The End: Thailand Dumps Yingluck-Era Rice Hoard

Getting rid of Thailand's massive Yingluck-era rice stockpiles.

Although political polarization has been a constant feature of Thai politics, the Shinawatra clan--big brother Thaksin and little sister Yingluck--have used above-market government purchases of rice as a way to gain support from rural voters. Unsurprisingly, spending public monies on a surefire money loser--nobody is expecting rice prices to rise anytime soon as other major rice-exporting countries like Vietnam and India ramped up production--has been a rallying cry for the royalists opposed to Shinawatra rule. Agricultural populism has its costs, they say.

So here we find ourselves a couple of years after the military junta overthrew Yingluck. Instead of letting the government's Yingluck-era hoard spoil, they are now going to unleash more of it much faster on an already-saturated market. This forthcoming action is causing concern in Vietnam:

Thailand's plan to accelerate sales of 11.4 million tonnes of rice in stockpiles within two months sparked concerns that it would hurt prices as well as Viet Nam's rice exports. However, some people were optimistic that the impact would not be significant. Thailand planned to sell the amount of rice in a government stockpile in May and June to generate US$2.8 billion, at an average price of US$245 per tonne, in what could be the biggest rice sale clearance ever of the world’s second largest rice exporter after India.

Actually, the expected fallout from Thailand's impending sale are not expected to be all that great on the world rice market. For one thing, most rice contracts have already been secured well in advance:

According to Le Van Banh, director of the Department of Agro-Fisheries Processing and Salt Production, the biggest stockpiled rice sell-off from Thailand would certainly have an impact on the global rice market following the law on supply and demand, as well as on Viet Nam’s rice market. However, the impact on Viet Nam’s rice exports would not be significant, at least in the short term, Banh said.

Banh also said that Thailand’s plan to sell 11.4 million tonnes of rice within just two months was not feasible. He said that Thailand exported on an average 400,000 tonnes to 500,000 tonnes of rice per month. "To sell 11.4 million tonnes in just two months sounds unrealistic," Banh said as quoted by vietnamplus.vn. The Viet Nam Food Association said that the impact on rice exports would not be huge in the second and third quarters as most contracts had been signed in the last quarter of 2015, and there were estimated to be 1.4 million tonnes of rice remaining to be shipped abroad following existing signed contracts.

Aside from the sheer difficulty of selling rice in such huge quantities immediately, also consider that these incentives were attractive to farmers for a reason: it made selling lower-quality rice at higher prices feasible:

According to Banh, the stockpiled rice for this clearance would mainly be "sub-standard" quality that the government had purchased following the 2012-2013 rice mortgage programme and Thailand would target the not too demanding markets such as in Africa. Since May 2014, Thailand has auctioned off 5.05 million tonnes of rice worth $1.5 billion.

The Thai government had previously said it aimed to clear the stockpile by the end of 2017. Meanwhile, major import markets of Vietnamese rice were China, the Philippines and Indonesia which had standards for rice quality and preferred newly-harvested Vietnamese rice, he said. "Rice exports from Viet Nam would not be significantly affected by Thailand’s sell-off in the coming months," he said. 

Shianwatras and their allies are popular and persistent. They get thrown out of office by coups and other machinations, but not by the Thai electorate. I hardly think this ends the story of "rice-pledging" as a political ploy to gain agricultural votes since the royalists have demonstrated they cannot win an election against the Shinawatras in a straight-up contest. If and when another Shinawatra or their followers gain office, don't be surprised to see this rice giveaway implemented again.

Some things never change.