The Thai mountain of rice inventory and global supply chain worries

An article in the Financial Times (July 18, 2013) describes the impact of the 50% price premium offered by the Thai government to rice farmers that last few years, leading to a drop in Thai rice exports and a surge in government inventories. The current level of Thai rice inventories can cover 50% of global rice imports. Now rice markets are nervous that Thai rice will flood the market and result in significant price drops, thus impacting farmers in India and Vietnam. But producers who use rice as input will also see an impact of this flood of product. How should Thailand manage its inventory to prevent such market meltdowns while achieving its goals ? Should farmers in Thailand be paid to stop growing rice for next year in an attempt to prevent burgeoning inventories ? Should alternate uses of rice for sustainable products such as paper or other be encouraged as a way to manage this problem ?

About aviyer2010

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