Govt, Private Sector Put Key Farm Products into Clusters

THAILAND - The Agriculture Ministry has identified 16 flagship products and grouped them into clusters with a view to further penetration of the regional market and cashing in on the upcoming Asean Economic Community (AEC).

Agriculture Minister Theera Wongsamut said a meeting of the joint government-private sector subcommittee had held an in-depth discussion regarding agricultural products with high potential for further marketing within Asean, according to The Nation of Thailand.

The meeting was attended by representatives from associations covering 16 agricultural sectors: rice, sugar cane, tapioca, maize, pineapple, sweet corn, longan, oil palm, rubber trees, pigs, beef cattle, dairy cattle, chicken meat, layer hens, sea shrimp and tuna.

The aim of the discussion was to gather ideas from the private sector and to prepare the agricultural sector for the further opening up of Asean when the AEC comes into effect in 2015.

The private sector called for government’s support and cooperation in developing the strength of local agricultural businesses, so that they are more competitive and can maintain their leadership position in Asean. 

Such cooperation should be extended to other member countries within Asean, in the areas of production, trading and investment, the representatives said.

Theera said that based on the discussion, seven clusters had been created and goals identified, as follows:

1. Rice, tapioca, sweet corn and tuna - sectors in which Thailand is a leading trading nation and should be the leader in the AEC single market.

The rice sector requires cooperation between the government and the private sector in developing a wider variety of native species, while jasmine rice species should have more value and uniqueness. 

The government should import raw tapioca and tapioca chips from neighbouring countries for more processing and adding value to the Kingdom's production.

The government should promote increased local consumption and look for new potential markets for exporting sweet corn, while for tuna it should promote investment in processing facilities in neighbouring countries. 

2. Rubber, sugar cane, pineapple, oil palm, dairy cattle and sea shrimp - products for which Thailand is a leading country for manufacturing, exporting and a potential trading centre in the AEC. The government should have a policy to import concentrated liquid rubber from neighbouring countries for use in mid-stream industry for rubber production in Thailand. It should also urge all other Asean nations to become members of the International Rubber Consortium by having a management and administration centre in Thailand in order to provide a platform for discussion and negotiation on rubber and related issues and ensure maximum marketing efficiency.

Thailand should pioneer the formation of an Asean Palm Oil Federation and encourage all Asean member states to become members, reports The Nation.

3. Layer hens and pigs - these are sectors in which Thailand produces for local consumption.

4. Chicken meat - a sector in which Thailand should maintain its position as a trading country.

5. Longan - a sector in which the Kingdom should maintain its position as leading manufacturing and trading country. 

6. Maize - where Thailand should maintain its position as a net importer. The private sector, however, suggested that local production should be promoted to replace imports, besides which Thai investors should |be encouraged to have production facilities in neighbouring countries and bring the output back to Thailand for further processing. 

7. Beef cattle - where Thailand will step forward as the production base in the region. The government should create a five-year plan.

ThePoultrySite News Desk

Thailand rice prices fall as government liquidates surplus

By : AHN

Thailand (IRIN) – Almost a year after the government promised Thailand’s farmers a fixed price for their rice harvest, concerns that the system would push up world rice prices may be unwarranted, as experts now forecast lower financial returns.

The government recently announced it was selling 753,000 tons of surplus rice, stockpiled under the programme, in an open bid set to end on 28 August, according to international media.

In an effort to boost farmer incomes, in 2011 the government started paying paddy farmers 15,000 baht (US$420) per ton – a 60 percent increase over 2010. Thailand exported less in 2012 because at the higher price its rice was less competitive.

Since 2005, Thailand’s rice reserves have grown to more than 10 million tons, but the government has committed to paying above-market prices for the 2012 paddy crop to be harvested in October.

“Now that the government is to release part of these stocks, prices may fall, especially if the 753,000-ton tender is followed by [others],” Concepción Calpe, a senior economist with the UN Food and Agriculture Organization (FAO), told IRIN. “When there is a supply surplus, normally, prices have to fall so as to stimulate demand and consumption, and bring the market back into balance.”

