Associate Professor Nipon Poapongsakorn, a distinguished fellow and former President, Thailand Development Research Institute Foundation (TDRI)

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1 Associate Professor Nipon Poapongsakorn, a distinguished fellow and former President, Thailand Development Research Institute Foundation (TDRI) Dr. Nipon Poapongsakorn formerly held the position of President of TDRI, and Dean, Faculty of Economics, Thammasat University, where he was also Associate Professor. He has been also teaching business and political economy course in the Executive MBA program of Thammasat University. Nipon Poapongsakorn is the author of over 16 research articles and publications related to labour economics and human resources; agricultural and livestock policies; industrial economics, trade and investment; corruption and conflicts of interest, as well as economic evaluation and planning assessment. His on-going research is the rice research and long-term issues facing the rice industry. He now begins to do new research in the areas of water management, emphasizing on the institutional arrangement of flood management. Nipon Poapongsakorn has advised governments, the ADB and the World Bank on issues from the rice price and agricultural policy, education and industrial policy to trade strategy. He is currently an executive member of the Asian Society of Agricultural Economists, member of the Tribunal of Public Information on Economy and Fiscal Information, the Legal Development Committee of the Council of State, and the National Reform Assembly Committee etc. He used to serve as committee members and directors of several government agencies, state enterprises and foundations, e.g., the Board of Investment, the National Economic and Social Development Board, the Trade Competition Committee, the Port Authority of Thailand, the Government Saving Bank, TMB Board of Directors and the Foundation of Rural Reconstruction and Development, etc. After the workshop, participants can download updated version of presentations as pdf.., that will be informed by

2 Rice in Thailand: Production, Consumption, Export and Policy Nipon Poapongskorn Thailand Development Research Institute The workshop on South-East Asian rice production. Hosted by KNIT and TRF at the Rama Gardens Hotel, Bangkok March 18 th to March nd, 13. Production Consumption Stock Export Paddy pledging project Outline

3 RICE PRODUCTION Millions ton 35 Rice output increased by 7 times in 65 years. Expansion of Rice Production in modern Thai history Elimination of rice premium Infrastructure and Land expansion Annual production Dry season production Source : TDRI,1 Commodity Boom Rice R & D Low rice price Mechanizations Asset price bubble Migration Economic crisis Commodity Boom Baht depreciation Price pledging at 15, Baht Big Flood

4 Production (Tons) Wet season (growth.6%) Dry season (growth 6.1%) Millions Ton Millions Ton Source: OAE. Planted area (Ha) Wet season (growth.9%) Dry season (growth 6.53%) Millions Ha 11 1 Millions Ha Source: OAE.

5 Yield (Kg./Ha),7,6 Yield - Wet season (Kg./Ha) growth 1.1%,6, Yield - Dry season (Kg./Ha) growth -.5%,5,,3,,1,, 3,8 3,6, , Source: OAE. Index of harvested area and production Wet season (1993=1) Dry season (1993=1) Harvested area Production Harvested area Production Source: OAE.

6 Water shortages are becoming more severe but irrigated area increased slowly. Millions Ha Irrigation area (growth.9%) Source: RID and TDRI 1. Billion M Demand for water to grow rice Land holding size increased. 3.8 Paddy Farm size in Central Plains, (Ha/household) Source: NSO, Agricultural Census. 1

7 Millions worker Young workers moved out of agriculture Millions worker Older workers remained in agriculture >55 Source: NSO, Labor Force Survey. 11 The increased use of agricultural machinery. Millions Unit Number of agricultural machinery Two wheel walking tractors Big tractors Water pump Threshing equipment Source: OAE and FAO.

8 In response to increasing incidence of filth in rice seeds, farmers buy new seeds, rather then cleaning the seeds, thanks to family labor shortage increasing incidence of filth in rice 1% 9% 8% 7% 6% 5% % 3% % 1% % Own seeds Buying seeds Source: TDRI Survey 1. Increasing incidence of using planting machines and parachute in Central Plains: Time saving Central Plains Manual transplanting Planting machines Seedling parachute 8 1 Source: TDRI Survey 1.

