Thai rice exporters are starting to suffer from an inability to export to the global market and some may cease operating if sales don't improve in the next six months, say industry executives.

The Thai industry is facing a severe challenge from India, which has lifted its ban on exports of non-basmati rice and also removed all limits on how much of the grain can be exported, said Korbsook Iamsuri, president of the Thai Rice Exporters Association.

Thai exporters are struggling because the government has a policy not to compete on price with other countries.

"The real world for commodities is price competition so Thai exporters will need to wait until the situation changes, such as India stops exporting its rice," she said.

As the Thai government is operating a paddy mortgage scheme, paying farmers high prices of 15,000 baht a tonne for 100% white paddy and 20,000 baht for fragrant paddy, Thai exporters complain that they cannot sell rice.

India aims to export 4 million tonnes of non-basmati rice by March, the end of the country's fiscal year, and its government is likely to allow the export of 2 million tonnes more.

Figures for January showed Thai exporters were in trouble as the country shipped only 378,000 tonnes abroad. If the government-to-government rice delivery to Indonesia was excluded, Thai exporters sold only 200,000 tonnes in the month, around 25% of average monthly exports last year.

Ms Korbsook said that if the situation remained unchanged with Indian sales continuing and no natural disasters, Thailand may export only 6.5 million tonnes of rice and the price is unlikely to reach the average of US$700 a tonne as targeted by Commerce Ministry.

However, the country may be able to export rice if conditions change, such as the Indian rupee appreciating and narrowing the price difference with Thai rice to only $40-50 a tonne.

Chanchai Rakthananon, president of the Thai Rice Millers Association, said India normally exported 3-4 million tonnes of rice a year and the exports from India would cover flood damage to Thai production late last year.

Because the floods damaged thousands of rai of fields, only 6 million tonnes of paddy have entered the mortgage scheme, much lower than the target, so he is confident that Thailand would be able to export at least 8 million tonnes of rice this year.

He said Thailand should not be worried and should let India sell its rice because Thailand has a share of 30% in the global rice trade of around 32 million tonnes this year.

"If Thailand stops exporting rice, it could cause a global food security problem, especially with Europe encountering unusual cold which may greatly damage grain output," said Mr Chanchai.

Europe is not a major market, importing only about 500,000 tonnes a year.

Jiranun Wongmongkol, director of commercial affairs at the Thai Embassy in Cambodia, said several Thai investors were now investing in the rice industry in Cambodia as the largest miller in that country has the capacity to produce only 500 tonnes a day.

Asia Golden Rice has invested $46 million to develop an integrated rice mill and rice improvement factory with a capacity of 2,000 tonnes a day. Once the project is operating at full capacity in two years, Cambodia may export as much as 1 million tonne of rice a year.

Source: Bangkok Post