Unstable prices and exchange rates are threatening the competitiveness of Thai rice exports to China, one of the major importers of Thai Hom Mali rice.

Xiong Gao, general manager of Chinese importer Chendgu Jinxiong Trading, said imports of Thai rice to China would fall this year due to the instability of Thai prices.

"Thai rice prices are fluctuating due to inconsistency in many government price guarantees. This has destroyed importers' confidence in the reliability of imports of Thai rice," he said.

Xiong called on the Thai government to ensure a stable price to reassure importers.

China is one of the major importers of Thai Hom Mali (jasmine rice). Thai rice exports to China saw a sharp drop of 80.96 per cent to just 11,841 tonnes in January.

Chengdu Jinxiong Trading normally imports 3,000 to 4,000 tonnes of Thai Hom Mali rice a year. However, the company is expected to reduce its imports of Thai rice this year by 10 to 20 per cent due to high prices and the global economic slowdown, which has caused a drop in consumer purchasing power.

Luo Hong, deputy manager of the firm, said higher prices might lead Chinese consumers to reduce their consumption of Thai rice.

"Wealthier consumers may not change their consumption behaviour, but middle-class consumers who normally prefer Thai Hom Mali rice would change their behaviour and buy lower-grade rice," he said.

To ensure that Thai rice sales in China are not affected by the economic crisis, Luo said the Thai government must stabilise the rice price and exchange rate.

Moreover, excessively high prices for Thai Hom Mali have led to the combining of rice types, damaging the reputation of Thai rice, he said.

Luo said some Chinese traders mixed Thai Hom Mali with Pathum Thani rice - a lower-grade fragrant rice - in order to lower costs.

Consumers who bought mixed Thai rice would be dissatisfied with its poor quality, causing irreparable damage to the reputation of Thai Hom Mali rice, he said.

Consumers might opt to buy cheaper rice from other countries such as Vietnam, Luo added.

Vietnamese rice is currently quoted at about US$200-$300 (Bt6,800 to Bt10,300) per tonne. Thai Hom Mali rice is quoted at $889 per tonne, while Pathum Thani rice is quoted at $725.

Benjawan Ratanaprayul, an adviser to the Commerce Ministry, is confident that the high quality of Thai rice ensures exports to China have a bright future, despite the price instability.

"Chinese consumers prefer Thai Hom Mali rice. The ministry will address the price-fluctuation problem with the government in order to ensure the sustainable growth of Thai rice exports to this market," she said.

Source: The Nation