Surging Baht Sends Thai Rice Shipments Tumbling, Farmers Reeling

Thailand’s currency is on a tear just when its signature crop most needs a weaker exchange rate. While electronics exports still shine, a relentlessly firm baht has left rice shippers scrambling to stay relevant against cheaper Vietnamese and Indian grains.

Quick lens on the issue

• Baht has gained almost 9 % this year, touching its strongest level in nearly 5 years

• Every 1-baht appreciation inflates Thai rice’s price by about $15 /t

• Thai 5 % white rice now costs roughly $415-420 /t, versus $350-360 offered by rivals

• Agricultural exports account for only 8 % of total shipments but deliver incomes to millions of rural households

• Authorities are deploying rate cuts, FX monitoring and gold-trade curbs yet admit the currency may strengthen further

The currency conundrum

A cocktail of a retreating US dollar, resilient current-account surplus and heavy foreign inflows into Thai bonds and equities has powered the baht from THB 36 to the dollar earlier in the year to around THB 33 today. Government analysts foresee an average of THB 32.9 next year and THB 31.8 in 2027, levels unseen since before the pandemic. The Bank of Thailand trimmed its policy rate to 1.25 % last week and has started shining a spotlight on large speculative gold trades, but officials stress they can only “smooth volatility,” not dictate direction.

Electronics fly, paddies sink

Export receipts in November topped $27.4 B, extending a 17-month winning streak largely thanks to computer hardware, AI-related chips and circuit boards. Yet shipments of rice, rubber and other farm goods fell 4.3 % in the first 11 months. In rice, where the ingredient base is 100 % local, currency moves feed straight into free-on-board (FOB) offers. Honorary Thai Rice Exporters Association chief Chookiat Ophaswongse notes that a THB-1 rise leaves sellers no choice but to tack on $15 per tonne “or bleed red ink.”

Pricing gap widens

Thai 5 % white rice clocks in about $50 per tonne above Vietnamese grain. The premium for hom mali fragrant rice is even starker—roughly $1,200 /t compared with $800 /t from Cambodia. Importers in China, once enthusiastic buyers ahead of Lunar New Year, have placed only token orders this season. In the United States, a 19 % tariff lifts shelf prices further, nudging supermarkets toward Vietnam’s aromatic ST varieties.

Farmers on an economic fault line

With paddies mostly family-run, any dip in export demand flows quickly into farm-gate prices and rural credit stress. Many growers already face higher fertiliser bills after the global commodities spike. If shipments slip below 500,000 t per month in Q1, as traders warn, tens of thousands of households in the Northeast risk cash-flow crunches just as planting costs rise.

SMEs and the hedging hurdle

Larger conglomerates regularly use forward contracts, USD futures or FX options to lock in rates. Yet surveys show fewer than 2 % of agricultural SMEs hedge systematically. Knowledge gaps, fee sensitivities and a belief that the state will eventually step in all undermine adoption. EXIM Bank and BAAC have rolled out subsidised premium schemes and training workshops, but take-up remains tepid.

Government’s multi-pronged response

Authorities are tackling the currency head-on and indirectly:

Monetary easing – A 25 bp rate cut aimed at dampening speculative flows.

Gold-trade scrutiny – Stricter reporting for online bullion deals to curb baht-supportive conversions.

Capital-inflow checks – Banks must vet foreign transfers above $200,000 for source transparency.

Aggressive G2G rice talks – Commerce officials are reviving state-to-state deals with China, Iraq and Saudi Arabia to secure volume at negotiated terms.

What to watch into 2027

The Commerce Ministry’s baseline sees export growth stuck between ‑3.1 % and +1.1 % next year. Rice volumes could slide toward 7 M t from an estimated 8 M t in 2026 if the baht keeps firming. Traders say a swing back to THB 35 could quickly restore competitiveness; absent that, Thailand may cede hard-won market share for good.

In the meantime, industry voices call for fast-track FX education, deeper hedging subsidies and accelerated value-add—think ready-to-cook jasmine rice packs instead of bulk grain. Whether such pivots arrive before customers rewrite their purchasing habits will determine if the Land of Smiles stays on global menus—or watches dinner plates fill with cheaper alternatives.