both regions and communities. Investment in agricultural R&D. Improving land productivity and tenure system. Providing agricultural credit at a reasonable interest rate.

Improvement in logistics and storage facilities. Enhancing and developing domestic and export market structure. Future market improvement.

Market price and income intervention measures.

มาก

Non-price and price policies are economic tool for solving farmers problems

3. Government Rice Price Policy: past and Presents

3.2 Previous Paddy Price Stabilization Policy 3. Government Rice Price Policy: past and Presents

The policy objective is to maintain fair price received by farmers for their rice crops to assure a good turnover.

Measures launched to achieve the objectives included rice premium, rice market intervention, buffer stock, export quota allotment and price support programs for paddy and milled rice.

Rice premium measure

After second world war, the world production of rice was below demand. Export of rice was required to seek an export permit from the government. The premium collection was also charged to prevent any internal rice shortage and to the raise the government revenue. The premium rate was varied according to the world trade situation and the export prices as well. Manipulation of rates was focused for domestic price stabilization. The premium collection was abolished late in 1986.

3.2 (continued) 3. Government Rice Price Policy: past and Presents

Rice market intervention

As in the rice harvest and sale periods, there were normally huge supplies and oligopolistic activities followed with low price fixing causing distress to farmers. The government stepped in with certain intervention and implementation measures as follows:

-Establishing and using Public Warehouse Organization(PWO) and Market Organization for farmers(MOF) to operate the farm paddy purchases in the provinces for the price support programs. Since 976, the MOF took responsible for the paddy price support program. In its purchase program, farmers were paid not exceed the standard maximum prices set by Farm Price Stabilization Committee.

3.2 (continued) 3. Government Rice Price Policy: past and Presents

Rice market intervention(Continued)

-Paddy pledging or mortgage program. Begun in 1983 the program has aimed for paddy market intervention in the harvesting and sale periods. In implementation, BAAC was requested to deter farm debt payments in order to develop the farmers’ ability to store their paddy for sale in the later period for a better price. With regard to the procedure, the mortgages being eligible to 80% initial payment of the price estimates with the reasonable interest rate. The redemption period is around 4 month. Otherwise, the mortgage ownership would fall to BAAC for trading it out in order to pay the outstanding debt.

-Rice buffer stock. It was between 1979-1981 that the price support program was much scaled down and the milled rice buffer stock was set up for raising paddy prices. The stocks were set up both in the export market and in the central markets in the regions. In time of short market supply, part of the stock was released for reducing consumer prices and the production supply rice remained stabilized.

3.3 Evolution of Rice Pledging Scheme in Thailand

Originated under the BAAC internal program for helping poor farmers who need cash during harvesting season. By allowing farmers to pledge rice for getting 80% cash from BAAC. But it was later enhanced to be the government program.

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3. Government Rice Price Policy: past and Presents

Starting from October 2011, the pledging price was rais to 15,000 B/ton for narmal paddy rice and 20,000 B/ton for jasmine pady rice. The scheme ended in May 2014.

Crop year 2001/02 from previous limit to wet season crop. It was extended to include second season crop.

Crop year 2000/01 The government at that time increased the pledging target price to a slightly higher than the market price, including increasing size and budget of the program. This is equivalent to minimum price guarantee.

3.4 Rice Pledging Scheme under Previous Government (from crop year 2011/12 to wet season crop 2013/14)

Crop year Amount pledged (mil. ton Paddy)

In term of Milled Rice (mil. Ton)

Pledged Value(trillion

Baht) Total 2011/12 21.65 14.08 337.33 Wetseason 6.95 4.52 118.66 Dry season 14.70 9.56 218.67 Total 2012/13 22.45 14.59 351.35 Wetseason 14.65 9.52 234.70 Dry season 7.80 5.07 116.65 Total 2013/14 11.55 7.51 191.32 Wet season 11.55 7.51 191.32 Total 55.65 36.18 880

Source: BAAC

In Price policy this Scheme was considered as the price guarantee not the pledging program. Because the gov’t bought all grain at the guarantee price.

3. Government Rice Price Policy: past and Presents

Raising high pledged price cause farmers to grow less quality rice.

Agricultural future markets trading on rice was vanished.

High operation cost in managing the scheme.

Government is a prime buyer in the market and prime seller in the export market.

The paddy was not redeemed creating too much rice in the public rice stock as well as a budget burden.

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Private central market has to force out of business.

Farmers , particularly large scale farmers, realized the rising in their income but that for very short run.

3.5 Lesson Learn form Previous Rice Pledging Scheme 3. Government Rice Price Policy: past and Presents

Using the high government budget at creating a very high net loss.

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During crop year 2011/12-2013/14(wet season), the government has already used the budget for the scheme about 880 billion baht(or 25 billionUS$) (excluding operation cost). The government could sell rice in the amount of 212.66 billion baht (about 6.25 billion US$).

