In the past, Thai people cultivated rice mainly for their own needs. Farmers dry harvested paddy rice in the sun until dry, then keep the grains in a storehouse. Prior to consumption, the grains are pounded to make dehusked rice in small quantities fit for only a short amount of time. Later on, when foreign contact began, self-sufficient cultivation turned into one for commercial purpose..

Suphan cities anchor their rice boats and ships to ply their trade. Those who live near these three temples set up mills to sell rice to the city folk, and to those who make alcoholic drinks’.

Foreign trade was mainly done by sea, with the trading policy being controlled by the government via the Department of Finances. The title the Lord of Warehouse Goods was appointed for the first time during the reign of King Prasat Thong, to control the traffic of forbidden goods that the private sectors could not trade on their own. Overseas rice trade in the Ayutthaya era included both Siam’s own exported rice and the rice that foreign merchants buy to sell once again. Trading nations in that time were Portugal, Holland, France, and peninsular coastal cities like Malacca, Java, Manila, Batavia, Cambodia, Vietnam, Lanka, Japan and China.

Rice Trade After World War II

During World War II, rice was considered an important war supply, and rice trade was strictly controlled by the Government. After the end of the war in 1946, Thailand, as Japan’s ally, was considered to be on the losing side and forced to hand over 1,500,000 tons of rice to repay the Allies for the damage done within three years. It was not until 1955 that the Government permitted the private sector to export rice under the government’s jurisdiction, using a quota system and two rates of exchange. Private exporters needed to obtain permission from the Ministry of Commerce to request a quota, and after the rice was sold, the foreign currency had to be exchanged at the Bank of Thailand at lower rates than market values. The difference would be the government’s income instead of taxes. The post-war effect, while causing famines worldwide, was positive for the recovery and expansion of Thailand’s rice trade after the food shortage caused prices to go up. The Government feared that this would affect domestic rice prices and changed the taxation system to a fining system for exports called the rice premium. Collecting this fee enabled the Government to earn more money, but later on the rice market became the buyers’ market where other countries began to produce more rice and effecting the export amounts and prices in the world market. This development rendered the premium system void, and the Government officially abolished it in 1986.

During the Green Revolution, the 1966 success of IRRI influenced the Department of Agriculture to develop the rice varieties that could be planted twice a year in irrigated lands with high yield. The increased production enabled more exports and triggered a wave of awareness. New mills were constructed to expand the production base for the rice grains, and in 1975 they started to switch to gasoline engines rather than diesel engines, resulting in both better quality and quantity of the product.

After the 14 October 1973 incident, the Government led by Prime Minister Kuekrit Pramote had started the Rice Grain Subsidizing Policy which became today’s Paddy Rice Pawning Project.