- Rice reserves surged under previous government's buying policy
- Thai rice export price dropped for a third year in 2015
Thailand will cut rice production to the lowest in almost two decades as it attempts to reduce domestic stockpiles and halt a decline in prices.
The country is targeting unmilled rice output of 25 million metric tons in the 2016-17 planting season that begins in May, Permanent Secretary for Commerce Chutima Bunyapraphasara said in Bangkok on Monday. That will be the lowest since 1999-2000 and compares with an estimated 27 million tons in 2015-16, according to government data.
Thailand’s military junta has vowed to reduce a domestic rice surplus and promote production of value-added products to improve farmer incomes as prices dropped. Output climbed and stockpiles surged after a previous administration introduced a program that purchased rice at above-market rates. The export price of Thai rice dropped 15 percent last year, a third straight annual decline. The production target is forecast to match estimated domestic demand and exports, Chutima said.
“Given the estimated output, local prices may stabilize around 7,500 baht ($206) to 8,000 baht a ton over the next few years,” she told reporters after a meeting of a working committee on the rice production plan. Government agencies will work on crop zoning as well as encourage farmers to grow alternative crops, Chutima said.
The target is based on impacts from an El Nino-induced drought and availability of reserves, she said. Thailand, which accounts for about a quarter of global trade, has about 13 million tons of rice in state stockpiles. Annual output is about 34 million based on the five-year average, government data shows.