THAILAND:  2014/15 Dry Season Rice Area and Production Forecast to Decline

There is significant uncertainty concerning the size of the upcoming rice harvest, given varying reports and assessments from official government agencies in Thailand. Thai rice farmers are facing an environment of deteriorating profitability. Domestic rice prices have declined nearly 30 percent over the past two years and the generous Paddy Pledging Scheme has been discontinued. Additionally, as the winter rice-growing season began in November, the government reported that it would restrict irrigation supplies to farmers so that the cultivated rice area and production would decline.

Rural Thailand is currently in the midst of the second of two annual rice-growing periods called the “dry season” crop. This crop is generally planted from November-February and harvested from March-June. Dry season rice is primarily irrigated, with 80 percent of the crop relying on water supplied from highland reservoirs. The dry season rice harvest is the smaller of two annual crops, normally accounting for roughly 28 percent of total annual production. Dry season rice acreage has averaged approximately 2.0 million hectares since 2007.

Satellite imagery analysis by USDA in January 2015 clearly indicates that between 25 to 30 percent of the area normally devoted to rice in the dry season has not been planted as of late January. In particular, the acreage of actively growing rice crops is much reduced from levels achieved last year in both the central plains and northern regions. These two regions comprise the heart of irrigated rice cultivation in Thailand, and typically account for over 80 percent of total dry season rice production. In the normalized difference vegetation index (NDVI) image (above right), the areas depicted by red and orange colors coincide with unplanted or barren paddy fields. In addition, Landsat satellite imagery (below) comparing field-level conditions in 2014 and 2015 revealed that these same fields were planted with rice last year at this time. The planting window for dry season rice extends into late February, so there is still time for acreage to be sown in the current 2014/15 dry season. In fact, the dark gray and black fields depicted in the January 20, 2015 image (below right) show land preparation and planting activity.

The government of Thailand’s agricultural forecast agency, the Office of Agricultural Economics (OAE), reported in early January that dry season rice production in 2014/15 would decline by 3.0 million tons (rough rice basis) or 31 percent this year owing to drought and limited irrigation supply. On a milled basis, this implies production would decline roughly 2.0 million tons compared to last year. Meanwhile, in early February the military government reported that it had successfully persuaded farmers to reduce 2014/15 dry season production by 50 percent, owing to its policy to actively restrict irrigation supplies for rice farming. If true this would imply a reduction of 2014/15 dry season rice output of approximately 4.85 million tons (rough rice basis); 3.2 million tons (milled basis).

The current uncertainty regarding the rice production outlook in the 2014/15 dry season rice crop is essentially a product of the unprecedented amount of unplanted land near the end of the normal planting window in the heart of the irrigated cropping region, and the unknown scope of irrigation supplies that the government will make available to farmers. Satellite imagery analysis has helped validate the fact that dry season rice acreage is currently well below that sown last year at this time. Meanwhile the government itself is sending strong signals that it believes that there will be a significant decline in production owing to its control over irrigation supplies. Due to these factors, the USDA forecasts total 2014/15 milled rice production in Thailand at 19.5 million tons, down 1.0 million or 5 percent from last month and down 5 percent from last year. Harvested area is forecast at 10.5 million hectares, down 0.4 million or 4 percent from last month and down 1 percent from last year. Rice yields are estimated at 2.81 tons per hectare, down one percent from last month and last year. Given the fluid nature of the situation, USDA will continue to monitor planting activities in the region and reassess the production outlook as the growing season progresses.

This report has been published by the Office of Global Analysis (OGA), International Production Estimates Division (IPAD). Current USDA area and production estimates for grains and other agricultural commodities are available on IPAD's Agricultural Production page or at PSD Online.