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    Southeast Asia
     Jul 2, 2010
Drought threatens global rice supply
By Brian McCartan

BANGKOK - Thailand and Vietnam, the world's two largest rice exporters, face severe drought conditions that threaten to severely undermine this year's crops and global supplies. Climate change and El Nino are variously being blamed for the unusually hot weather and lack of rainfall, which began with an early end to last year's tropical rainy season.

Poor weather and low rice stocks contributed to a regional food shortage scare in 2008. Then prices spiraled to more than US$1,000 per tonne and many exporting countries put in place restrictions on overseas sales to guard domestic supplies. Across Asia, rice production was expected to be up this year before


signs of drought became more apparent. The possibility of a new scare is rising as crop conditions deteriorate.

For Thailand, which accounts for about one-third of global rice exports, analysts are provisionally predicting a drop of at least one million tons. On June 4, Thai officials declared 53 provinces as disaster areas because of severe water shortages. The Ministry of Interior's disaster prevention and mitigation department said nearly 6.5 million people had been adversely impacted by drought.

North and northeastern provinces have been the worst hit, and an estimated 58,300 hectares of farmland have been severely damaged, according to official statistics. In addition to rice, sugarcane, maize, cassava, rubber and fruit crops have also been impacted.

A report issued by the Thai Department of Water Resources in May showed critically low water levels in every river basin except for the central Chao Phraya River and the Mae Khlong River in western Kanchanaburi province. Critically low water levels indicate that a river is carrying less than 10% of its capacity.

Lack of rain and low water levels in feeder waterways have drained key reservoirs, with dams in the north and northeast at 32% and 34% capacity respectively. Several dams have halted releasing water downstream for agriculture irrigation due to consumption and electricity generation needs. Around 70% of Thailand's total water supply is used for agriculture.

Authorities at the Lam Takhong dam in Nakhon Ratchasima province stopped releasing water for irrigation purposes in June and the dam is now operating at 29% capacity. At Queen Sirikit dam, the country's largest, situated in northern Uttaradit province, water levels are at an 18-year low. Some believe that water shortages could extend into 2011.

Thailand produces about 20 million tonnes of rice annually in two or more cycles, around half of which is exported. The government also reserves about 10% of the harvest as a reserve to stabilize prices and stave off food shortages as a result of bad harvests.

The Thai government has asked rice farmers to put off planting the year's main rice crop for a month until rains predicted by the Thai Meteorological Department begin in July. Many farmers, however, have ignored the official advice and started planting in June in often parched conditions. They reportedly argued that the lack of water may reduce yields, but so will the shorter growing season as a result of late planting. Thailand's millions of small-scale rice farmers are particularly vulnerable.

The dry season's second rice crop to be harvested in August and which accounts for 25% of Thailand's annual rice output is expected to drop from 8.4 million tonnes last year to 7 million tones this year.

Thai rice prices are considered the benchmark in Asia, but they have recently fallen to their lowest level in two years due to a drop in export demand. In the first five months of this year, Thai rice exports fell by 5.2% to 3.4 million tonnes over the same period in 2009. With many of the world's leading rice trades based in debt crisis-hit Europe, the decline of the euro against the US dollar, in which international trade is usually priced, has impacted commodity trades.

The government instituted a price guarantee scheme in May to insure farmers against rice prices falling below a certain minimum. The plan was aimed, however, at preventing losses from falling rice prices and not as a safety net against bad harvests.

Some interpreted the government's request for later planting as indicative of a plan to offer compensation to cooperative farmers. Reports indicated that the Agriculture Ministry was considering a plan to provide 1,000 baht (US$30) cash handouts to drought-stricken farmers.

Thai Prime Minister Abhisit Vejjajiva reportedly opposed the plan, saying that manufacturing and material support would be preferable to cash handouts. On June 22, he announced a new debt relief program to be offered to about 900,000 drought-affected farmers with a budget allocation of between $6.2 billion and $9.2 million. Under the program, farmers would be exempt from paying interest charges for a month-and-a-half and allowed to delay principle payments for one month.

In Vietnam, the drought is shaping up to be the worst in a century, with little rainfall across the entire country since last September. The Red River in the north is at record low levels, but it is the Mekong Delta - the country's premier rice-growing region - that has been the most severely affected. The Vietnamese Ministry of Agriculture and Rural Development predicted in March that some 100,000 hectares in the delta were under threat.

Low rainfall has resulted in increased salinization of the Mekong Delta. In normal years there is an ebb and flow of salt and fresh water, with salt water reaching as far as 30 kilometers inland during the dry season due to reduced fresh water flows. This year, salt water has flowed as far as 60 kilometers upriver, putting a wider swathe of crops and farmland in danger of over-salinization.

Dam reservoirs are also at extremely low levels in Vietnam. The reservoir of the Hoa Binh dam, which supplies over 40% of the electricity consumed in the north and 15% nationally, is only slightly above levels that would require severe restrictions on electricity production. In March, the state-owned electricity company said it could not release much more water for irrigation purposes and still meet demands for electrical power.

More than half of Vietnam's estimated 44 million workforce is involved in agriculture. Hanoi announced in mid-June that it would release $5.3 million from state coffers for drought relief in the northern city of Haiphong as well as in 11 northern and central provinces. This follows an earlier grant of $2.4 million to six northern provinces and $7.6 million to 13 Mekong Delta provinces for drought relief. Another $5.3 million has been spent on improving irrigation to mitigate the impact of last year's drought.

Brian McCartan is a Bangkok-based freelance journalist. He may be reached at [email protected]

(Copyright 2010 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)


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