The Effects of Rice Subsidies in Thailand

Name
Sarah AlBrahim
The Effects of Rice
Subsidies in Thailand

1
Executive Summary
The main aim of the paper is to discuss rice subsidies in Thailand. It was found that
rice was the most important crop in Thailand from which the farmers made their livelihoods.
However, in the paper it is quite evident that rice farming went through a series of ups and
downs in price change. The significant findings derived during this paper was that the rice
price scheme that was introduced in Thailand helped the farmers to gain a profit. Soon
government policies improved the state of the farmers. Later poor production of rice all over
the country helped the farmers to sell their rice at a higher rate thereby increasing the GDP of
the country as a whole. Furthermore, the paper also shows how the government and the
farmers are interrelated to each other and how the decision of one can affect the other. The
paper discusses how the government policies can improve the state of the workers and how a
wrong policy can lead to bad consequences that damage the overall economy in the long-
term. The pros and cons of the price support has been discussed in detail where advantages
and disadvantages of price rise has been enlisted. Lastly, the alternative methods for rice
farmers have been discussed that will help them to produce rice using different techniques.
The various techniques introduced for farming will help the rice farmers to grow their rice at
a speedy rate without facing much difficulty. Government measures help the farmers to rise
up and acquire different modes of technology. Thus, it is clear that farmers should be
supported and protected with government laws and new methods of farming.
.

2
Rice Price Scheme
Rice was the most important crop that was grown in Thailand as it provided income in
agriculture. The country was the largest exporter of rice beside India and Vietnam. In this
section, various price schemes for rice and the motives behind it will be discussed.
Thailand was ordered to export 1.5million tons of rice for free after the second world
war as it had supported Japan in the war against the west; at this point, the export of rice
began in Thailand. In 2006 the government introduced the price scheme where farmers
received a price lower than the market price that was prevailing in the world for selling rice
to the government. The central motive behind this decision was to encourage exports as well
as improve the well-being of the farmer by ensuring a guaranteed buyer for them. However,
between 2007-2008 the price of rice shot up to 198 percent. It came as a shock for the people.
The reason behind the price rise was slow production, and the price of chemical fertilizers
had increased due to an increase in the amount of oil. Further problems arose when the
exporters of rice declared that they would store rice for the consumptions of the locals rather
than export it to other countries. This step ensured to keep the price of rice affordable for
their citizens. Thailand, on the other hand, did not resist the export of rice. The framers
planned to store most of the rice and then sell it at a higher price to other countries. The
government too supported their farmers and provided loans for paddy fields where the
farmers could store their crops and sell it later. The motive behind this rice price scheme was
to increase the income of farmers and support the price scheme 1.
The outcome of this decision was that the supply of rice that was produced
domestically had increased as the farmers were now allowed to export their rice at a higher
price to the other countries. The farmers could now make more profit and increase the
production capacity for upcoming seasons along with that they could also improve their
infrastructure. On the other hand, the export quota countries drastically reduced the profit and
capability of the production of their farmers.
1 French, J., 2016. Effects of Rice Subsidy in Thailand.
North American Case Research
Journal,
36(2).