The continuous rise in the price of Thai rice due to the government's pledging policy has led to a serious decline in export volume for the fifth consecutive month since the launch of the scheme in October.Govt's pledging policy blamed for scenario since October

The Thai Rice Exporters Association reported that as of February 23, export volume for the month was 465,081 tonnes, down 41.6 per cent from the same period last year. Exports at the end of the month are expected to reach 586,400 tonnes thanks to higher demand from Nigeria to make up for inadequate shipments from India temporarily.

The total shipment of Thai rice in the first two months has dropped by half compared with the same period last year. Shipments from January 1 to February 23 were 825,629 tonnes, a 50.4-per-cent drop year on year.

Rice-export volumes have been declining steadily since October when the government kicked off the first pledging project at a high price. Exports slumped from 824,487 tonnes in September to 603,752 tonnes in October, 469,593 in November, 527,348 in December, and 360,548 in January.

Korbsook Iamsuri, the association's president, said Thai rice exports were facing a tougher situation amid fierce competition in the world market. Since India lifted its export ban late last year, exports of Thai and even Vietnamese rice have slipped significantly.

"The falling volume of Thai exports is a warning sign that Thailand may lose the title of the world's largest rice exporter to India within the first half of this year," Korbsook said.

In the worst-case scenario, exports of Thai rice would amount to only 6.5 million tonnes this year, while India has targeted driving exports to 4 million tonnes in the first half.

Korbsook said Thailand must closely monitor India's export situation as it could increase its target export volume because of high amounts of rice in its stockpiles.

Vietnam has lowered its rice price to compete with India. From February 20-29, Vietnam reduced its export price from US$470 to $430 per tonne of 5-per-cent white rice to remain competitive with India, while India lowered its price during the same period from $470 to $445 per tonne. However, the price of Thai rice has been rising after the government continued its pledging project for the second-crop harvest season.

The price of 5-per-cent Thai white rice has increased from $520 to $525 per tonne.

As the price of Thai rice cannot be lowered because of the high pledging price, Korbsook said Thai exports would continue to drop until India and Vietnam run out of stocks.

In addition, because of the sky-high price of Thai jasmine rice, export volumes of the premium grade have also plummeted continuously, losing market share to the Vietnamese and Cambodian varieties of fragrant rice, which are cheaper.

Shipment of Thai jasmine rice dropped in particular to Asian markets, which favour fragrant rice.

In January, Thailand's export of jasmine rice to Hong Kong dropped by 26.9 per cent year on year to 17,099 tonnes, while shipments to mainland China shrank by 48.4 per cent to 4,262 tonnes.

Source: The Nation