Burma Profits from Thai Rice Subsidy Scheme

Thai traders are flocking to Burma to buy up cheap rice with the aim of selling it to a Thai government rice-buying scheme that is supposed to support Thai farmers, the Myanmar Rice Merchants Federation says.

"For a long time, Thailand did not buy any rice from Myanmar… But at the beginning of this year, Thai traders started to buy normal rice and broken rice [grains] from Myanmar and transport it across the border," said Ye Min Aung, the federation's secretary.

The federation organized a press conference in Rangoon on Wednesday to highlight the increase in the largely unregulated trade in rice.

"This cross border rice trade is related to the Thai government's rice scheme. Thai farmers will benefit if they buy cheap Burmese rice and import it into Thailand for this scheme," Ye Min Aung said. "The Thai government offers a good price for the rice."

On Tuesday, The Bangkok Post reported that Thai officials at the Myawaddy-Mae Sot border crossing discovered 25 tons of rice hidden in a cargo truck. The paper said the rice was destined to be sold under the Thai government's rice pledging scheme.

In 2011, Thai Prime Minister Yingluck Shinawatra revived a rice subsidy program that offers to buy up rice from paddy farmers at 15,000 baht (US $420) per ton, well above the market price. The program was first started under her ousted brother Thaksin, who sought to woo Thailand's rural voters. However, the buying program has resulted in bulging warehouses of rice that the government's can't sell on world markets, costing Thailand its position as the world's biggest rice exporter. An attempt to cut the subsidy failed last week when the Thai government caved in to the rice farmer lobby and restored the support price for rice to Bt15,000 a tonne (US$484) soon after announcing a cut to Bt 12,000.

The Myanmar Rice Merchants Federation (MRMF) said it would investigate the cross border rice trade to Thailand, adding that it should be regulated and involve Burmese rice traders. "We need to find out whether a lot of rice is exported across the border to Thailand, officially or unofficially," Ye Min Aung said.

Official rice exports from Burma have almost tripled in the last three years and are poised to reach 1.4 million tons in the current fiscal year, rice experts said in March. Only two years ago rice exports still stood at a mere 537,000 tons.

A fourth of Burma's US$45.4 billion GDP comes from the farming sector, according data by the Ministry of Agriculture and Irrigation from 2011, the most recent available figures.

Ye Min Aung said however, that the surge in the unregulated flow of Burmese rice to Thailand still remained relatively small compared to the massive, unofficial rice trade on the Burma-China border, which is estimated to have a volume of 800,000 tons.

"Burma and China don't have bilateral trade agreement yet [for rice], even though the Burmese government asks for it every time they meet with China," he said.

"So rice from Burma simply flows [unregulated] across the borders. The Chinese authorities could take action against the traders, but they don't do it because their people demand this rice."

(Reprinted from The Irrawaddy)