Rice scheme may harm Thailand's reputation

The rice price-guarantee scheme in the world's biggest exporter Thailand may damage its reputation among buyers and highlights the need to expand a regional rice reserve, a World Bank economist said on Tuesday. Thailand's new government plans to raise the price it pays farmers for their rice, which will keep more supplies at home and drive up the export price.
"Probably it will damage (Thailand's reputation), because the Thais are the largest exporters of rice, and now the price is higher," Kiyoshi Taniguchi, an economist at the World Bank told Reuters on the sidelines of the Southeast Asian Nations (ASEAN) Food Security Conference.
"Some of the governments are surprised that this scheme has actually been implemented," he said. In February, officials said the Association of Southeast Asian Nations plus China, Japan and South Korea plan to establish a rice reserve to help protect them from volatile commodity prices. The countries agreed a scheme for rice reserves of around 787,000 tonnes, to help stabilise costs after global food prices surged at the start of the year.
Taniguchi said Thailand's rice scheme gave more weight to the reserve plan. "This is why this initiative by ASEAN plus three - the rice reserve - will be key," Taniguchi said. "But we know the rice reserve at this stage is only looking at disaster relief, but it is better this rice reserve scheme is expanded for food security in general, not only for natural disasters."
He said Thailand may lose customers as rice importers diversify their supplies to other countries. Indonesia is one Southeast Asian country that has already started looking for alternative shipments of rice after the reported cancellation of a proposed sale of 300,000 tonnes of rice from Thailand.
"Each country, especially as rice is a strategic commodity for many Asian countries (will) have to change the source of imported rice," said Taniguchi, adding that a positive outcome to the Thai move could be more producers becoming exporters of rice. "It gives a competitive edge for other countries, for example Vietnam," he added. "Now Thailand is not exporting as much, maybe newcomers like Cambodia can start to export."