What politics and drugs have to do with the hike in rice prices

As with some crops, the weather is one of the reasons Thai jasmine rice costs more – but the situation is more complex that just that. The series For Food’s Sake looks at the issues and some solutions.
Derrick A Paulo and Gosia Klimowicz Channel NewsAsia 17 Nov 18;

THAILAND and SINGAPORE: Because of its taste and texture, it is the key ingredient in the old favourite among Singaporeans, chicken rice. Hom Mali – or fragrant Thai jasmine rice – is also preferred by local Chinese restaurants.

It is one of Thailand’s premium exports, and the World Rice Conference has named it the world’s best rice five times since 2009. But that quality, for the most important staple in Asia, has come at an increasingly higher price.

For hawker Wong Teck Tham, the cost of the rice had increased by more than 10 per cent over the past five years, to about S$100 for every 50 kilogrammes.

He was shocked, however, when it then increased to S$108 around the middle of this year. “I’ve never used rice that’s so expensive,” he said.

But the hike has been far steeper for local rice importers: Up by 58 per cent since last year, according to the Singapore General Rice Importers Association.

And with the price of Thai jasmine rice now at its highest in a decade owing to a supply shortage, they will have to remain on the alert for more hikes, as the series For Food’s Sake discovers. (Watch the episode here.)

HARVESTED ONCE A YEAR

Singapore imports more rice from Thailand than from any other country. And the kingdom’s north-eastern province of Ubon Ratchathani is one of the main areas for growing Thai jasmine rice, which can thrive because of the soil and climate there.

But unlike other types of rice that farmers elsewhere can produce up to five times a year, Thai jasmine rice is harvested only once a year. And a delicate balance is involved.

“We need water to run into the fields to a depth of 15 centimetres,” said farmer Vichai Pimpam.

“If it rises any higher than that, it isn’t good because the rice stalks won’t grow straight, and the wind would blow it over easily.

Herein lies a major issue. Owing to insufficient public funding, the irrigation system is lacking in the province. So a successful harvest depends on the whims of the weather.

And extreme weather has not been uncommon in recent years. In 2016, Thailand experienced its worst drought in decades, and Ubon Ratchathani was one of the provinces that suffered the most.

The supply of Hom Mali rice from the harvest at the end of last year was also quite low, said Thai rice exporter Khajornkiat Sa-Nguankulchai.

Factors such as the dry weather as well as floods caused the shortage, which in turn caused the price to increase, added Mr Chokchai Lorattanakul, the managing director of Ubonsangcharoen Rungruang Rice Mill.

He does not expect rice production this season to be better. And there has already been good demand this year, domestically and internationally, for the stocks that Thailand has, noted Mr Khajornkiat.

RICE SCHEME GONE SOUR

But the weather has not been the only notable factor. A rice-pledging scheme from 2011 to 2013 under the previous government – headed by former Prime Minister Yingluck Shinawatra – has also been costly.

The programme encouraged farmers to grow as much rice as possible and bought the crop from them at 50 per cent higher than the market price. The supply was then stockpiled to create an artificial shortage to jack up prices.

While the policy proved popular in the rural areas, the government could not sell the rice at prices covering the purchase cost, administration and storage. And a political scandal erupted.

Eventually the funds dried up, leaving hundreds of thousands of farmers unpaid and millions of tonnes of rice rotting in warehouses.

The cost to the country? An estimated 640 billion baht (S$26.7 billion), said Thailand Development Research Institute distinguished fellow Nipon Poapongsakorn, an expert on the Thai rice industry.

After the military government came into power in 2014, it changed tack and encouraged farmers to diversify by growing other crops or stop farming altogether. This has contributed to the shortage of Hom Mali rice.

AGEING FARMERS, POVERTY AND DRUGS

Going forward, prices may also continue to rise because young people do not want to become farmers. The income is too low and the risks too high for them, so they are moving to the cities.

This is becoming a serious issue, as the average age of Thai rice farmers is now 51. “In north-eastern Thailand, the agricultural land and labour are declining,” highlighted Knowledge Network Institute of Thailand senior fellow Somporn Isvilanonda.

“At the same time, the remaining workforce is ageing. These factors are affecting the price.”

Take, for example, 35-year-old Charuwan Chanthop, a daughter of rice farmers from Ubon Ratchathani. She moved to Bangkok when she was 16 and owns an art gallery now.

“My family was poor. We knew nothing but farming. I asked myself, ‘Did I really want to be a farmer?’ Then I decided to leave and move to Bangkok to find a job that can support my family,” she said.

The drugs infesting her province, along one of the trafficking routes in the Mekong region, played a part in that decision.

“My home town has a drugs problem. There are a lot of drug dealers in my village, so (families) want to send the kids away … (to help them) escape the problem,” she said.

TACKLING THE PROBLEMS

One of the ways to overcome the labour shortage is to use technology. “More farmers are reducing costs by, for example, using machinery to harvest crops, as labour cost is higher during harvest season,” cited Dr Somporn.

In the long run, seed treatment using a coating process can help to prevent shortages caused by diseases, insects and drought or heat.

“This protects the rice in its first 30 days after planting. So just like a little baby … you need to protect it early on,” explained Syngenta head of seed-care (Asia-Pacific) Saad Haroon.

The agrotechnology company’s treated seeds may cost 10 to 30 per cent more than regular seeds, but such technology can pave the way to a brighter future for farmers.

“This leads to approximately 6 to 7 per cent yield improvement,” said Mr Saad. “(The grower) has more rice that’s produced, and he can sell more and get more profit.”

Meanwhile, consumers in Singapore must depend on rice importers to mitigate the impact of the price hikes and sudden shortages. Keeping stockpiles is one way of doing this, as shown by Singapore General Rice Importers Association chairman Michael Hiu.

Even though he is forced to buy rice at a higher price, his stockpile means he is not at the mercy of Thai exporters.

And he has raised his selling price for supermarkets, restaurants and hawkers by only one to two per cent each time, taking a cut in his profit margin.

“They’re still our customers – their survival is equal to our survival,” he explained. “If we raise the price too high, we might lose the customers.”

When asked about the cost of Thai rice going forward, however, he was not optimistic. “Based on current trends and the current (market) situation, we don’t foresee there’ll be a drop in the price,” he said.

Watch this episode here. Read about why cockles are becoming costlier and harder to find, as well as the harsh realities behind the rising sugar cane prices in Singapore.


Source: CNA/dp