Rice stockpiling under scrutiny

Policy seen as buffer against price swings

- WICHIT CHANTANUSORNSIRI SOMHATAI MOSIKA

Rice experts say the stockpile requirement is reasonable for exports, boosts the quality of rice, and ensures the country's food security.

Somporn Isvilanonda, an independent academic in agricultural economics and a rice expert, said requiring stocks for export helps improve rice quality and the country's reputation.

In some cases, such a stockpile requirement can also serve as a buffer to absorb surplus rice, helping to prevent farmers' rice prices from falling too rapidly.

"The regulation requiring rice exporters to hold at least 100 tonnes of rice in stock is intended to prevent traders from 'catching a tiger with bare hands' having no rice in stock. If exporters receive overseas purchase orders without holding inventory, they may abandon those orders if they anticipate losses. Order cancellations can occur during both rising and falling rice price cycles," Mr Somporn said.

He added that in the past, the Thai government required rice exporters to maintain no less than 500 tonnes of rice in stock, along with a financial deposit, to prevent order cancellations.

Stockpiling rice also enables the state to oversee the quality of rice for export, as historically some rice shipments were rejected and returned due to poor quality. Even today, some small rice traders and SME operators selling rice domestically still fail to meet quality standards, with impurities such as gravel and sand found mixed in the rice.

Regarding stockholding costs, Mr Somporn said medium-sized rice mills naturally maintain rice stocks as part of their normal trading operations.