Storage cost around 2,138 million Bt/month or 25,650 million Bt/year.

Total rice pledged about 55.64 mil. ton of paddy or 33.61 mil.ton of paddy.

Total amount of milled rice sold under previous gov.t 17.36 million ton.

Stock accumulated about 16.25 million ton of milled rice in 2014.

3.5 (Cont.)

Stock accumulated in recent month about 5 million ton of milled rice.

3. Government Rice Price Policy: past and Presents

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Thai White100 B

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Viet 5%

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Viet 25%

ทีม่า: FAO rice price data, FAO

3.5(continued)

Rice Price Trend in 2015 has continuously declined since last year.

3. Government Rice Price Policy: past and Presents

42

3.7 Reforming Strategy in Rice Production Sector

By Balancing the national production rice supply to match with the global demand condition. Production target is set not beyond 27 mil. Ton of paddy (from previously 33 ton).

Dry season rice

Wet season rice by main varieties

Jasmin rice 8 million ton of paddy(4 million ton of milled rice) Glutinous rice 7 million ton of rice(3.5 million ton of milled rice) Other local varieties rice 3 million ton of paddy(1.5 million ton of milled rice) non-photoperiod sensitive varieties(MV) rice 9 million ton of paddy mostly grows in irrigated areas.

Non-photoperiod sensitive varieties about 11 million ton of paddy and mostly grows in irrigated areas.

Total MV production 20 million ton of paddy (13 million ton of milled rice.)

7. Challenges

3.6 Under Current Government Rice Policy

Aiming to reduce the price of seed, fertilizer, land rent, and combined harvester service in total of 432 Bt/Rai

Subsidized production cost 1,000Bt/rai but at the max. of 15rai or 2.4ha.

3.6 (continued)

Production Cost Reduction Policy since 2014

Reduced chemical fertilizer expenditure 40-50 /Bag of 50 kg Reduced combined harvester service expenditure 50Bt/rai. Reduced insecticide expenditure 20Bt/rai Reduced seed expenditure 122Bt/rai. Reduced land rent expenditure 200Bt/rai.

3. Government Rice Price Policy: past and Presents

Note: 6.25 rai= 1 hectar

Rice area consolidation.

Establishing the zoning area for suitable rice production. The marginal rice land areas would be advised to change to other economic crops by supporting the short-and medium tern credit at the low interest rate.

Rice production cost in some ASEAN countries

Seed distribution program for improving productivity

3.6(Continued)

Providing Farm Credit to Rice farmers and Farmer Institution

Subsidized interest rate for using rice as a collateral for loan from BAAC.

Allowing farmers to pledging rice at 90% of announcing target price.

Providing loan (for harvesting rice and preparing to keep in the stock) to farmers 2,000Bt/rai at 0% interest rate for two months, including areas.

Providing loan to farmer institution and agricultural cooperatives.

3. Government Rice Price Policy: past and Presents

Support Sustainable Rice Farming Practices Toward Environmental Friendly Niche Products

Credit loan with subsidized interest rate was provided for promoting green and sustainable farming.

Enhancing community enterprise and creating other marketing option for niche products.

สถาบนัคลงัสมองของชาต ิสถาบนัคลงัสมองของชาต ิ

45

4. Creating a New Platform for Rural Rice Production Economy: A Challenge

Third Country Training Program(TCTP) Cultural Practice, Technology and Management for Subsistence Rice Production, Office Extension and Training Kkamphaengsaen, Kasetsart University, June 20,2017

4.1 Farmers Encountering Black Holes for Improving Their Better Life

4. Creating a New Rice Platform for Rural Thai Economy: A Challenge

Lack of management skill for developing business farm

Acces to market is very limited

Facing poverty situation

Source: Modified fromก Apichart Vannvichit

University engagement

New management skill

Specific variety

4.2 Empowering Rural Poors Through Enhancing Management Skills and Developing New Supply Chain

innovative technique

Social enterprise

Source: Modified from Vanvicit 2014

Business engagement

Community engagement

Empowering farmers and community in

production and business

management skills

Creating new and fair share supply chain

linking up stream and

down stream business activities

Fair trade Innovative products

Public sector and government engagement

Infrastructure improvements; ensuring property rights; regulatory governance; better extension services.

Source: Modified fromก Apichart Vannvichit

4. Creating a New Rice Platform for Rural Thai Economy: A Challenge

4.3 Thailand 4.0 Creating Innovation for Driving Thailand Rice Economy

Cutting rice production cost and enhancing export competitiveness

Enhancing value creation and raising unit value

Creating rice beyond a stable food

Reducing Mass production but promoting Niche Production

4. Creating a New Rice Platform for Rural Thai Economy: A Challenge

Upstream production

Environmental friendly

production process

Geographical

indicator

Farm resource management

Seeds improvement

Niche product

Business engagement

Community engagement

4.4 Upstream Production Renovation Engagements

Sufficiency economy philosophy Practice

Process upgrading

Product upgrading

4. Creating a New Rice Platform for Rural Thai Economy: A Challenge

University engagement

government agency engagement

4.5 Strengthening Community Networks and Stakeholders Engagement in Value Chain Development

Strengthening farmers in community for understanding and sharing new skill and knowledge in creating niche product from upstream to downstream value chain.

