As global food prices continue to rise, rice is no exception. In Thailand, extreme rain and government regulation are also expected to contribute to a sudden hike in rice prices.
Thailand has around 8 million rice farmers, and currently accounts for about 30 percent of global rice exports. However, the Thai government is stepping in to increase local prices, so that share is likely to drop. The Thai government hopes the increase in prices will benefit local struggling farmers increase their income. Unfortunately, the increase in prices also means that Thailand rice exports will be less competitive internationally. Some say that other countries, such as India and Vietnam, will be able to make up for what Thailand does not export but global price increases are still likely. With other countries becoming larger international players in the rice market the Thai government may end up rethinking its rice pricing policy.
The monsoon season in Thailand has also caused problems for rice exporters. Not only have the floods killed dozens of people, but millions of acres of farmland have also been affected. Many farmers are forced to harvest their rice crops early, which causes a large decrease in their potential outputs. Since water is completely covering so much farm land, it is also feared that the slowly sinking water will also ruin crops that are currently planted causing further losses.
Despite some feelings of opposition, the Thai government intends to move forward with their rice pricing scheme. Thailand may consider offering an export subsidy to keep global demand high, but that will cause an increase in taxes for the Thai and risks violating World Trade Organization rules. The impacts of this pricing policy will undoubtedly affect the exporting of rice and its quickly rising price.