Overseas sales of Thai rice next year could suffer as much as a 50-per-cent reduction from this year's expected 10 million tonnes if the new government resumes the pledging scheme without any measures to support the export sector, the Thai Rice Exporters Association warned yesterday.

Honorary president Chookiat Ophaswongse said skyrocketing Thai prices as a result of high intervention prices would jack up export prices from the current US$545-$550 (Bt16,200-Bt16,350) per tonne, free on board, to $840-$850, while the price of jasmine rice would rise from $1,050-1,060 to $1,400 a tonne.

Exporters would certainty lose competitiveness to their rivals in other countries as a result, he said.

The association expects export volume will reach 10 million tonnes this year, from 8.5 million tonnes in 2010.  However, the level could fall by half next year because of reduced price competitiveness, he warned.

The price of exported white rice in Vietnam, a major rival, is currently quoted at $515-$525 a tonne.

Moreover, the rocketing price of Thai rice would panic overseas consumers and could encourage them to shift to other cereals, he added.

To ensure export growth, Chookiat said the incoming government should have additional measures to support the export sector. For instance, he cited the sale of low-priced rice to exporters and/or the introduction of more efficient promotional plans for sales to each key market.

Association president Korbsook Iamsuri said Thailand should achieve shipments of 10 million tonnes this year, thanks to remaining stocks, stable prices and high global demand.

However, she cited three major factors that could dent export competitiveness: the stronger baht; India's plan to drop its rice export ban next month; and the current uncertainty over the new government's plan to resume the pledging project, which if pursued would drive up Thai rice prices.

Of greatest concern, she said, was that Thai parboiled-rice exports would be seriously affected soon. Export volume could drop from 4 million tonnes this year to less than 2 million tonnes next year, as India is the world's major exporter.

India's buffer stocks exceed 60 million tonnes because of its export ban, against the normal stockpile of 20 million tonnes.

India has set a minimum export price for parboiled rice at only $400 a tonne, while the Thai equivalent is currently quoted at $535-$545.

Charoen Laothamatas, vice president of the association, said the Kingdom would also lose more market share for jasmine rice to Vietnam and other countries.

Thai jasmine-rice export volume has dropped significantly in the past few years because of higher prices. It is currently quoted at $1,050-$1,060, while Vietnamese fragrant rice is just $655-$665.

The Thai market share in major markets has dropped continuously, while export volume for Vietnamese fragrant rice has risen.

Somkiat Makcayathorn, president of the Thai Rice Packers Association, said domestic prices would likely increase in the short run after implementation of the pledging project.

However, if exports are seriously damaged by the scheme's reintroduction, domestic prices may not rise significantly because of low demand from exporters, he added.

Source: The Nation