Thai rice exports this year may fall for the second year to 6.5 million tonnes due largely to strong market competition and weak global demand, according to the Thai Rice Exporters Association.

The volume is far lower than 8.5 million tonnes projected by the Commerce Ministry for this year.

Sluggish demand from major buyers _ China, Indonesia, and the Philippines _ and large shipments from Vietnam and India were attributed to the decline, according to Korbsook Iamsuri, president of the association.

In 2012, rice exports dropped sharply to 6.9 million tonnes worth of 147 billion baht, compared with 10.6 million tonnes for 192 billion baht in 2011, a 35% and 24% decline in volume and value, respectively.

Thailand therefore slipped to the world's third largest rice exporter, behind India, with 10.25 million tonnes exported and Vietnam with 7.7 million tonnes.

Exporters blame the state's rice-pledging policy, which paid high paddy prices to farmers and made Thai rice uncompetitive in the global market.

As the pledging scheme has continued for another year, lower-priced rice from Vietnam, India and Pakistan will eat away Thailand's market share. The factors will decrease the export volume this year to around 6.5 million tonnes for 136 billion baht, said Mrs Korbsook.

Vietnam's 5% white rice sells for US$390 a tonne this week, compared with $590 of Thai rice, $430 of India's rice, and $425 of Pakistan.

The US Department of Agriculture forecast Thailand would return to the top spot this year with 8 million tonnes, followed by India (7.5 million tonnes) and Vietnam (7.4 million tonnes).

The agency estimated world rice trade at 37.37 million for milled rice, down 4.35 % from last year.

"It is possible that the shipment volume may be higher but only if the sales under the government-to-government contracts materialise,"she said at the annual briefing yesterday.

The government-to-government rice exports as announced by the Commerce Ministry are worth about 1.5 million tonnes this year.

Vichai Sriprasert, honorary president of the association, said the baht appreciation has also affected rice exports largely this year.

He said that the pledging price, at 15,000 baht a tonne for white paddy, or $800 a tonne of milled rice, resulted in lower Thai rice exports last year.

The government is estimated to stock no less than 10 million tonnes now. Last year, the country lost about 45 billion baht from rice sales and the bills will be higher every year including storage costs of 40 billion baht for 10 million tonnes of rice, said Mr Vichai.

Chookiat Ophaswongse, another honorary president of the association, sees active sales in the first quarter this year thanks to more orders from Japan and Iraq, which would push monthly shipments to about 500,000 tonnes.

The Iraqi government may open bids to buy 85,000 tonnes of white rice this week but Mr Chookiat is worried Thailand could lose due to the $200-a-tonne price difference between Thai and Vietnamese grain.

Last year, the top rice importers of Thai rice are: Nigeria (2.7 million tonnes), China (2 million), Iran (1.8 million), Philippines (1.5 million) and Indonesia at 1.45 million.

Source: Bangkok Post