Challenges Awaiting Thai Farmers

Sripai Kaeo-eam stands in front of her rice field. (Photo: REUTERS)

Looking for opportunities from rising rice prices

After finishing the rice harvest, Ms. Sripai Kaeo-eam rushed to start the new crop, ignoring the Thai government 's advice to limit further planting this year to conserve water resources.

Normally, there are two main rice crops in a year. In the middle of the year, farmers often limit planting to save water. However, this year, Ms. Sripai is trying to do a third crop to increase production.

This year, rice could fetch double or triple the price of most years, said Sripai. “This harvest is our hope,” the 58-year-old farmer in the central Thai province of Chai Nat told Reuters .

Sripai Kaeo-eam stands in front of her rice field. (Photo: REUTERS)

Rice prices have surged globally, reaching near their highest levels in about 15 years after India, the world’s largest rice producer, imposed an export ban. The surge in prices has given Ms. Sripai an incentive to quickly clear her debt of more than 200,000 baht ($5,600).

Like Ms. Sripai, farmers across Thailand , the world's second-largest rice exporter, are also hoping to profit from the rice price "fever."

However, according to Thai government estimates, the area of rice cultivation in the country decreased by 14.5% in August compared to the same period in 2022. The area of rice cultivation has decreased every year since 2020.

Extreme weather patterns due to El Nino are posing risks to farmers, with rainfall this year 18% below average and major reservoirs only filling to about 54% of their capacity, according to Thailand’s National Water Resources Office.

Born into a family of rice farmers in Chai Nat, where she has lived all her life, Sripai says she has never witnessed a drought like the current one.

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Farmers in Thailand's Chai Nat province prepare to sow rice seeds in a rice field. (Photo: REUTERS)

Some Thai government advisers have recommended limiting further rice planting this year to conserve water resources. But Ms. Sripai and other farmers have good reason to ignore it.

Nearly half of Thailand’s agricultural land is devoted to rice cultivation, with more than 5 million households involved in production, according to Krungsri Research. Thailand exported 7.7 million tonnes of white rice in 2022 to countries across the Middle East, Asia and Africa.

Meanwhile, Thailand has one of the highest household debt levels in Asia. According to Thai government data, in 2021, 66.7% of all agricultural households were in debt, mostly from agriculture-related activities.

Ms. Sripai is paying an interest rate of 6.875% on her loan. “All the farmers in our group are in debt. We are in debt when we face drought, floods and pests,” she said.

Relieve pressure for farmers

Thailand's rice production industry is under severe pressure due to climate change and lack of innovation in production methods, experts say.

These pressures weigh heavily on Thailand’s farmers, who are saddled with debt despite receiving tens of billions of dollars in subsidies over the past decade. For some households, the financial burden of borrowing to finance their crops has lasted for generations.

Agricultural expert Somporn Isvilanonda, a senior fellow at the state-run Knowledge Network Institute of Thailand (KNIT), said the reduction in cultivated land could reduce Thailand's rice output, adding to food price inflation that has been rampant following droughts in major rice-producing countries around the world.

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Farmers sow seeds in a rice field in Chai Nat province, Thailand. (Photo: REUTERS)

According to expert Somporn, rice prices are currently high but farmers are finding it difficult to take advantage of the opportunity to produce. Mr. Somporn expects rice production to decrease by about 30% in the next two planting seasons due to water shortages.

Nipon Poapongsakorn, an agriculture expert at the Thailand Development Research Institute, said the foundations of Thailand's rice industry were laid in the late 19th century under King Chulalongkorn, who promoted free trade, agricultural and land reform.

In the 1960s, investments in research and infrastructure enabled farmers to switch to high-yielding rice varieties, cementing Thailand's position as the world's largest rice exporter.

Noting the decline in investment in rice research, Mr. Nipon worries that Thailand seems stuck in its success. “Our rice varieties are old, the yield is very low,” the expert said.

According to experts, in recent years, countries such as India and Vietnam have invested significantly in research, surpassing Thailand in productivity and gaining traction in the export market.

In his first policy statement to parliament on September 11, Thai Prime Minister Srettha Thavisin said the government will seek to improve farmers' incomes .

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Debt suspension is one of the measures the Thai government plans to implement to support farmers. (Photo: REUTERS)

The Thai government has announced plans to strengthen water resources management, promote new farming techniques to help increase yields and find more markets for agricultural products.

The government also plans to implement measures to ease farmers' difficulties such as debt moratorium, reduction of fertilizer and pesticide prices and implementation of projects to ensure irrigation water for agriculture.

Thailand's Interior Ministry will coordinate with the military and other agencies to develop more water reserves and dredge canals to improve water flow as part of short-term measures to combat the drought.

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