The government of Thailand, the world's biggest rice exporter, may reduce the country's rice plantation area to cut supply and prop up prices, the Deputy Prime Minister said. "We may have to convince farmers to reduce their area for rice growing and grow other things, like cassava, sugar cane or rubber," Kittirat Na Ranong, who is also the Commerce Minister, told Reuters.
If the plan to intervene aggressively fails to push up prices, the government would try propping up prices by cutting rice supply through a reduction in rice planting area, he said. The government said it would start buying paddy rice from farmers at 15,000 baht ($500)per tonne, double the current market price of around 8,000 baht per tonne.
Fresh demand from Nigeria and speculation about aggressive government intervention pushed Thai rice to 1-1/2 year highs this week. The benchmark 100 percent B grade Thai white rice was at $615 a tonne, the highest since late December 2009. Government intervention was expected to push Thai export rice prices to as high as $870 per tonne, an uncompetitive level that could force buyers to turn to other origins, resulting in a sharp drop in Thai annual rice exports, exporters said.
However, Kittirat did not give details on how many hectares of Thai rice plantation area would be cut. Thailand's current rice plantation area stood at 9.6 million hectares, producing a total of around 30-32 million tonnes of paddy a year. That equates to around 18-20 million tonnes of milled rice, of which 8-10 million tonnes is for domestic consumption and the rest for exports. Thailand aims to export a record of more than 10 million tonnes this year, due to hefty demand in the first half of the year.