Thailand and Vietnam urge farmers to plant less rice

A rice-drying yard at an export rice plant in Thailand's central Chainat province. Thai officials are trying to encourage farmers to switch to corn production by offering interest-free loans and guaranteeing prices for the crop.
A rice-drying yard at an export rice plant in Thailand's central Chainat province. Thai officials are trying to encourage farmers to switch to corn production by offering interest-free loans and guaranteeing prices for the crop.PHOTO: REUTERS

The grain-exporting nations are encouraging growers to switch crops and consolidate production as prices fall

Falling rice prices have caused an outcry in Thailand - the world's second largest exporter behind India - prompting the government to rush out soft loans that help farmers withhold sales.

But these falling prices are also making regional exporters consider planting less of the grain.

Thailand last month unveiled plans to plant corn on 320,000ha of rice fields over the next seven months. This is around a quarter of the land used last year in the second rice planting season of the crop year.

To nudge farmers to switch, the government is dangling interest-free loans and has guaranteed prices for the corn, its Ministry of Agriculture and Cooperatives told The Straits Times.

Vietnam, the world's third largest rice exporter, approved a strategy earlier in May to restructure its rice industry by integrating production and developing a national brand that can command higher prices.

It also wants to convert 700,000ha to 800,000ha of its roughly 4 million hectares of rice fields to mixed or other uses.

  • PRODUCERS AND IMPORTERS

  • Top rice exporters in the world, 2015

    1. India - 11.05 million tonnes
    2. Thailand - 9.78 million tonnes
    3. Vietnam - 6.61 million tonnes
    4. Pakistan - 4 million tonnes
    5. US - 3.36 million tonnes


    Top Asian rice importers, 2015

    1. China - 5.15 million tonnes
    2. Philippines - 2 million tonnes
    3. Indonesia - 1.35 million tonnes
    4. Malaysia - 1.05 million tonnes
    5. Japan - 0.69 million tonnes

    SOURCE: US DEPT OF AGRICULTURE

The idea is to earn more by dedicating less land to rice, so as to help paddy farmers weather the vagaries of the global commodity market.

"Rice farming is no longer an economic activity, it's a social safety net for families," said the World Bank's lead agriculture economist Steven Jaffee, who is familiar with the situation in Vietnam.

"They make their money by doing something else."

Increasingly, these rice-farming families stay afloat only because some members leave to work in the city, leaving the grandparents and grandchildren to till the land.

The Food and Agriculture Organisation expects a record harvest of 749.7 million tonnes this year.

Between 2013 and last year, overall prices of higher grade Indica rice, commonly grown in South-east Asia, dropped 18 per cent despite a contraction in production.

Vietnam exported 6.61 million tonnes of rice last year and Thailand 9.78 million tonnes, according to the United States Department of Agriculture.

While paddy production is a source of food security, recent developments have given pause to the notion that more is better.

Small-scale paddy farmers in Vietnam resort to growing three crops throughout the year to maximise their income, but use high levels of fertiliser and pesticides, said Dr Leocadio Sebastian from the International Rice Research Institute.

Dam-building in the upper reaches of the Mekong River, the lifeblood of the region, is also disturbing the sensitive ecology that nourishes rice fields downstream.

Earlier this year, a drought caused the loss of 1.29 million tonnes of Vietnam's crop.

Rice specialist Pham Thi Kim Dung from Vietnam's Institute of Policy and Strategy for Agriculture and Rural Development, the agriculture ministry's think-tank, said: "Rice brings much lower profitability compared with other agricultural commodities when Vietnamese farmers receive little support from the government.

"So the plan to reduce the amount of land for rice-planting and... keep the most suitable areas for paddy cultivation is expected to help farmers gain more from less."

More than nine million households - the majority of rural households - are involved in Vietnam's rice industry, so "the job is very important to keep stability in rural areas", said Ms Dung.

In Thailand, where about one-third of its workforce is employed in agriculture, concerns over restive farmers in the populous north and north-east pushed the government to pledge an extra 20 billion baht (S$792 million) of aid last week - the latest batch of rice subsidies handed out by successive governments over three decades.

Economists like Mr Viroj Na Ranong from the Thailand Development Research Institute argue that it simply keeps an unsustainable number of people in farming.

In the long run, say experts, the solutions lie in higher-value grains and integrated and environmentally sensitive farming.

While rice farmers are not about to give up their trade, the changes being attempted now could well determine whether the next generation will keep it going.

A version of this article appeared in the print edition of The Straits Times on November 07, 2016, with the headline 'Thailand and Vietnam urge farmers to plant less rice'. Print Edition | Subscribe