Short-term government policies leave farmers at the mercy of fluctuating prices and fierce competition.

Thai rice farmers should be enjoying higher prices for their crop due to regional trade agreements and the demand for rice on the international market. However, prices remain depressed largely because of mismanagement of the rice market by the government coupled with a failure to improve crop yields.

Local farmers recently rallied to pressure the government to reinstate the rice-pledging scheme and increase the guarantee price from Bt10,000 a tonne to Bt12,000. While the Commerce Ministry rightly insisted that a reintroduction of the rice pledge was unlikely to happen (it took a heavy toll on taxpayers' money but failed to systematically boost the market price), the National Rice Policy Committee is discussing measures to solve the immediate problem of the price drop. They realise that the falling price of rice could become a serious political issue.

Almost every year, local farmers have issued threats that often end in rallies to pressure the government to boost prices, especially at harvest time. Unfortunately, ministers tend to react by using short-term measures with politically oriented goals to cushion the rice price, even though these can have damaging long-term effects.

For instance, the controversial rice-pledging programme cost a lot of money and benefited only a small group of people, most of them middlemen. But politicians preferred to use it because it produced a short-term impact.

The government should react to the demand from farmers cautiously. Otherwise, it would create long-term damage not only to the government's budget but also to the local price levels of rice. The solution is not to simply change the form of price intervention to a price-guarantee policy, which will not strengthen Thai farmers over the long term. The government should instead target price stability, sustainable marketing and production development.

A regional trade agreement would also open up more opportunity for Thai rice exports.

Korbsook Iamsuri, president of the Thai Rice Exporters Association, recently noted that the Asean Free Trade Agreement (AFTA) to eliminate tariffs should benefit rice exports in the long run. But that is based on the condition farmers should focus on cost competitiveness to survive the emergence of new exporters in the region.

He warned that with or without AFTA, Thai rice will suffer in the long run if we cannot come up with better yields and better quality.

Thai paddy is always more costly than that of her neighbours. The production cost of Burma's paddy is only Bt4,000 a tonne, while Vietnam's rice is Bt7,000 to Bt8,000 a tonne. The higher cost of production here is down to farmers' failure to improve production methods, and an ineffective intervention programme which unnecessarily added cost to rice production in Thailand.

Thai rice is also facing competition from emerging producers such as India and China. In short, Thai rice is losing its competitiveness in a non-premium market.

Therefore, the government needs to tread carefully and plan what should be done to help farmers to stand on their own. Any farmer-support scheme would likely further widen the disparity between Thai rice production and that of her neighbours.

Rather, local rice farmers should be given the knowledge and instruction to produce higher yield crops at a lower cost. New rice strains should be developed. Moves like these would help cushion the effects of fluctuations in the price of rice internationally.

Knee-jerk responses such as the rice-pledging programme are no solution at all.

Source: The Nation