9 Increasing use of combined harvesters: time saving and cost reduction Central Plains Combined harvestors Labor Source: TDRI Survey Theshers Other regions Combined harvestors Labor Theshers Hiring big trucks to transport paddy to the market rather them using own vehicles: time saving & lower transportation cost Central Plains Hired truck Owned vehicles Do not sell 8 1 Source: TDRI Survey Other regions Hired truck Owned vehicles Do not sell 8 1

10 Rice farmers use more fertilizer and Central Plains use fertilizer more than other region Fertilizer used by type (Kg./Rai) Fertilizer used by region (Kg./Rai) Chemical Organic Chemical Organic Mix 5 1 Central Plains Other region Source: TDRI Survey 1. Insecticide use on the rise due to duty free Millions Kg. Share of imports hazardous materials by selected type Acaricide Herbicide Fungicide Insecticide Source. DOA.

11 The outbreak of pest due to increasing cropping intensity Areas of BPH outbreaks 9-1 Proportion of farmers who suffer from outbreak by type of pest 5 and 1 BPH is a major problem. Source: Wantana Sriratanasak, Sukanya Arunmit and Jintana Chaiwong. 11. % BPH Rice stem Thrips Rice leaf Snail WBPH Leafhopper Rat Crab Source: TDRI Survey 1. Disaster in Thailand Number of drought affected tambons Number of flood affected tambons Number of tambons 6, 5,, 3,, 1, Number of tambons 6, 5,, 3,, 1, Billions Baht 8 6 Value of drought damage Billions Baht Value of flood damage Source: Department of disaster prevention and mitigation.

12 Effect of flood and drought on agriculture Millions ha Areas of drought affected (Million ha) Millions ha Areas of flood affected (Million ha) Source: Department of disaster prevention and mitigation. Investment in research is declining. To politicians, unlike extension services, investment in research do not yield short-term benefits % Rice Research Intensity Source: Bureau of the Budget, NRCT and RiceNESDB. Agriculture

13 CONSUMPTION OF RICE Rice consumption Global rice consumption is increasing slowly. And may begin to decline in the next 1 years. Thailand rice consumption in the next 1 years is increasing slowly. Million tons Thailand rice consumption Rice consumption Forecast at constant price Source: C. Peter Timmer, Steven Block, and David Dawe, 1. Source: TDRI 1.

14 Global trends in the consumption of rice Asian reduce the consumption of rice. 5 Percentage of calories from rice. In total calories Source: C. Peter Timmer, Steven Block, and David Dawe, 1. Source: FAO Food Balance Sheets. Thailand: rice and flour consumption per capita (kg) Whole Kingdom Urban Rural Source: NSO, SES RICE STOCK (SKIP) GOVERNMENT STOCK OF RICE IS ALWAYS THE SECRET.

15 The actual quantity between 1 17 million tons. USDA World Ending Stocks (mil. tons) FAO World Ending Stocks (mil. tons) /1 1/ /3 3/ /5 5/6 6/7 7/8 8/9 9/1 1/11 11/1 1/13 /3 3/ /5 5/6 6/7 7/8 8/9 9/1 1/11 11/1 1/13 Source: USDA and FAO. China increased ending stock. USDA Ending stock (mil. tons) FAO - Stock Variation (mil. tons) /1 1/ /3 3/ /5 5/6 6/7 7/8 8/9 9/1 1/11 11/1 1/13 8/9 9/1 1/11 11/1 1/13 China Indonesia Philippines China Indonesia Philippines USDA Ending stock (mil. tons) FAO - Stock Variation (mil. tons) 6 /1 1/ /3 3/ /5 5/6 6/7 7/8 8/9 9/1 1/11 11/1 1/13 8/9 9/1 1/11 11/1 1/13 India Thailand Vietnam India Thailand Viet Nam Source: USDA and FAO.

16 RICE EXPORT: THAILAND AS THE WORLD LARGEST RICE EXPORTER??? Rice export jumped from mt to 11 mt between 199 and 11, then declined drastically due to the paddy pledging policy 1 Rice export of Thailand Million tons Quantities Growth % (Left) Value Growth 8.7% (Right) Source: Thai Rice Exporters Association and Ministry of Commerce Billion baht

17 Export markets are very diversified, thanks to the effort of private exporters Top 1 destinations Nigeria 13% 1 Nigeria 16% Other 36% Hong Kong % Singapore % China % Iraq % Senegal 1% Iran 9% South Africa 7% Malaysia North Korea 5% % Other 1% Senegal 3% Indonesia 3% Japan 3% USA % Benin 5% Ivory Coast 7% South Africa 6% Philippine 6% Iraq 6% Source: Thai Rice Exporters Association. Millions Ton 6 5 Almost equal export shares of 3 types of rice Rice export by selected rice Hom Mali rice Parboiled rice White rice Source: Thai Rice Exporters Association.

