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Maizefarmer

Status Of Thai Rice Industry

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Just had some feedback from a group of potential investors (not Westerners) - who came over to Thailand this last week to look into the rice business - milling and exports.

They found loads of mills climbing over each other to sell their production quota's, and impossible to get any export license for a quantity of rice less than 500tons!

..... there be problems coming this coming season for rice farmers.

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Thanks for the 'on the ground' info Maizefarmer which adds to the crystal ball outlook at the moment as there seems to be a swaying opinion that things are going to be difficult. Like just about everything else going on at the moment, no one really knows to what degree.

I'm wondering whether a harvesting business is immune to rice prices...I would normally say it wouldn't be as farms try to reduce their costs to offset lower prices, but I'm not so sure that will be the case in Thailand.

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I doubt it - other than for those who calculate that planting is just not worth it, those who plant will still need to have there crop harvested. Where things may be slightly different for those running rice harvesters is that the best business will be going to those who can offer the earliest harvest schedule .... won't be long before those who harvest last will be kicking themselves for leaving it so long.

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Yes my worry is how many this year may refuse to plant, but from my experience so far most Thais will still harvest at near to a loss just for something to do its bread into them they rarely think of the business issue's involved & think of it as food for the family for the rest of the year.

Area's with irrigation stand to fare best from the storm ahead as the Rice production per Rai makes it more of business sence for the one's that think in this way.

Price immune? I think not there will be plenty bartering going on this coming harvest I'm sure & as long as Diesel stays low this will be used to barter the price down to below 600 baht a rai we will wait an see in April.

I personally would rather be here in Issarn than the West right now they have shown me how to get by on little & changed my western materialistic views,that's why Thailand's people will better weather this storm ahead as they don't have nothing much more to lose unlike friends back home having their Home's/Car's repossessed & record Bankruptcy's.

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Its not only that Mali - it appears to be any Thai businesses with Western clients, or Western product distibution in Thailand. I know 2 ex-pat PR's, both in business with multiple Western clients, or distribution Western products in Thailand (one who has close on 50 Western multi-nationals as clients) - both reckon business is the worst they have ever seen things. One has sold up and the other is in the process of selling up.

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Its not only that Mali - it appears to be any Thai businesses with Western clients, or Western product distibution in Thailand. I know 2 ex-pat PR's, both in business with multiple Western clients, or distribution Western products in Thailand (one who has close on 50 Western multi-nationals as clients) - both reckon business is the worst they have ever seen things. One has sold up and the other is in the process of selling up.

Yes time's are very hard personally I've never been so low on actual cash in my life but I'm still upbeat for my personal & business future as I have said before I'm not looking to get rich,just to be able to sustain my life with my family here in Thailand, at least until my small retirement funds start to kick in but that's 10 years away! We may be boomed & Bust again by that time.

There as been much talk on TV especially for individuals on how to get by living here in LOS & so many have pointed out that making your income here in Baht cuts out a lot of the overseas issue's, but has your post seems to point out,that is not that easy either.

I suppose the only small plus for ex pats working in the farming sector is that your not as directly effected by the trading/selling to or trading in western goods I'm sorry to hear of your Friends misfortune's & hope like me they can at least stay here in LOS.

Cheers Shaun

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Anyone hear talk of Middle-Easterns trying to buy land for rice farming?

Yeah the same people that think buying Manchester City can win you the Premiership now they realise not a chance.

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Just had some feedback from a group of potential investors (not Westerners) - who came over to Thailand this last week to look into the rice business - milling and exports.

They found loads of mills climbing over each other to sell their production quota's, and impossible to get any export license for a quantity of rice less than 500tons!

..... there be problems coming this coming season for rice farmers.

I doubt it - other than for those who calculate that planting is just not worth it, those who plant will still need to have there crop harvested. Where things may be slightly different for those running rice harvesters is that the best business will be going to those who can offer the earliest harvest schedule .... won't be long before those who harvest last will be kicking themselves for leaving it so long.
Yes my worry is how many this year may refuse to plant, but from my experience so far most Thais will still harvest at near to a loss just for something to do its bread into them they rarely think of the business issue's involved & think of it as food for the family for the rest of the year.

Area's with irrigation stand to fare best from the storm ahead as the Rice production per Rai makes it more of business sence for the one's that think in this way.

Price immune? I think not there will be plenty bartering going on this coming harvest I'm sure & as long as Diesel stays low this will be used to barter the price down to below 600 baht a rai we will wait an see in April.

I personally would rather be here in Issarn than the West right now they have shown me how to get by on little & changed my western materialistic views,that's why Thailand's people will better weather this storm ahead as they don't have nothing much more to lose unlike friends back home having their Home's/Car's repossessed & record Bankruptcy's.

