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3 Sep 2007

Agriculture

Rice Milling Industry: Problems Needing Urgent Solutions(Business Brief No.2035)

News about the closure of two rice mills owned by a large miller in Pichit province on August 21 and unauthorized selling of government rice stocks derived from the paddy pledging scheme has received wide public interest. Many of those concerned are now keeping a watch on the milling industry that has long been plagued with problems. Among them are shortages of working capital, insufficiently skilled workers and a huge rice inventory built up as a result of the rice price-support program initiated by the government many years ago. In 2007, most rice millers have been hit hard financially due to reduced income as a result of recent changes in the state-run paddy pledging scheme, and they are also in great need of working capital for the purchase of new seed. Worse, the appreciating Baht which has resulted in higher export prices for rice in the global markets has marginalized profits of rice millers/exporters on Hom Mali and sticky rice.

To stay afloat, rice millers will have to adjust in earnest through upgrades in production efficiency. They should also closely monitor the situation in markets both at home and abroad, as well as monitoring the government's new policies to cope with the changing circumstances over time.

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