Effects of Paddy Price Intervention on the Rice Mill Business: A Case Study of the Paddy Pledging Programme in Thailand

This article explores the effects that Thailand’s controversial paddy pledging programme had on Thailand’s rice mill business and offers some managerial suggestions to deal with the programme. The programme was introduced during 2011–2014 to offer farmers a premium-guaranteed price for their crops. However, there was little discussion about the programme’s effects on the rice mill business, and how the mills had adapted their business model to meet the abrupt changes in demand and supply conditions. A case study of two rice mills in the Phu Sang district, Pha Yao Province, Thailand, was chosen as subjects for this study. One mill participated in the government’s paddy pledging programme, and the other did not. In-depth interviews were conducted with the rice mills management teams to explore the effects of the paddy pledging programme; to understand the mills’ motivations to participate or not participate the paddy pledging programme; to see how the mills adapted their business strategies to the drastic changes that occurred in the rice business environment and to draw key managerial and policy implications.