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Asia Thailand- Rice Farmers sell at a Loss & need Guaranteed Prices

Rice farmers seek 40% profit margin

Petchanet Pratruangkrai
The Sunday Nation June 8, 2014 1:00 am

Rice farmers yesterday proposed that the National Council for Peace and Order set a price for rice based on

the average production cost plus a 40 per cent profit margin so they can survive.

The proposal could be another option if the NCPO abolishes the former government’s loss-making rice-pledging scheme.

General Chatchai Sarikalya, deputy economic chief of the NCPO, yesterday chaired a discussion forum with the permanent secretary of the Commerce Ministry to listen to comments from the public sector and related stakeholders on how to assist rice growers.

Chatchai said eight rice farmer associations participated in the discussion and their proposals had been categorised into three key areas: reduce production costs, particularly the cost of fertilisers and insecticides; develop irrigation systems so farmers have thorough access to water sources; and improve rice quality.

“We will bring all ideas and comments gathered from the rice farmer associations, academics and related agencies to the head of NCPO next week [this week] to be further reviewed,” he said.

Vichian Phuanglamjiek, president of the Thai Rice Growers Association, said that the staging of the forum showed that all parties wanted to help farmers.

However, Vichian said rice growers still need the rice-pledging scheme as farmers throughout the Kingdom would benefit from it.

Currently, the rice price is only between Bt4,000 and Bt6,000 per tonne, meaning farmers sold rice at a loss given the average production cost was between Bt7,000 and Bt7,700 per tonne.

He said that if the NCPO or a new government wanted to abolish the rice-pledging scheme, measures should be implemented to allow farmers to stay in business. The price could be based on the average production cost plus 40 per cent profit.

This would be the equivalent of an average rice price of between Bt10,000 and Bt12,000 per tonne, allowing all farmers to survive.

Ravee Rungruang, chairman of the Western Rice Community, said that he had proposed the government sector give financial assistance to farmers – about Bt2,500 per rai – to boost production.

Ravee said a mechanism to control the amount of rice going into the market should be set up. A long-term farmer development plan should also be set up for the next five or eight years.

Vichian also proposed that the NCPO control the cost of land rental fees as a key measure to control the cost of rice production.

He said the NCPO or a new government should implement measures to control the fee at about Bt1,000 per rai per during the rice harvest season, as the fee had increased markedly over the past two years.

“The land rental fee is currently between Bt1,000 and Bt2,000 per rai compared to between Bt500 and Bt1,000 per rai a year ago,” he said.

Vichian said farmers had suffered from higher production costs during the past two years of the pledging scheme, with the cost Bt15, 000 per tonne of paddy rice. But despite pledging project ending, rental fees had not decreased.

For instance, a farmer would pay about Bt40,000 per round of rice plantation if they rented 20 rai.

Chookiat Ophaswongse, honorary president to the Thai Rice Exporters Association, agreed measures had to be introduced to reduce production costs.

He said costs here were high compared to some rival markets because of the high cost of agricultural equipment. The government needed to find sustainable measures to ensure low production costs and increased value to help farmers in the long run.

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