What does white rice come from

Rice production was changed under technological progress. From the past, farmers cultivate rice by their wisdom but lack of technology improvement. At that time, the production was done by nature. The production was lower than today.

Now, the productivity is higher than the past due to high yield rice strain, soil improvement, plow machine, fertilizer, and pesticide. The modern irrigation also helps farmers to cultivate all year-round. The modern silo uses to store harvested paddy.

In the past, farmers sell paddy to the middlemen after harvest. The middlemen make profit and convey paddy to millers and then, millers transform paddy to rice.

Nowadays, the mode of production has gradually changed. The integration processes of transportation and storage were cut down. Major miller directly buys paddy from farmers and transport to its own storage and mills paddy when they need. So the middlemen are less important. Also, the agricultural cooperatives buys paddy from its members and mills to rice or act as major miller. The development improves rice standard.

Why do we commence trading white rice 5 percent.

Thailand is major rice exporter of the world. From International Rice Research Institute, Thailand exported rice more than one forth of total world export in the millennium.

The white rice 5 percent is the largest quantity in Thai rice market because white rice is typical rice than other kinds of rice. For example, Japanese prefers short grain and sticky rice, while South Asian nation prefers "Basmati Rice".

AFET considered white rice 5 percent because white rice 5 percent is the middle grade between white rice 100 percent class 2 and white rice 10 percent. The white rice 5 percent can be upgraded to white rice 100 percent class 2 or downgraded to white rice 10 percent. And AFET used Rice Standard from announcement of Ministry of Commerce B.E. 2540 as the rice standard.

AFET with risk management on white rice

Rice futures price is important to farmers, millers, exporters. All groups use futures price or price discovery as information to direct their businesses or to manage their risk.

In addition, exporters can use futures exchange as hedging tools to manage their risk. They can buy futures white rice contract and sell futures white rice contract before the first delivery notice day called "offset", then the exporters take profit or loss from contract price difference. If they buy high and sell higher, they will gain from buying futures contract. In contrast, they buy high and sell low, they will lose from buying futures contract.

In cash market, exporters can buy or sell white rice in which they may take profit or lose as well. Fortunately, they gain in futures exchange but lose in cash market. And the gain covers their losses, so they will take profit.