With rice-importing nations becoming more reliant on their own production, and Thai prices remaining high, the Kingdom’s exporters will find it more difficult to win orders in an increasingly competitive global market.
Asean rivals, in particular, are battling hard to increase market share, rice experts have warned.
They also cautioned the government that continuing budgetary losses under the high-subsidy pledging scheme would result in less funding for infrastructure development, and would damage the rice industry’s growth in the long run.
The outlook was offered at the “Thailand Rice Convention 2013”, attended this week in Chiang Mai by more than 400 experts and traders from 40 countries.
Panellists warned that the global trend was for countries to be more self-reliant by increasing their own rice production under food-security policies, resulting in less international trading opportunities, in particular for major exporting nations such as Thailand.
David Dawe, senior economist at the Agricultural Development Economics Division of the United Nations’ Food and Agriculture Organisation (FAO), said that although global rice trading had increased due to world trade liberalisation, Thai exports could well face more difficulties because of high prices under the government’s pledging policy.
“The rice-pledging scheme of the Thai government has challenged the country’s trading, as it means higher stocks each year. The scheme is also a challenge in terms of budgetary losses, since the government needs to spend a high amount each year. As a result, the country’s spending for other projects, such as on infrastructure, education and agricultural development, will be less,” he said.
According to the FAO’s projection, global paddy-rice production over the past decade was at a record high of 747 million tonnes, as many countries had been engaged in the promotion of self-reliance under food-security policies.
World rice trade in 2013 will grow a little less than last year to 37 million tonnes, it forecast, because of lower consumption and the self-sufficiency trend.
As a result, the trading of Thai rice is unlikely to increase significantly because of high prices under the pledging scheme, the organisation added.
The FAO also predicted that the year-end global rice stock would rise from 161.7 million tonnes in 2012 to 171.8 million tonnes this year.
Indonesia to import less
Sutarto Alimoeso, president of Perum Bulog, the Indonesian government’s rice-import agency, said Indonesia was likely to import less rice this year because of its self-support policy.
He said the country should have a sufficient home-grown supply, with a production of about 42 million tonnes of rice against domestic consumption of around 37 million tonnes a year.
Indonesia may, however, still need to import some rice each year, depending on the effects of plant disease and climate change on the nation’s production, he added.
That said, the price of Thai rice is quite high when compared with that of other countries, and Indonesia considers price as one of the important factors in deciding where to source any imports, he warned.
Korbsook Iamsuri, president of the Thai Rice Exporters Association, said that while it was true that the global trend was for countries to be more self-sufficient by growing their own rice, international trading would not drop significantly because the industry was also dependent on climatic conditions and the rising world population.
However, as long as Thai rice remained too costly, any increase in world rice trading would not benefit the Kingdom, because many countries had already turned to importing grain from exporting nations offering lower prices, she said.
Korbsook explained that if Thai rice were only about US$50-$70 (Bt1,490-Bt2,090) a tonne more expensive than that of its rivals, it would not affect Thai rice trading because the Kingdom’s exporters offered quality rice, logistics and financial services to buyers.
However, if the price gap remained higher due to the government’s high pledging price, these advantages would be outweighed by a lack of price competitiveness, and Thai exports would continue to suffer, she warned.
The price of Thai white rice is presently quoted above $500 a tonne, while Vietnamese rice is quoted at $380 and Indian rice at about $415.
Danuwat Pengont, director of the Institute of Product Quality and Standardisation at Maejo University, said the government’s high pledging price had attracted farmers to grow more rice, but this had been achieved at the cost of a reduced focus on quality development.
He urged the government to pay more attention to promoting farmers to grow organic rice, as such a move would create sustainable growth in the long run.
Commerce Minister Boonsong Teriyapirom insisted that government would continue its pledging policy and rice-release strategies in order to help farmers generate better incomes.
The administration will continue to release rice from its stockpiles, with an emphasis on government-to-government contracts, he said.
Another two countries, Togo and South Korea, have negotiated the purchase of rice from Thailand under such deals, the minister said, adding that the latter would be signing a contract to buy about 1 million tonnes each year.
