Trade representatives warn Thai exports face serious threat from India and Vietnam because of the price difference

Thailand must urgently develop a rice marketing and trading strategy to boost the confidence of importing countries as consumers are shifting to cheaper rice, Thai trade centres warned.

Thailand's white rice and jasmine rice have lost out to other rice exporting nations due mainly to high prices.

Thai trade representatives in Vietnam, Malaysia and Hong Kong recently presented almost the same report - that Thailand's rice export volume has continued to shrink since last year due to the high prices. This has paved the way for other rice exporters to gain an upper hand by lowering prices and actively expanding their overseas markets.

In a recent announcement by the All India Rice Exporters Association, India plans to export 4 million tonnes of rice, both basmati and non-basmati, in the first half of this year. India said it could beat Thailand as the world's biggest rice exporter this year due to stocks of up to 30 million tonnes, while expecting bumper harvests.

Pranomsri Sormkunngoen, director of the Thai Trade Centre in Ho Chi Minh City, said the Vietnam government is targeting to export at least 6.5 million-7 million tonnes this year. Vietnam plans to export more rice in order to compete with India after India started aggressively growing its export volume and slashing its rice prices.

Pranomsri said Vietnam had slowed down its rice exports in the expectation that rice prices would rise after the Thai government set a high pledging price. However, Thai and world market prices have not increased following the pledging scheme.

Vietnam has set a floor price for exported rice of US$450 (Bt14,000) per tonne for this quarter. However, exporters had to lower the price to $430 per tonne for 5-per-cent white rice due to tougher competition from India.

According to the Thai Rice Exporters Association, 5-per-cent Indian white rice is quoted at $470 per tonne, while 5-per-cent Thai white rice is quoted at $549 per tonne.

The Thai Trade Centre in Kuala Lumpur reported that Vietnam Southern Food Corp recently clinched an order for 300,000 tonnes of rice from Malaysia. The contract price was $520 per tonne. Vietnam will ship this lot of rice to Malaysia next month.

The centre reported that Malaysia has switched its rice purchases to Vietnam due to the high cost of Thai rice. The centre suggested that authorities urgently promote the export of high-quality rice as upper-market consumers are still willing to pay for premium rice.

The Thai Trade Centre in Hong Kong has also urged the government and exporters to strongly promote Thai jasmine rice to Hong Kong since Thailand has continued to lose market share to Vietnam.

The centre showed that the market share of Thai jasmine rice in Hong Kong has dropped gradually since 2007 from 90.6 per cent to 61.9 per cent last year. On the other hand, Vietnam jasmine rice has shot up from 0.2 per cent to 27.3 per cent in the period.

Source: The Nation