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Thailand RiceAccording to the rice experts, the long-term price prospects forthe world's most popular grain are looking pretty good. "Even if you become a saint, you cannot predict rice prices," goesan old Chinese proverb. Even so, the rice gurus of Thailand - the world's largest riceexporter for the past four decades - may be in a better positionthan most to predict the future. "I personally believe we are now in a sellers' market," said VichaiSriprasert, honorary president of the Thai Rice ExportersAssociation and CEO of Riceland International, the seventh-largestrice exporter in the country. "The rice market has been a buyers' market for the perhaps 40-50years, since the Green Revolution when new technologies introducedin the mid-1960s made it possible for farmers to produce more riceand grow rice two to three times a year," Vichai said, addressing aseminar on the world food crisis hosted by the Konrad AdenauerOrganisation in Bangkok. Thailand has been the world's top rice exporter since themid-1960s, after the world's former leader, Burma, fell undermilitary rule in 1962 and its exports fell into a steep and steadydecline. In 2007, Thailand's rice exports hit a historic high of 9.55million tonnes, earning the country $3.6 billion. During the first four months of 2008 rice exports had alreadyreached 4.07 million tonnes, earning the kingdom $1.91 billion, ahike of 73 per cent over the same period last year. Rice prices have more than doubled this year, driven up by severalshort- and long-term factors that have created a highly volatilemarket. However, one thing noticeably missing in the price equation hasbeen any shortfall in rice production, which has been relativelysteady throughout 2007 and 2008 and certainly enough to meet demandin Asia, where 90 per cent of the rice market resides. "The wheat market was the one that had a shortfall and the culpritwas Australia, that has suffered several years of drought," saidAmmar Siamwalla, Acting President of the Thailand ResearchDevelopment Institute. It is now accepted that this year's rice crisis started in India,which slapped a ban on its rice exports in early 2008 to guaranteedomestic food stability in case the country of 1.1 billion peoplesuffered a wheat shortage due to uncertain imports from Australia. The Indian ban prompted Vietnam to announce its own export ban inApril, which helped jack the world rice price up to $1,100 a tonnein June, compared with $340 a tonne in November. Both India and Vietnam, the two largest rice exporters afterThailand, have now lifted their export bans and prices are startingto edge down on the world market. "I think the price of nearly $1,000 a tonne will not besustainable," predicted Ammar, one of Thailand's top rice experts. "Assuming no adverse natural events in producing areas, rice priceswill probably slide back to reestablish a relationship with othercereal prices, in particular with the maize price," Ammarpredicted. One such adverse natural event was last month's Cyclone Nargis inBurma, which is expected to cause a 3-million-ton shortfall in thecountry's rice crop this year, the impact of which has yet to befelt on the global rice market. Maize prices have experienced a slow but steady increase, almostdoubling over the past four years, and are likely to continue to doso, driven up by growing demand of food and bio-fuels, Ammar said. Although rice is not a likely candidate for producing bio-fuels inthe future, the possibility of more land going towards bio-fuelcrops, such as maize and palm oil, and away from rice, is one ofthe long-term factors that is expected to keep rice prices high inthe future. Another obvious factor is oil prices. "Fertiliser and transportation all require oil, so when oil goes upthe price of rice also goes up," Vichai said. During the last oil crisis of 1973-74, rice prices reached ahistorical peak of $2,700 a tonne, Vichai recalled. "Besides the oil crisis, the second thing affecting price istechnology," he said "Our technology is out of date and we have notinvested in in the rice industry, in irrigation and research anddevelopment, especially Thailand." Without investments in new technology, it is unlikely that riceproduction will be able to keep up with world demand whichincreases by an estimated 80 million new rice consumers each year. So far the Thai government, however, has shown more interest itbolstering rice prices for farmers and lowering them for consumersrather that tackling long-term solutions for the rice industry. "The government is interested in only two things: getting campaignfunds and the popular vote from the farmers," Vichai said.