Stronger demand from China and Malaysia are the main reasons. Lower prices for fragrant rice also attracted the Philippines to import more than the previous years. However, exports of low quality rice dropped dramatically and pulled total exports down 2 percent. The yearly average farm gate price continued to drop 14 percent in 2000 after moving upward during 1995-1998 in response to strong competition from other major producers, such as Vietnam and Pakistan. Moreover, prices of rice are likely to weaken in 2001 as foreign demand has been very weak and prices have been very low in most major exporting countries including Thailand.
Current prices tend to fluctuate along with international demand.
Export prices of most grades in the first quarter of 2001 dropped about 35 percent from the same period last year in the absence of major rice sales. As a result, the average farm-gate paddy price declined significantly from 4,800 baht in mid March 2000 to 4,300 baht per ton during the same period of 2001. Since market demand has been weak, most exporters delay payments to millers. As a consequence, liquidity problems cause the industry to slow down their milling and keep less paddy in their stocks. However, the government continues to provide packing credit to the exporters as usual.