Iran War Disrupts Thai Rice Exports to Middle East, Intensifying Pressure on Farmers

The escalating conflict in the Middle East has significantly disrupted Thailand’s rice exports to its largest overseas market, causing further hardship for farmers already struggling with declining domestic prices and rising production costs. The ripple effects could impact not only the agricultural sector but also the broader Thai economy, which relies heavily on farming.

This week, two ships carrying a total of 80,000 tonnes of Thai rice destined for Iraq were halted at a Bangkok port, with buyers requesting that the containers be unloaded and the rice returned to storage, according to Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association. In an interview, Chookiat stated, “Everything is at a standstill. Shipments to the Middle East could be suspended for months, and no new purchases are occurring because of uncertainty over the situation.”

The disruption exacerbates existing challenges for Thai rice farmers. Falling domestic rice prices, combined with a strong Thai baht that reduces competitiveness abroad, are squeezing profit margins. With Thailand’s agricultural workforce accounting for roughly a quarter of the national workforce, the crisis threatens broader economic repercussions.

Before the conflict intensified, Thailand’s rice exports were projected to decline by 11% this year, totaling approximately 7 million tonnes—a five-year low. The outlook has worsened because Iraq, Thailand’s largest rice importer, requires shipments through the Strait of Hormuz, an area recently impacted when a Thai cargo vessel came under fire from Iranian projectiles.

Rice exporters now face additional costs from war-risk insurance surcharges and higher shipping rates driven by rising fuel prices, Chookiat explained. These added expenses coincide with rising global rice prices due to the Thai baht’s strength against the U.S. dollar, even as global supply projections are suppressing demand.

Currently, Thailand’s 5% white rice is priced at around US$392 per tonne, compared with US$356–US$360 for similar grades from Vietnam and US$350–US$354 from India, according to the Thai Rice Exporters Association. “One might assume rice demand surges during conflicts,” Chookiat said, “but in reality, deliveries are heavily constrained.”

Farmers are also facing shortages of essential inputs such as fuel and fertilizers, most of which are imported from the Middle East, ahead of the upcoming planting season. Kriengsak Tapananon, an adviser to the Thai Agriculturist Association, warned that “if fuel and fertilizer costs increase, farmers will face even more distress.”

Current inventories of fertilizers can last two to three months, but the ongoing conflict has generated anxiety about future availability and price spikes. Domestically, rice prices remain low due to a strong harvest and ample global supplies. In January, benchmark unmilled paddy rice with 15% moisture content sold for roughly 6,800 baht per tonne in northeastern Thailand—down from 11,000 baht per tonne a year earlier, according to the Ministry of Agriculture.

The challenging market conditions have forced some farmers to queue at petrol stations with trucks and empty containers to ensure machinery, including combine harvesters, remains operational—only to be turned away amid anti-hoarding measures. Many farmers, burdened with high household debt and low productivity, may have to reduce planting, delay loan repayments, or borrow more just to survive, Kriengsak said. “When sales are low or production costs rise, the farmers inevitably bear the burden,” he added.

The ongoing war’s impact on Thailand’s rice exports highlights the vulnerability of the country’s agricultural sector to geopolitical events and underscores the urgent need for measures to support farmers and stabilize the domestic rice market.