Thailand is attempting to persuade the Philippines to accept 50,000 tonnes of premium-grade Thai rice, to increase the value of Thailand's normal exports of low-quality rice to the Manila market.

The 50,000 tonnes of premium rice would be part of a quota of 360,000 tonnes of rice proposed for Thailand's rice exports to the Philippines.

Trade Negotiations Department director-general Nuntawan Sakuntanaga yesterday said the two countries had yet to reach final agreement on the size of Thailand's rice quota because Thailand was pressing the Philippines to accept the premium-grade shipment as part of its quota.

"Allocation of a premium-grade rice quota would help increase export opportunities for Thai rice in the Manila market," Nuntawan said. "Normally, the market imports only low-quality rice, which creates lower returns."

Moreover, there is high competition for low-quality rice in the Philippine market, particularly from Vietnam, because Vietnamese rice is priced much lower than Thai rice.

Therefore, Thailand must focus on the upper market, and insistence on a quota for premium-grade rice is aimed at increasing opportunities for Thai rice exports to Manila, Nuntawan said.

Under the terms of the Asean Free-Trade Agreement (AFTA), Manila does not have to abolish import tariffs on rice, because it classifies rice as a "highly sensitive good". However, it has offered Thailand an annual rice-import quota with no tariff imposed.

The Philippines is one of the AFTA signatories that is committed to reducing its import duties on rice. It will reduce the tariff from 40 per cent to 35 per cent by 2015. Malaysia likewise will reduce its import tariff on rice to 20 per cent next year, while Indonesia will cut its tariff to 25 per cent by 2015.

Meanwhile, the Commerce Ministry's Foreign Trade Department is moving to increase the amount of premium-grade rice grown in Thailand, particularly organic jasmine rice. The department will launch a training programme in the Northeast next month aimed at educating rice farmers on the benefits of growing premium rice varieties.

Director-general Vichak Visetnoi said there was a high potential for increasing both the export volume and the export value of organically grown jasmine rice in many markets. Thai rice farmers should grow more organic rice, because it would give them better returns.

On the other side of the industry, Thai rice traders support the government's plan to release 2 million tonnes of rice from its stockpiles via the Agricultural Futures Exchange of Thailand (Afet), saying the move would create greater transparency than open bidding.

Thai Rice Millers Association president Chanchai Rakthananon called the government's plan to increase the volume of rice traded through Afet "an efficient way to solve corruption and stabilise rice prices".

He said the government should gradually release small stocks of rice, not larger than 300,000 tonnes a month, via Afet, so that it would not affect overall market prices.

A report issued last month by the National Rice Policy Committee said 684,776 tonnes of rice was traded via Afet between last September and December. Of that, 321,467 tonnes were second-grade jasmine rice and the rest 5-per-cent white rice.

Source: The Nation