Rice exports plummet as its high price bites

Thailand's rice exports are expected to fall to only 8 million to 8.5 million tonnes next year as it is losing rice contracts because of the skyrocketing price of Thai rice.

Exports for two consecutive years have been more than 9.5 million tonnes.

Chookiat Ophaswongse, president of the Thai Rice Exporters' Association, said yesterday that Thailand would no longer enjoy high export volumes as the country had lost many markets like Iran and Indonesia due to the high price since early this year.

"Iran has shifted to importing rice from Pakistan and Uruguay instead of Thailand this year because of the high price. Indonesia has also reduced its import order and is trying to increase its own rice production," he said.

According to the Foreign Trade Department, Thai rice exports to Iran dropped sharply from 615,904 tonnes last year to only 77,000 tonnes in the first eight months of this year. Exports to Indonesia also fell from 456,158 tonnes to only 50,433 tonnes during the same period.

Normally, these two countries are major export destinations for Thai rice. But the high price has snatched the opportunity. Moreover, there are also financial difficulties in exporting to Iran as no commercial banks approve letters of credit for Iranian contracts.

In a bid to preserve the Iran market, Chookiat urged the government to negotiate for selling rice to Iran under government-to-government contracts or barter trade deals to reduce financial risks for exporters.

Chookiat said the government must preserve this market as it has high demand for rice each year.

He added that lower export volume was also a result of dropping global rice trade from 30 million tonnes this year to 27.5 million tonnes next year due to higher stockpiles of each country and expensive Thai rice, which is guaranteed by the government at Bt14,000 a tonne.

However, the director-general of the Foreign Trade Department, Apiradi Tantraporn, is confident of achieving 9 to 9.5 million tonnes of rice export next year.

She said that despite lower rice trading globally, there was still high demand for rice especially in markets such as the Philippines, and countries in Africa, where the government will strongly promote Thai rice.

 She added that rice is the major staple for the world population. Despite tightening demand in the short term, the world will have a larger population and that will increase demand for rice consumption, which would benefit Thailand as the world's major rice supplier.

Meanwhile, the government is losing billions of baht from its rice-pledging programme this year amid reports of fraudulent practices. Some rice millers have mixed sticky rice with 100-per-cent white rice. The sticky rice price is quoted at Bt6,000-Bt7,000 per tonne while white rice under the price intervention programme costs Bt14,000.

The practice will allow rice millers to benefit from the lower cost of sticky rice instead of delivering 100-per-cent white rice.

A rice trader said there were instances of cheating by rice millers, surveyors and officials from the Marketing Organisation for Farmers, which directly handles the government pledging, who have combined sticky rice and white rice for selling to the government.

"Unscrupulous traders and corrupt officers have grouped together to benefit from the price differential and the government's delay in rice inspection," said the source.