In 2011, Prime Minister Yingluck Shinawatra introduced the Rice-buying scheme which was aimed to lift prices and rural incomes to strengthen support of her ruling party. Rice Hoarding Policy Backfired Thai Government. Under the scheme the government buys rice harvests from farmers at twice the price from the existing global markets. Bangkok judged that by storing the grain bought and withholding it from the global market, rice prices would increase.
Hence with only 7% of world’s rice output traded cross border, problem in any one location can heavily affect International prices. One such event has already happened in 2008, when countries like India and Vietnam temporarily restricted rice exports, soaring global prices from US$300 a ton to a value of US$900 a ton, initiating food riots and protests.
But however, Thailand attempt to influence global rice price has all gone wrong as they started with holding rice, India resumed exports after long gap and also other countries like Philippines, hence this caused global price to fall from US$1000 a tonne in 2008 to around US$390 a tonne.
All this has caused huge loss to Thailand, causing large stock piles of around 15-17 tons and a severe paper loss in first two harvests in 2011 and 2012, reached US$4 Billion hence Thailand losing its top rice exporter tag to Vietnam in 2012.
It has been estimated that stock pile will increase to more than 20 million tons this year and Thailand Development Research Institute would ask government to dump rice on the world market to pay more than a million farmers. This situation may also foster political risks.