18 FOB white rice 1% Grade B [USDA] FOB white rice 1% Grade B [Thai Rice Exporters Association] Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug 5 Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug 9/1 1/11 9/1 1/11 11/1 1/13 11/1 1/13 Source: Thai Rice Exporters Association and USDA. Value of total rice export Quantity of total rice export Billions Baht Millions Ton Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug. Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug 9/1 [.16 Trillion Baht] 9/1 [8.1 Million Tons] 1/11 [.1 Trillion Baht] 1/11 [1.13 Million Tons] 11/1 [.1 Trillion Baht] 11/1 [6.97 Million Tons] 1/13 [.5 Trillion Baht] 1/13 [.9 Million Tons] Source: Thai Rice Exporters Association.

19 Value of white rice export Quantity of white rice export Billions Baht Millions Ton Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug. Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug 9/1 [.9 Trillion Baht] 9/1 [5.75 Million Tons] 1/11 [.1 Trillion Baht] 1/11 [9.38 Million Tons] 11/1 [.8 Trillion Baht] 11/1 [5. Million Tons] 1/13 [.3 Trillion Baht] 1/13 [1.73 Million Tons] Source: Thai Rice Exporters Association. Value of Hom Mali rice export Quantity of Hom Mali rice export Billions Baht Millions Ton Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug.1 Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug 9/1 [61. Billions Baht] 9/1 [.7 Millions Ton] 1/11 [63. Billions Baht] 1/11 [.53 Millions Ton] 11/1 [55.6 Billions Baht] 11/1 [1.87 Millions Ton] 1/13 [.9 Billions Baht] 1/13 [.76 Millions Ton] Source: Thai Rice Exporters Association.

20 PADDY PLEDGING PROJECT Wet 11/1 Amount and value of paddy sold under the pledging project Paddy ( 36 million tons in 3 seasons) Dry 1 + extra Wet 1/13 Dry Value (67 billion baht) Wet 11/1 Dry 1 + extra Wet 1/13 Dry 13 Source: BAAC.

21 Government s poor export performance. The rice was sold only 6 billion baht in 1., 15, 156, Plan of sold rice in pledging program 1, 5, 15, 15, 7,3 13,8 13,5 1 Jan-13 Feb-13 Plan Actual Source: MOC and BAAC. Profit and loss of rice pledging program. Billion baht Expenditure Revenue Loss Source: TDRI.

22 Paddy expensive, Cheap rice (A) paddy price (15%) Pheu Thai Party The pledging start Oct 11. (B) the average retail price Pheu Thai Party The pledging start Oct Jul-1 Oct 1 - Jul 11. 9,5 THB Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-1 Oct 11 - Jul 1. 1,75 THB Apr-1 Jul-1 Oct-1 Jul-1 Oct 1 - Jul THB/Kg. Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Oct 11 - Jul THB/Kg. Jan-1 Apr-1 Jul-1 Oct-1 Paddy (15%) White rice (baht/kg.) Source: Rice price at Ayutthaya. Rice Mills Association of Thailand and the Office of Trade and Economic Indices. Ministry of Commerce Who Won, Who Lost Wareho use % Mill 11% Gainers Losses of 175 billion baht (If no corruption). Expense of the state 13% Farmers (13 billion baht) 7% Losers Taxpayers. Export business. Business, who not have to pull some strings Source: TDRI.

23 Who sold rice to the program? (Cont.) The benefits of farmers participating in the pledging program by the pledging value. Wet season 11/1 Dry season 1 % Mil.THB (13.7 tons) Mil.THB (7.3 tons) Mil.THB (1 tons) >6 Mil.THB (>1 tons) % Mil.THB (13.7 tons).1-. Mil.THB (7.3 tons) Mil.THB (1 tons) >6 Mil.THB (>1 tons) Number of farmer Value Number of farmer Value Source: BAAC. Who have benefited? Poor or rich farmers? spread the benefits of pledging program (assuming that every farmer who sold rice at 15, baht / ton). Billion baht % 6. Source: Ammar, calculate from SES, NSO. % % 56. Poor Middle Rich 5% 5% % 35% 3% 5% % 15% 1% 5% %

24 THANK YOU