A year ago, Samarendu Mohanty, head of the Social Sciences Division at the Philippines-based International Rice Research Institute (IRRI), forecast increased global rice prices as a result of Thailand’s scheme, on the assumption that stockpiling would decrease the supply of rice on the market, which would then increase demand and prices. But India lifted its four-year-old rice export restrictions in 2011, which stabilized the amount of rice on the market – and prices – Mohanty said.

In July 2012, FAO reported that international rice prices were “surprisingly stable”. “A drop in international rice prices would be a great relief for the world, especially as maize and wheat supplies have thinned,” Calpe noted.

The US, the world’s largest producer of maize, is expected to bring in its smallest crop since 2006/07, the US Department of Agriculture said in its August forecast. Prices for yellow maize, used mainly as feed for livestock, are already above US$300 per ton, and are now projected to exceed $350 per ton in the coming months and into 2013. Maize prices climbed by 23 percent in July alone, according to FAO. A drought in Kazakhstan and Russia, two of the world’s largest producers and exporters of wheat, threatens to drive up wheat prices.

The World Bank has noted that although food prices are higher, they are nowhere near the record levels of 2007/08.

Where prices will go from August 2012 onward is still uncertain, according to FAO, and depends in part on whether the Indian government reinstates export restrictions. The agency noted that such restrictions contributed to the 2008 price hike.

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– Provided by Integrated Regional Information Networks.

Article © AHN – All Rights Reserved

Canadian agricultural prices higher than world rate, WTO says

A World Trade Organization analysis done last year has concluded that Canada's domestic agricultural producers are getting prices 11 per cent higher than world prices - due mainly to the supply management system that protects dairy and poultry producers.

That study has been cited in some of the many criticisms of Canada's protectionist policy posted by trade partners, including key participants in the Trans-Pacific Partnership trade negotiations that Canada was given permission to join this week.

"The report notes that Canada's domestic agriculture prices are 11 per cent higher than world prices due to domestic insulation from world markets," the Australian government said as part of the WTO's regular review of Canadian trade policies.

"Would Canadian consumers benefit from lower prices, and Canadian producers be more globally competitive, if Canada undertook further liberalization of the most heavily protected sectors?"

Questions about supply management were also posed at the WTO's agriculture committee during the review of Canada's trade policies by Brazil, Chile, China, Columbia, the Dominican Republic, the European Union, India, Korea, New Zealand, Thailand and Ukraine, says a Canadian government document obtained under the Access to Information Act.

Colombia, for instance, asked Canada "how it ensures that these support measures do not distort the domestic market price?"

In its replies to WTO members, the Canadian government didn't specifically address the issue of whether Canadian consumers are being gouged.

The queries at the WTO challenged the long-standing Canadian quota system for dairy and poultry producers that is supported by stiff tariffs on imports.

"Supply management is a system that ensures a stable supply of dairy, poultry and eggs to Canadian consumers and the agri-food industry," the Canadian government response states.

Agriculture Minister Gerry Ritz asked the media last November to produce a study which showed that Canadian consumers would benefit from the elimination of supply management.

He pointed out that a Canadian Tire flyer in his mailbox had four litres of milk on sale for $4.19 and a dozen eggs for $1.29.

"So I don't see this increased price to consumers," Ritz said, asking journalists to "show me an economic study where if the dairy farmers of Canada were disbanded, or the poultry farmers were disbanded, that somehow that would benefit consumers."

Ritz's office didn't directly challenge the WTO's findings but referred to reports and statements from industry groups protected by supply management which reject assertions that consumers are being gouged.

"Deregulation of the dairy systems in the U.K. and Australia has caused farm prices to come down, but consumer prices kept increasing with inflation," states the Dairy Farmers of Canada.

"The intermediaries simply increased their own margin after deregulation. Neither farmer nor consumer benefit from deregulation."

