Thailand's rice industry will collapse unless the government takes more constructive actions by releasing rice from its huge stockpiles, chief of a local rice exporters association warned.

Korbsook Iamsuri, chief of the Thai Rice Exporters Association, said the government must accept losses from sales due to low global prices and fierce competition. This would mean the government would incur losses by selling some of the 17 million tonnes of paddy it paid to farmers last October at a lower price than what it paid for.

Exporters said the volume is equivalent to 10 million tonnes of milled rice and it will take the government up to two years to sell off that volume.

Weak demand and stiff competition reduced exports of Thai rice in the first six months by 45% year-on-year to only 3.45 tonnes rice.

Although 3.05 million tonnes of rice is expected to be exported in the second half this year, total volume exported would be 6.5 million tonnes, the lowest since 2000, she said at the press briefing Wednesday.

Demand for Thai rice in the second half will come from Iraq, South Africa, Indonesia and Japan. But an ample supply of Indian rice coupled with a depreciation of the rupee this year has boosted India's attractiveness as a rice exporter significantly, she said.

Also, to compete with the subcontinent, Vietnam discounted the price of its rice, driving world market prices even lower.

The pledging plan pays 15,000 baht a tonne of paddy, which translates to US$800 a tonne in cost. But Thai rice is sold at an average $550 a tonne compared with $405 for Vietnamese rice and $420 for Indian rice.

The association has called for the release of rice at market prices, not based on pledging costs.

She said that if the government sells to exporters at a lower cost, we could compete with Vietnam.

"The government should sit and talk and tell the truth to exporters before the Thai rice industry suffers any longer or collapses," she said. "If exporters suffer, it will eventually hurt millers and farmers. If no action is done today [selling rice], farmers might not have have to grow rice next year, thanks to enormous supply but low demand," she said.

Chookiat Ophaswongse, president of Thai Rice Exporters Association said more supply will come to 26 million tonnes of paddy to be harvested in October.

He said the government has no other option but to bear the losses which, he said, could be as much as 10,000 baht a tonne.

Mr Chookiat said the programme has made Thai rice artificially high and reduced its standing with foreign buyers who see Vietnam's rice as more reasonably priced.

Source: Bangkok Post