Global Rice News

Challenges and Opportunities for Rice Exporters in Thailand

Rice farmers in Suphan Buri province have devised effective methods to eliminate weeds in their fields, boosting rice production levels. Despite their efforts, numerous risk factors still pose challenges for rice exports this year. The Thai Rice Exporters Association highlights concerns such as exchange rate volatility, declining competitiveness of Thai rice, intense price competition, the impact of the El Niño weather phenomenon, and India’s restrictive export policy.

According to Chookiat Ophaswongse, the honorary president of the association, the US Department of Agriculture predicts that global milled rice production will remain stable at 513 million tonnes in 2024. China is set to be the largest producer with 144 million tonnes, followed by India with 132 million tonnes. Thailand, on the other hand, is expected to produce a similar quantity to the previous year, totaling approximately 20 million tonnes.

Based on the forecasts, around 7.5 million tonnes of rice, valued at 150 billion baht, are projected to be exported this year. This reflects a slight decline compared to the estimated 8.7 million tonnes of rice, valued at 178 billion baht, exported in the previous year. Despite the dip in exports, Thailand maintained its position as the world’s second-largest rice exporter in 2023, trailing only behind India, which exported 16.5 million tonnes.

However, Mr. Chookiat cautions that Vietnam is experiencing significant growth in rice exports, posing a risk to Thailand’s second position. Vietnam’s annual exports, typically around 6 million tonnes, surpassed 8.1 million tonnes in 2023.

One of the challenges Thailand faces in maintaining its rice exports is the evolving methods of rice purchase employed by rice-buying countries. Many countries now prefer private entities to handle rice imports, allowing them to charge import taxes and raise proceeds to support their own farmers. The Philippines has adopted this approach, offering more flexibility in the purchasing process.

The Thai government’s government-to-government (G-to-G) rice deals have become more complicated and time-consuming compared to private sector decisions. Mr. Chookiat explains that the G-to-G process in Thailand involves multiple steps and takes over two months to finalize contracts. In contrast, the private sector can make decisions within a week.

In addition to these challenges, Thai rice exporters must also navigate exchange rate fluctuations and the potential impact of India reviewing its rice export restrictions, which could influence global prices. They must also closely monitor the effects of the El Niño weather phenomenon on rice production levels.

Charoen Laothammatas, president of the Thai Rice Exporters Association, emphasizes the interdependence of production and export conditions on Thai rice prices. He reveals that in the first month of 2024, Thailand has exported over 1 million tonnes of rice, representing a 44% increase compared to the previous year. If this trend continues for several consecutive months, it will undoubtedly have a positive impact on domestic prices.

To strengthen Thailand’s competitiveness in the rice market, Mr. Charoen suggests that the government focuses on exchange rate stability, developing new rice varieties with high yields per rai, and improving irrigation systems. Additionally, attention must be given to transportation costs due to the significant increase in shipping freight rates, which have quadrupled from the previous year to $4,000-$6,000 per container for transport to Europe and the US.

Conclusion

Despite the challenges faced by Thai rice exporters, there are opportunities for growth and success. It is essential for the government and industry stakeholders to proactively address these challenges and implement strategies to enhance competitiveness. By doing so, Thailand can maintain its position as a leading rice exporter and seize new opportunities in the global market.

Source:

Bangkok Post