Guys,

I am sorry,I am trying to understand what you are all talking about.!

Maizefarmer with your experience can you elaborate on what the impact will be on rice outputs?

So what you cant get a new export licence,with Thailand being the biggest rice exporter why all the doom and gloom,yes prices may drop,but lets face it last year the rice price was high, but after all is said and done the net return would have been the same as fuel and chemicals were so high..

Mali, I am sure that some farmers make a loss but not all..!! and to say that most harvest at near to a loss,I cant imagine where you get that information from. I know its tough in Issan,but most Thais will make enough money to survive each year from their crop..

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Just had some feedback from a group of potential investors (not Westerners) - who came over to Thailand this last week to look into the rice business - milling and exports.

They found loads of mills climbing over each other to sell their production quota's, and impossible to get any export license for a quantity of rice less than 500tons!

..... there be problems coming this coming season for rice farmers.

I doubt it - other than for those who calculate that planting is just not worth it, those who plant will still need to have there crop harvested. Where things may be slightly different for those running rice harvesters is that the best business will be going to those who can offer the earliest harvest schedule .... won't be long before those who harvest last will be kicking themselves for leaving it so long.
Yes my worry is how many this year may refuse to plant, but from my experience so far most Thais will still harvest at near to a loss just for something to do its bread into them they rarely think of the business issue's involved & think of it as food for the family for the rest of the year.

Area's with irrigation stand to fare best from the storm ahead as the Rice production per Rai makes it more of business sence for the one's that think in this way.

Price immune? I think not there will be plenty bartering going on this coming harvest I'm sure & as long as Diesel stays low this will be used to barter the price down to below 600 baht a rai we will wait an see in April.

I personally would rather be here in Issarn than the West right now they have shown me how to get by on little & changed my western materialistic views,that's why Thailand's people will better weather this storm ahead as they don't have nothing much more to lose unlike friends back home having their Home's/Car's repossessed & record Bankruptcy's.

Guys,

I am sorry,I am trying to understand what you are all talking about.!

Maizefarmer with your experience can you elaborate on what the impact will be on rice outputs?

So what you cant get a new export licence,with Thailand being the biggest rice exporter why all the doom and gloom,yes prices may drop,but lets face it last year the rice price was high, but after all is said and done the net return would have been the same as fuel and chemicals were so high..

Mali, I am sure that some farmers make a loss but not all..!! and to say that most harvest at near to a loss,I cant imagine where you get that information from. I know its tough in Issan,but most Thais will make enough money to survive each year from their crop..

Hi Nick

What would you say is the average Thai, (no Falang) involved average Rai is for owner ship of land? I'd say from my experience here in Roi Et & I'm talking a big family the average is maybe 10 Rai per Family.

We did exceptionally well last harvest at 1200 Baht net Profit per Rai in our village so use our figures being the better than most.

At 10 Rai average your saying that 12,000 baht a year is enough to get by on? 1000 baht a month :o Why do you think so many of them have Taxi driver/Factory Workers members of the family working in Bangkok that send a couple of Thousand home each month, without that Issarn would be on its knee's.

Its taken a while to study what goes on here but I feel I'm experienced enough to know the average small Rai land owner here is growing is rice for the love of it not for a living here in Issarn.

Now if your talking Falang thinking business/profit etc large Rai holding's then yes Maybe money can be made.

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Hi Mali,

I hear where you are coming from, but I farmed 50 rai last year and I can assure you I made profits of considerably more than that,but, I am with you on the 10 rai per Thai, but not sure how you are getting your costs.

Rice seed for ten rai no more than 5000 baht,less if dum nar.

Chemicals per rai 600 = 6000 baht

no manpower to speak of as they work them selves

cutting costs at 600 per rai 6000 baht ,nothing if they cut it them selves.

assuming 500 kilos per tonne Jasmine at 14,000 baht per tonne 5 tonnes = 70,000 baht less costs of at the very worst 17,000.. their is still money left,now I have not put in tractor costs or grassweedkiller,but even if I do there is money left over.

I am not saying its a good living but I can live and frequently do when i go to the wifes as these is nothing to do or buy on 2-3000 baht for a month, so I am fairly sure Thais can get by on less..

This is not a Bun fight Mali,just my view point..I know its hard..

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Just had some feedback from a group of potential investors (not Westerners) - who came over to Thailand this last week to look into the rice business - milling and exports.

They found loads of mills climbing over each other to sell their production quota's, and impossible to get any export license for a quantity of rice less than 500tons!

..... there be problems coming this coming season for rice farmers.

