Let the markets help the farmers.
March 9, 2011 Leave a comment
We understand rice is the most sensitive of all the soft commodities, and a story in today’s Bangkok Post caught our eye :-
Rice farmers are not happy with the cabinet’s decision on Tuesday to raise the price of pledged rice from 10,000 baht per tonne to 11,000 baht as it still does not cover the cost of growing a crop, Thai Farmers Association chairman Prasit Boonchoey said on Wednesday.
Farmers still have to meet a range of rising costs, including fertilisers and pesticides, said Mr Prasit.
“The rice price has not been raised for several years. The call for the rice pledging price to increase to 14,000 baht a tonne is not too high because prices of consumer goods have already gone up,” he said.
Prices not changing for years? No wonder the farmers are a tad unhappy. A quick look at the easily tradable CBOT Rice futures contract shows prices do change. Often. All the time in fact. Now we know a free and open rice futures market is but a dream in Thailand, but what about allowing rice farmers to trade rice minis? Easy to create, as a CFD based on the underlying pricing of the CBOT, and they could be made very affordable, with say margin of 3000 Baht per mini contract.