In spite of the long distance to that market, Thai rice has room to grow in Latin America if the industry focuses on value-added development rather than bulk sales, reports Petchanet Pratruangkrai.

A survey of the rice-trading markets in some Latin American countries like Brazil, Peru and Chile shows that Thai rice is rarely found in those markets because of high transport costs and tough competition.

Latin consumers have preferred hard-grain rice imported from neighbouring countries for its lower price, aided by low import tariffs. In Brazil, Thai rice is available only at some leading chain supermarkets.

 However, the price is higher than for any other kind of rice, even India's renowned Basmati long-grain variety. For instance, Thai rice is quoted at 5.29 reais (Bt95) per 500-gram pack, while Basmati rice is quoted at 4.65 reais. Local rice is quoted at only 1.95 reais per 500-gram pack.

Deputy Commerce Minister Alongkorn Ponlaboot said that although countries in Latin America imported small amounts of Thai rice, there was a room to grow if traders changed their marketing strategy from selling in bulk packs to small premium packs of rice and high-value-added rice products.

"It is very difficult for Thai rice to compete with the low prices in the local markets. To boost opportunities for Thai rice, exporters should focus on high-valued-added products and on Asian consumers who live in Latin America," Alongkorn said.

Brazil, Peru and Chile have high demand for rice each year. Their production cannot serve domestic demand. They must import rice, mainly from neighbouring countries such as Uruguay, Paraguay and Argentina.

 However, those countries do not have premium grades of rice to serve up market and Asian consumers.

To help promote the sale of Thai rice in the market, Alongkorn said the ministry would restructure its strategy by focusing on promoting rice brands and high-value-added rice, including organic rice and special kinds of rice grains. It will not sell rice in bulk but in small packs, as the logistic costs will be lower.

Moreover, it will focus on boosting sales of rice products rather than the raw grain. Currently, Thai rice products account for only 6 per cent of the country's total rice export income of Bt5 billion a year.

Alongkorn said the ministry would also adapt this rice-trading strategy to other markets in the future. Natthapong Senanarong, a commercial counsellor in Sao Paulo, said Thai rice exports had plenty of room to grow in the Brazilian market as many Asian people, especially Chinese and Japanese, lived in the country.

In fact, Brazil is home to the largest Japanese population outside of Japan, with 1.5 million to 2 million people of Japanese descent in that country. Many Chinese restaurants are also emerging in the market.

They need jasmine rice to serve their customers, and therefore Thai rice exporters should focus on marketing with that group of consumers, he advised.

Brazil is one of the major rice-consuming countries, with a demand of about 8.6 million tonnes a year. It imports about 950,000 tonnes of rice a year, mainly from Mercosur, a trade grouping comprising Argentina, Brazil, Paraguay and Uruguay.

In the past three years, Brazil imported only 190, 309 and 246 tonnes of rice respectively from Thailand, mainly Hom Mali (jasmine) rice and sticky rice.

In the first half of this year, Brazil imported about 211 tonnes of rice from Thailand. Thai rice is subject to a high import tariff between 11.5-13.5 per cent in Brazil, while rice imports from its neighbouring countries enjoy zero tariffs.

Thiravuthi Bisalbutra, ministry counsellor (commercial) in Santiago, said the Chilean market imported small amounts of Thai rice annually because most consumers preferred white rice.

However, there was room to grow for Thai rice at restaurants, as many Thai restaurants demanded Thai rice. Although Thai restaurants in Chile are not owned by Thais, they try to use Thai rice to preserve the authenticity of the cuisine, he said.

Chile imports about 680 tonnes of Thai rice a year, mainly the Hom Mali variety. Thai rice exported to the country rose significantly to 1,322 tonnes in the first half of this year. Peru imports about 2 million tonnes of rice a year.

However, because of its high import tariff of up to 25 per cent and high sanitary standards, Thai rice exports to that market dropped by 93.9 per cent from 347 tonnes in the first half of last year to 21.5 tonnes this year.

In previous years, Thailand used to export up to 14,000 tonnes of rice to Peruvian consumers annually.Clearly, the Thai government must address the problem of export barriers to the Peruvian market. Otherwise, Thai rice may disappear from the market.

A small pack of Thai rice in a Brazilian supermarket. The price of Thai rice is higher than other varieties, be they local products or India's Basmati.

Source: The Nation