I doubt it - other than for those who calculate that planting is just not worth it, those who plant will still need to have there crop harvested. Where things may be slightly different for those running rice harvesters is that the best business will be going to those who can offer the earliest harvest schedule .... won't be long before those who harvest last will be kicking themselves for leaving it so long.
Yes my worry is how many this year may refuse to plant, but from my experience so far most Thais will still harvest at near to a loss just for something to do its bread into them they rarely think of the business issue's involved & think of it as food for the family for the rest of the year.

Area's with irrigation stand to fare best from the storm ahead as the Rice production per Rai makes it more of business sence for the one's that think in this way.

Price immune? I think not there will be plenty bartering going on this coming harvest I'm sure & as long as Diesel stays low this will be used to barter the price down to below 600 baht a rai we will wait an see in April.

I personally would rather be here in Issarn than the West right now they have shown me how to get by on little & changed my western materialistic views,that's why Thailand's people will better weather this storm ahead as they don't have nothing much more to lose unlike friends back home having their Home's/Car's repossessed & record Bankruptcy's.

Guys,

I am sorry,I am trying to understand what you are all talking about.!

Maizefarmer with your experience can you elaborate on what the impact will be on rice outputs?

So what you cant get a new export licence,with Thailand being the biggest rice exporter why all the doom and gloom,yes prices may drop,but lets face it last year the rice price was high, but after all is said and done the net return would have been the same as fuel and chemicals were so high..

Mali, I am sure that some farmers make a loss but not all..!! and to say that most harvest at near to a loss,I cant imagine where you get that information from. I know its tough in Issan,but most Thais will make enough money to survive each year from their crop..

Impact on output? - meaning production or milling?

On production very little, farmers will probably still plant and harvest, but the milling side of it is going to have extremely tight margins, and as such the farmgate price is likely to head South. Thats a straightforward forward Water/Diamond paradox type explination (W/D paradox is a basic economics theory -about how supply demand impacts pricing). In short: Co-ops will struggle to get good prices , which in turns affects what the farmers earn.

Its not that striaght forward: much of Thailands production last year still sits in Thailand - while part of that has to stay in Thailand as an emergency national food reserve, rotating & selling it this coming season is unlikely to return what it cost to produce last year. Remember last year the price was high because India banned rice exports. They won't this coming season. Thats a very basic explination there are also yet as to be determined influences one of which is the almost dead certainty that the Baht is going to fall in value - the question is no-one knows by how much and exactly when that is going to start happening.

As well: the international rice futures market is "short" at the moments on the commidities exchange in Chicago - meaning: bets are on that the price is going to continue to fall.

The one positive in this equation, which you have quite rightly noted (and if I can blow my trumpet - I made a bit of a song and dance about several months back on the forum), is that energy costs have dropped, and in my opinion are going to drop by another 9% - 14% over the next 5months.

Then there are climatic influences: what if when the monsoon season swings round the July/August rains don't materialise - or there are floods..... there are so many inputs that determnine final pricing: some can be forecast with a degree of certainty, others can't. The big input last year on the international rice market was India's ban on rice exports.

Collectively the outlook is pesimestic as things stnad at the moment - but things can change overnight - so take what I have said as only valid for the moment. Tomorrow may be a different story - and I am no expert on the rice business, in fact ag wise. its probably the thing I know least about!

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Just had some feedback from a group of potential investors (not Westerners) - who came over to Thailand this last week to look into the rice business - milling and exports.

They found loads of mills climbing over each other to sell their production quota's, and impossible to get any export license for a quantity of rice less than 500tons!

..... there be problems coming this coming season for rice farmers.

I doubt it - other than for those who calculate that planting is just not worth it, those who plant will still need to have there crop harvested. Where things may be slightly different for those running rice harvesters is that the best business will be going to those who can offer the earliest harvest schedule .... won't be long before those who harvest last will be kicking themselves for leaving it so long.
Yes my worry is how many this year may refuse to plant, but from my experience so far most Thais will still harvest at near to a loss just for something to do its bread into them they rarely think of the business issue's involved & think of it as food for the family for the rest of the year.

Area's with irrigation stand to fare best from the storm ahead as the Rice production per Rai makes it more of business sence for the one's that think in this way.

Price immune? I think not there will be plenty bartering going on this coming harvest I'm sure & as long as Diesel stays low this will be used to barter the price down to below 600 baht a rai we will wait an see in April.

I personally would rather be here in Issarn than the West right now they have shown me how to get by on little & changed my western materialistic views,that's why Thailand's people will better weather this storm ahead as they don't have nothing much more to lose unlike friends back home having their Home's/Car's repossessed & record Bankruptcy's.

Guys,

I am sorry,I am trying to understand what you are all talking about.!

Maizefarmer with your experience can you elaborate on what the impact will be on rice outputs?