Good Manufacturing Practice (GMP)

Good Agricultural Practice (GAP)

4. Creating a New Rice Platform for Rural Thai Economy: A Challenge

ปัจจัยการผลติ

• Good seeds • Good input materials • Good farm management

practice

Production • Land consolidation • Technical standard • Mechanization • Effective irrigation

Post harvest • Good processing • Good storage • Good package and

transportation

Processing • High VA processing • Processing by-products

Trading • Traceability◌ ้• Good quality • Food Safety • Marketing

Business

Agricultural cooperatives

Contributing land and capital

Extension service and farm credit

Source:Dang Kim Son, 2014 :

51

4.6 Rice Value Chain Development for Economy of scales

4. Creating a New Rice Platform for Rural Thai Economy: A Challenge

4.7 Creating Option for Small Farmer Production Away from Mass to be Selected Niche Products

Niche Production is a way to create quality and specific attribute to the product; eg changing from non-organic to be organic production process; using GI; using a specific variety.

Moving the product from local to global by adopting standards; domestic, regional, or world standard.

4. Creating a New Rice Platform for Rural Thai Economy: A Challenge

https://www.marketingoops.com/exclusive/the-power-of-rich-market/

https://www.marketingoops.com/exclusive/the-power-of-rich-market/

4.8 Pathway Toward Environmental Friendly Sustainable farming

High quality, safety, and environmental friendly of

food product for consumers

Enhancing community, academic, gov. agency engagement, creating specific product for niche market

Creating specific product value (niche product), using environmental

friendly inputs, good farm practice

Better awareness for natural resources, environment and

ecology 53

Soil, water,climate, biodiversity

Social

Economic Environment

Sustainable agriculture

Better quality of life among

farmers

Efficiency Equity

Agricultural crop mixed

สถาบนัคลงัสมองของชาต ิ

4. Creating a New Rice Platform for Rural Thai Economy: A Challenge

4.9 Options for Increasing the Rice Value without Increasing the Production Area

Investment in R&D is necessary for creating new innovation

How to make rice be better than staple food dish.

4. ขา้วไทยภายใตค้วามทา้ทายใหม ่

54

Source: Modified from Stan Shih’s refered by Tangkitvanich et al., 2013

4.10 Moving Up the Value Chain by creating Innovation for Up grading

Moving up the value chain implies a continuous process of change, innovation and productivity growth.

Functional Upgrading

Process Upgrading

Product Upgrading

R&D Planning and Designing

Production Distribution Branding

Activities under value chain

Value added

Government engagement

University engagement

Business engagement

Community engagement

4. Creating a New Rice Platform for Rural Thai Economy: A Challenge

ระบบการผลติ (Production System)

ระบบการตลาด (

4.11 Value Added Activities and Supply Chain Connection and Integration

ระบบการแปรรปู (Processing System) Marketing System)

ระบบการบรโิภค (Consumption System)

4. Creating a New Rice Platform for Rural Thai Economy: A Challenge

4.12 Innovating Rice Toward a Medicinal and Healthy Food Products

White rice 20 B/kg.

Aromatic rice 35 B/kg.

Nutritive rice >80 B/kg.

Development toward healthy food &cosmetic

ทีม่า: ดัดแปลงจาก Apichart Vannvichit

Organic Paddy 15 B/kg

Organic white rice

30 B/kg Rice production

Cosmetic/spa 5000 B/kg

Riceberry oil

Medicinal material 6,500 B/kg

4. Creating a New Rice Platform for Rural Thai Economy: A Challenge

Country Standard

International Standard

Thai standards

International standards

การเกษตรอาเซยีน

58

Jamine standards Production standards (GAP, Organic Thailand,) Otop standardss Generl standards SPS/QIE/CODEX/ IPPC

IFOAM, USDA ORGANIC General standards SPS/QIE/CODEX/ IPPC/OIE

Moving toward Word Free Trade Economy

Time dimension

4.11 Keeping Farmers Awareness on Quality and Safety Food Standards

4. Creating a New Rice Platform for Rural Thai Economy: A Challenge

To be specialized in bio-base economy

Agriculture base economy

การเกษตรอาเซยีน

Renovating Rice-Base Economy to be Specialized in Bio-Base Economy

59 Time dimension

To be specialize in commodity

ทศิทางขบัเคลือ่นขา้วไทยThailand 4.0

Thank you Qestion&Discusion