Here is an update of the chart “Rice crisis” I’ve created last year, when we had the peak of inflation and serious problems of offer/demand in the world.
Now with the big crunch of exports, particularily in the industrial sector, agriculture is coming back under the spot lights.
Some people think “self sufficiency” and foresee a rozy future for Thailand.
Yes agriculture is a good card for the country… But let’s not forget some serious drawbacks :
-productivity is low… many people are working in the fields… It would be possible to achieve higher productivity but… employment would take a serious hit. What all those people without job would do ?
-prices are volatile. Even though we can assume they will remain high (demand is increasing… following the increase of world population), and new shortages could happen again (if other rice producting countries reduce their own exports because natural disaster etc.).
-If money is to be made from the rice business… it’s not really on the farmers side. Same old story… Companies, middle men take a large chunk of profits.
-Rice is political, highly political, therefore can be riddled with problems : indeed, the government is buying large quantities of rice… at higher prices than market prices. It’s a subsidy. Therefore it costs.
The “bubble” last year is clearly visible, and the peak at 1,2 million metric tons (june) is linked to the “Peak Exports” (july 2008).
In february 2009, the quantity was 690 000 metric tons, in the average.
Watch out : prices are in current US dollars (1 USD in 2009 is worth less than 1 USD in 2005). And we had inflation in Thailand too.
(source Bank Of Thailand, table EC_XT_009)