Thai rice farmers hope to reap rare profits

Suphan Buri: Pranee On-lamoon gazes anxiously at her newly planted rice paddy, hoping to cash in on a price rally that has so far eluded most Thai growers.

Like many farmers in the heart of Thailand's main rice growing region, Pranee was spurred to grow a rare third crop of the staple grain after supply fears across Asia in the last four months pushed rice prices to historic highs.

"It's a risk, but it is the one golden chance I have," Pranee, 56, told Reuters as she prepared to work on her six hectare paddy field in the province of Suphan Buri, just north of Bangkok. "I have been a farmer since I was born and I've never seen prices rise so high," the mother-of-two said.

But despite their back-breaking work, farmers such as Pranee might be the last to reap profits from high rice prices and the first to pay the bill from high planting costs and the risk that rice prices might tumble before harvest time in around June.

Most Thai farmers missed the chance to profit from prices as high as 17,000 baht a tonne this month because they had to sell most of their crop after harvest in November due to a lack of storage on their own farms.

That same month India imposed a ban on non-basmati rice exports, sparking fears about supply and forcing up prices. Vietnam, the world's number two exporter, then started restricting shipments, leading to a buying frenzy on world markets that has caused prices to double since January.

As a result, producer countries such as Thailand and Vietnam, which between them account for half of all world exports, are growing out extra crops.

Whether Pranee and her neighbours get to see the benefits of their extra work is another matter.

She believes a local miller is still hoarding the rice she sold in November in the hope of selling later to exporters at a higher price - a charge also levelled at millers by the government but denied by the industry.

"I got only 7,000 baht per tonne when I sold my rice," said 42-year-old farmer Kasem Laosittiwaro.

"I will grow another crop but I don't know if I can get 17,000 baht per tonne when I sell my rice in June after the harvest," he said, referring to the current price for white rice paddy sold to millers for processing.

Producing a third crop is not the easy money it might seem at first glance.

The cost of fuel and fertiliser have risen steeply over the last year, pushing many farmers such as Kasem, who failed to get a much higher price for their November crop, deep into debt.

For decades, rice paddy prices have been around 6,000 baht per tonne, propped up by a state minimum price scheme to prevent big fluctuations around harvest time.

This year, the domestic price has surged to 17,000 baht due to strong overseas demand. But most farmers fear they will never be able to get that price, and will struggle just to cover their fixed costs estimated at 5,000 baht a tonne.

"I'm not sure whether I could get any profit from selling prices at these historic highs as my costs have risen, leaving very little profit for us," said 53-year-old Wattana Boonyatim, who invested heavily in seed and fertiliser for his third crop.

In Vietnam, rice farmers are also feeling the pinch of high fertiliser costs which have eaten into their profits.

"This year's profit is not good as fertiliser prices have jumped strongly," Ha Van Duc said at his farm in Vietnam's Mekong Delta.

With fertiliser and rice seed prices almost doubling in the last 12 months, Bangkok has pledged to import 20,000 tonnes of fertiliser. Farmers say this is a drop in the ocean in a country that uses up around 4.5 million tonnes of fertiliser per year.

Farmers are also aware that less fertiliser means less rice.

"Without fertiliser we can not get higher yields which means we suffer losses," said 61-year-old Chin Sudsaward, who had to borrow money for fertiliser.

Another factor playing on the minds of most farmers is the increased cost of land, with landlords seeing the high global prices as a chance to demand higher payments.

In response, farmers want the government to set a floor price of more than 10,000 baht per tonne in case global prices have fallen by the time the third crop is harvested around June.