Former Liberal MP Martha Hall Findlay published a report this week in favour of dismantling supply management which cited Statistics Canada data stating that the average price of four litres of whole milk in Canada was $9.60 in Canada, compared to $3.68 in the U.S.

The Dairy Farmers of Canada, in response to Hall Findlay's report published by the University of Calgary's School of Public Policy, accused her of using "misleading" data in a "flawed" report.

The $9.60 figure is "$3 to $4 more than what most consumers pay. This misleading data does not match the experience of consumers in the Canadian marketplace," the organization stated.

However, even the $5.60 to $6.60 figure the Dairy Farmers of Canada says consumers pay for four litres of whole milk remains well above the $3.68 US figure cited in Hall Findlay's report, which is based on U.S. Bureau of Labor Statistics.

U.S. President Barack Obama announced this week that Canada and Mexico have been invited to participate in the ambitious TPP trade talks that already include the U.S., Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam.

The U.S., Australia and New Zealand had previously resisted Canada's entry due to concerns about supply management and Canadian intellectual property law.

The Harper government has never budged from its 2011 throne speech commitment to "continue to stand up for Canadian farmers and industries by defending supply management - in all international forums and bilateral negotiations."

The government says it will continue to defend the system in the multilateral TPP talks, though it has also agreed that the matter will be the subject of negotiations.

"Canada has made clear to all TPP members that it would be prepared to discuss all issues as part of the TPP negotiations," states an October, 2011 Agriculture Canada briefing note.

"Canada has also indicated that we will not pre-negotiate or make down payments to join, and that the only appropriate place to discuss issues is at the negotiating table."

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Thailand seeks global cooperation on rubber prices

Thailand, the world's biggest rubber producer and exporter, said on Thursday it was seeking concerted action with fellow producers Indonesia and Malaysia to stabilise falling rubber prices. Slower growth in major economies and worry about Europe's debt crisis has hit rubber demand and led to falling prices in recent months. That has sparked sporadic protests by farmers in Thailand demanding government intervention.

Thailand hopes co-operation between the world's top three producers can shore up prices, Thai Deputy Agriculture Minister Nattawut Saikuar told Reuters. "I had a discussion with the Indonesian trade minister last night. We agreed that rubber prices had fallen to an inappropriate level and we needed to do something to prevent them from falling further," Nattawut said in an interview.

"I also plan to go to Malaysia in early June to talk about this issue with the Malaysian trade minister." Indonesian is the world's second-biggest producer and Malaysia is the third-biggest. The big three rubber producers account for about 70 percent of global natural rubber output.

The price of Thai unsmoked rubber sheet stood at 99 baht on Thursday, falling in line with the benchmark grade smoked rubber sheet (RSS3) and Tokyo rubber futures prices, which sets the global trend. Tokyo rubber futures prices fell to a 6-month low at 257.9 yen per kg, the lowest level since November 24 because of renewed concern about Euro zone's debt woes.

Traditionally, the three Southeast Asian rubber producers choke off supply by cutting down rubber trees to prop up prices. They have in the past worked together to support the market, most recently in December 2008 as physical rubber fell as low as $1.10 per kg when global recession loomed. At that time, they agreed to cut exports by a total of 915,000 tonnes in 2009 to prop up prices.

In the event, the export restriction plan was never strictly enforced as the market started to rebound from mid-2009, largely because of demand from tyre companies in China and India. Nattawut said the Thai government would step up its existing intervention scheme and buy more rubber to push up the price of unsmoked rubber sheet to a target of 120 baht ($3.76) per kg.

Thailand sees 2012/13 main rice crop at 24m tonnes Thailand has bought only a fraction of the 200,000 tonnes of rubber sheet it planned to purchase under a government intervention programme, failing to boost prices, government and industry officials said on Tuesday.The government had approved a 15 billion baht ($474 million) budget in January to buy rubber from farmers in a bid to push up unsmoked rubber sheet (USS3) prices to above 120 baht per kg.

