Thailand’s Push for Reduced Rice Cultivation Could Stir Global Rice Markets Amid Existing Turmoil

Thailand, the world’s second largest exporter of rice, is urging farmers to decrease rice production to conserve water amid low rainfall, a move that might cause additional disruptions in the global rice market. This decision comes on the heels of India’s recent ban on non-basmati white rice exports, meant to ensure domestic supply.

In the face of a 40% rainfall deficit, the Office of the National Water Resources (ONWR) in Thailand is recommending farmers pivot to crops that are less water-intensive and can be harvested quickly. The emphasis, according to ONWR secretary-general Surasri Kidtimonton, must be on water for consumption and the cultivation of perennial crops that grow back after harvest and don’t require annual replanting, unlike rice.

Rice, an annual crop, consumes approximately 2,500 liters of water per kilogram during cultivation, whereas alternatives like millets demand between 650 to 1,200 liters for the same yield.

India, as the top rice exporter globally, accounts for 40% of the international rice trade. Its recent export ban is expected to impact millions and contribute to a potential global rice price hike, particularly if Thai rice production decreases significantly, according to Rabobank’s senior analyst, Oscar Tjakra.

However, Tjakra also noted the uncertainty over whether Thai farmers will comply with the water conservation directive, considering the high global rice export prices.

Rice prices are currently at a decade-high, partly due to Russia’s invasion of Ukraine in February 2022 which led to increased demand for rice as prices for other major grains soared.

Jeremy Zwinger, CEO of The Rice Trader, expressed doubts over the effectiveness of Thailand’s push for water conservation, citing the undeveloped state of the water rights system in the country. He also mentioned that global rice supplies remain substantial despite the potential changes in Thai production.