So what you cant get a new export licence,with Thailand being the biggest rice exporter why all the doom and gloom,yes prices may drop,but lets face it last year the rice price was high, but after all is said and done the net return would have been the same as fuel and chemicals were so high..

Mali, I am sure that some farmers make a loss but not all..!! and to say that most harvest at near to a loss,I cant imagine where you get that information from. I know its tough in Issan,but most Thais will make enough money to survive each year from their crop..

Impact on output? - meaning production or milling?

On production very little, farmers will probably still plant and harvest, but the milling side of it is going to have extremely tight margins, and as such the farmgate price is likely to head South. Thats a straightforward forward Water/Diamond paradox type explination (W/D paradox is a basic economics theory -about how supply demand impacts pricing). In short: Co-ops will struggle to get good prices , which in turns affects what the farmers earn.

Its not that striaght forward: much of Thailands production last year still sits in Thailand - while part of that has to stay in Thailand as an emergency national food reserve, rotating & selling it this coming season is unlikely to return what it cost to produce last year. Remember last year the price was high because India banned rice exports. They won't this coming season. Thats a very basic explination there are also yet as to be determined influences one of which is the almost dead certainty that the Baht is going to fall in value - the question is no-one knows by how much and exactly when that is going to start happening.

As well: the international rice futures market is "short" at the moments on the commidities exchange in Chicago - meaning: bets are on that the price is going to continue to fall.

The one positive in this equation, which you have quite rightly noted (and if I can blow my trumpet - I made a bit of a song and dance about several months back on the forum), is that energy costs have dropped, and in my opinion are going to drop by another 9% - 14% over the next 5months.

Then there are climatic influences: what if when the monsoon season swings round the July/August rains don't materialise - or there are floods..... there are so many inputs that determnine final pricing: some can be forecast with a degree of certainty, others can't. The big input last year on the international rice market was India's ban on rice exports.

Collectively the outlook is pesimestic as things stnad at the moment - but things can change overnight - so take what I have said as only valid for the moment. Tomorrow may be a different story - and I am no expert on the rice business, in fact ag wise. its probably the thing I know least about!

Maizefarmer,

Thanks for an excellant explanation.

I will not start to worry yet then and I will of course be the first to say you were right in the coming months if your predictions are correct.

I am enlightened though on your facts regarding rice,as I assumed that it would have mostly all left Thailand by now for overseas..

From a rice farming point of view if the rice prices drops back to its normal 6000 or so baht per tonne for non jasmine,in my opinion I will not be much worse off,as this year it was so expensive to buy seed,petrol and chemicals,so if all these prices have dropped it will be about the same return,so in my opinion business as usual for Thailand..

Lets hope that this coming years weather is back to normal and the Indians dont export again and all will be well..

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Some of the rice in storage is 2006 crop. The govt storage figures for any crop are open to debate, as the product seem to have ability to disappear. Note rice, lamyai, garlic that we have heard about in the past, with some simply being sold when the price is high. Nick; in post #11 you noted 500 kg/ton for your numbers which when adjusted may cut into your forecast profit somewhat. Oil prices are jumping around by 9 to 14% on some of the day trades at present. It is interesting to look at oil price at ports in individual producing country, as well as note the difference between US light sweet and brent light. This difference of 8 to 10 dollar/bbl is a recent thing. I would doubt the Thai refiners buy US oil and brent purchases would surprise me, but who knows in todays business world. I have been told that most of the fertilizer comes from China, thus cost would be based on their oil cost. (imported and domestic)????

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DUBAI - Thai rice which came in as a suitable replacement when India stopped its rice exports to the AGCC, is getting to be more and more popular in the region.

The change in trend has seen Thailand’s rice exports to this part of the world increase by over 100 per cent.

Thailand is the world’s leading rice exporter with over 60 countries depending on the Southeast Asian nation.

Tilun Bhanich Sutatul, executive director of Thai Trade Center, said in 2008 Oman imported nearly $102 million worth of rice compared to its 2007 figure of $2.2 million.

“Oman resorted to storing huge volume of Thai rice as precautionary measures during the rice shortage last year as a result of the Indian rice embargo,” he said. The UAE, on the other hand, doubled its Thai rice imports by from $40.2 million in 2007 to $194 million last year.

Saudi Arabia’s rice imports also soared by from $36.9 million in 2007 to U$101 million last year.

Sutatul said Kuwait registered a slight increase in its rice imports by from $5.6 million in 2007 to $6.7 million in 2008.

Qatar’s increased its rice imports $2.9 million to $11.9 million. Bahrain, though a small country, increased its imports from $2.2 million to $7.3 million in 2008. “Though we cannot increase the volume because of area limitation the price of rice continues to go up, which explains the soaring volume of our rice imports,” Sutatul added.

Regards

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