But prices have continued to fall with the current 100 baht per kg even lower than January's 115 baht."It is the complicated authorisation process that slowed down the buying programme, plus unfavourable weather that cut supply. That's why we haven't been able to buy much rubber so far," said Wit Pratuckjai, director general of the Office of the Rubber Replanting Aid Fund (ORRAF).Thailand - the world's biggest rubber producer and exporter - implemented the intervention plan in early May, with the delay mostly due to the government's decision to buy from local rubber co-operatives, not from individual small farmers.

The government has bought only 4,300 tonnes so far.Local administrations had to set up sub-committees to select which co-operatives would be qualified to join the intervention programme, which took up to a few months."The programme did not achieve much in terms of pushing up prices as the channel it used to buy rubber was too small, buying from local co-operatives only," said Prapas Uernontat, president of the Thai Rubber Association.Farmers have demanded that the government accelerate its purchases to support prices by buying from individual farmers as it did with rice. However, there has been no immediate response from the government.Wit said the government was expected to buy more rubber in June, when the weather was likely to be fine, allowing farmers to tap more latex.

Copyright Reuters, 2012

Thailand rice prices slip but Iraqi demand lends support

Thai rice prices slipped this week on the prospect of fresh supply flooding into the market although demand from Iraq provided some support, while Vietnamese prices continued to fall as loading demand subsided, traders said on Wednesday.

Thailand's benchmark 100 percent B grade white rice was at $630 per tonne, down from last week's $640, which was the highest in seven months.

The 5 percent broken grade was at $610 per tonne, down from last week's $612.

Thai prices have been pushed up by a government intervention scheme, which has left little grain in the market for exporters.

They are likely to fall further in the next few months because of fresh supply from an off-season crop of 2-4 million tonnes due to be harvested in July.

The intervention scheme ends in June and it is not clear if the government will extend it since it has limited warehouse space, with stockpiles at a record high of 13.9 million tonnes of paddy.

"Prices were on a downward trend.

However, demand from Iraq will help support prices, at least for a short time," said a Bangkok-based trader.

Iraq's state grain board has purchased 100,000 tonnes of rice in an international tender, of which 70,000 tonnes was from Thailand and 30,000 tonnes from Uruguay.

The main Thai suppliers to the Iraqi market are normally Asia Golden Rice, Capital Rice and Chaiyaporn, traders said.

"Shipment is expected to be done by July and after that prices could fall again as there's no demand and supply is about to rise," said Wanlop Pichpongsa of Capital Rice, who confirmed Capital supplied part of the order.

Thailand, the world's biggest rice exporter, is struggling to sell its grain because the intervention scheme has pushed prices up to uncompetitive levels.

It has exported just 2.6 million tonnes of rice so far this year, down 42 percent from the same period in 2011, when it had sold 4.5 million.

Even so, the government still reckons its target of 9.0-9.5 million tones is feasible and is confident it can secure government-to-government deals to boost exports in the second half of the year, using grain from its stockpiles.

NO DEMAND IN VIETNAM In Vietnam, the second-biggest exporter, prices also fell due to an absence of demand, even though the Philippines said it would seek Vietnamese or Thai grain at a tender, traders said.

Its 5 percent broken rice eased to between $420 and $440 a tonne, free on board Saigon Port, from $430-$450 last Wednesday.

The 25 percent broken grade was quoted at $380-$390 a tonne versus $390 a week ago.

"Loading demand is waning and there is very weak commercial demand," a Vietnamese exporter in Ho Chi Minh City said.

The next harvest of the summer-autumn crop is due to start in July in the Mekong Delta food basket.

The Philippines said on Tuesday it would seek 100,000 tonnes of rice from either Vietnam or Thailand, and may open a tender later this year for another 20,000 tonnes.

"This volume is too small for Vietnam's export capacity," another trader said, adding prices would not change even if Vietnam was picked.

Last year Vietnam exported a record 7.2 million tonnes of rice and the country's agriculture minister has said shipments in 2012 would match that, although industry officials forecast volume could drop to 5.4 million.

Copyright Reuters, 2012