Thai rice traders believe that market integration under the coming Asean Economic Community (AEC) will not only maintain Thailand's status as the world's largest rice exporter, but make the country into a ricetrading centre where buyers can shop for all kinds of rice.

Unavoidably, Thailand will lose export competitiveness and market share within the region to Vietnam, which can offer more attractive prices for white rice than Thailand.

As a result, Thailand's future goal is to focus on high quality rice, such as jasmine rice and organic rice.

Rice exporters offered these comments after the University of the Thai Chamber of Commerce (UTCC) found that Thailand had lost the regional riceexport leadership to Vietnam as long ago as 2003.

Vietnam's share of the Asean export market has increased significantly from 48.4 per cent in 2003 to 79.4 per cent in 2009. Over the same period, Thailand's share has fallen from 51.2 per cent to 9.2 per cent.

To increase Thailand's share of the regional export market, exporters agreed with the UTCC report yesterday by saying the government should allow imports of paddy rice [unmilled grain] from other Asean countries. This strategy will lead Thailand to become a "onestop shop" for rice buyers.

Thai Rice Exporters' Association president Korbsook Iamsuri said that Thailand could become a service provider for all kinds of rice grain in order to better serve its customers.

"Instead of focusing only on Thai rice marketing, which has limited supply, the Kingdom has a high capability to polish other rice grain and reexport it from Thailand," she said.

However, to ensure differentiation between high quality Thai rice and other Asean grain, the country would need to label clearly which grain came from Thailand and which was sourced from other Asean countries.

Moreover, involved government agencies and traders needed to urgently establish a clear traceability system to prevent rice mixing.

The chairman of a rice millers' group in Phichit province, Banjong Tangjitwattanakul, said that Asean liberalisation would benefit Thailand by increasing the country's exports, if it was freely allowed to import paddy rice.

Currently, Thai rice millers have the capacity to polish up to 100 million tonnes of rice a year. However, the country produces only 31 million to 33 million tonnes of paddy rice annually. Additional supplies of grain from imports will increase traders' efficiency and incomes, he said.

The director of the UTCC's Centre of International Trade Studies, Aat Pisanwanich, suggested that Thai rice traders and involved agencies should cooperate to establish Thailand as the Asean ricetrading centre before the integration of the AEC was completed in the next four years.

He said that Vietnam's riceexport share had surged largely because of its lower prices and access to additional supplies, mainly from Cambodia. Vietnam also has a single export team for all of its marketing.

Aat said that if Thailand could group together and categorise clearly to prevent the combination of low and high quality rice, it would enjoy a position as the world's biggest rice supplier for a long time.

Otherwise, if the country does nothing to develop its ricetrading system, Thailand could lose more of its market share within Asean to Vietnam, as well as its share of other international markets.

In 2009, the value of Vietnamese rice exported to other Asean countries was US$1.31 billion, while Thai rice exports within Asean were worth $316.3 million.

The UTCC's study showed that Thailand's share of riceimport markets in Singapore and Indonesia fell sharply, year on year, after implementation of the first moves towards AEC early last year. Thailand's share of the Singapore rice market fell from 65.9 per cent to 61.83 per cent, while Vietnam's share was up from 8.05 to 15.03 per cent. Thailand's share of the Indonesia market fell from 82.07 to 66.61 per cent, while Vietnam's share improved from 14.21 to 30.66 per cent.

The study also showed that the incomes of Thai rice farmers will increase by a smaller measure than those of rice traders after the Asean liberalisation. Incomes of Thai farmers are expected to increase by Bt1,009 per household, while trader's incomes will rise by Bt5,665 after the AEC.

Source: The Nation