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Stepped-up release pressures home rice traders

THE CARETAKER government's accelerated release of rice from its stockpiles has created difficulties for domestic traders, which now have to be much more active in promoting sales amidst a combination of lower market prices and weak consumer confidence in regard to rice quality.

Somroek Tangpiroonthum, chief executive officer and managing director of Thai Ha - the producer of packed rice under the Kaset brand - yesterday said the government's pledging policy and its stepped-up release of stockpiled rice was having a negative impact on domestic traders.

"The price of Thai rice, in particular in the domestic market, has dropped continuously since last year. The price is expected to reach its lowest level this year, following a huge amount of rice having been released onto the market during the year," he said.

The price of packed rice on the domestic market had dropped by 4-5 per cent in late February compared with late last year, he added.

The CEO said that as the government had become a major holder of rice stock, many consumers were worried about its quality.

As a packer, the company therefore needs to pursue a number of strategies to promote confidence in the quality of rice and encourage consumers to buy it.

One of these, he explained, is to focus more on organic rice production and selling - encouraging farmers to grow more non-chemical produce - and on specialty rice grains being supplied to the company.

He also said the owner of the Kaset brand would concentrate more on selling organic rice in light of the rising health-consciousness trend. Moreover, organic rice and specialty rice grains have more added value.

Thai Ha is now also paying greater attention to rice consumption in the industrial - or non-household - sector, that is, in hotels and restaurants.

This year, the company plans to increase its sales to the industrial sector to Bt360 million, which would account for 20 per cent of its revenue.

Thai Ha will also promote more rice exports, which currently contribute 54 per cent of sales.

Somroek said that following the government's rice-release programme, the price of Thai rice would reach its lowest level by the middle of the year. Once it has less volume in its stockpiles, the price should start to increase early next year.

However, he said he could not estimate what sort of price would be seen when it did bottom out, as the government had not yet stated clearly when it would stop releasing its rice.

The company has, however, projected that Thailand should be able to export about 8.5 million tonnes of rice this year, as the government needs to release a huge amount from the stockpiles.


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