Study warns of huge loss in rice export value

Economy September 24, 2014 01:00

By Petchanet Pratruangkrai
The N

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Thailand will lose about Bt87.5 billion in rice export value during the next 10 years if the country does not put a serious effort into developing its farming sector and related industries, according to a study by the University of the Thai Chamber of Com



The study found that the rice industry had been going nowhere during the past decade. While costs of production have increased gradually, the income of farmers has declined, despite subsidy programmes by many governments.
“The Thai rice industry is at risk of losing more market share and competitiveness in global trading, particularly in Asean markets. Farmers have always been hurt by unsustainable policies by each government, with no long-term measures to promote the growth of farming and trading,” said Aat Pisanwanich, director of the centre.
The average production cost for rice has increased considerably, from Bt4,835 per tonne in 2004 to Bt10,685 last year. Although the price of rice has also increased, farmers’ net profit has declined over the past 10 years.
The price of Thai rice was quoted at Bt6,741 a tonne in 2013, while last year it averaged Bt11,187. This implies that farmers enjoyed an average profit of Bt1,906 per tonne in 2004, but only Bt502 last year.
Meanwhile, the average yield for rice-growing in Thailand has changed relatively little. In 2004, the average yield per rai was 422 kilograms, while last year saw a 457kg/rai yield for main-crop rice. 
The average yield for second-crop rice declined during the period, from 680kg/rai in 2003 to 674 last year.
In stark comparison, the average yield per rai for Vietnamese rice is 1,200kg.
To urgently promote rice-industry development, Aat suggested the military-led government should launch a long-term plan for rice production and marketing. 
The government could subsidise farmers’ production costs by 20 per cent, which would help raise their income from the current Bt500 per rai to something in the region of Bt2,000-Bt3,000, he said. 
The subsidy could be in the form of coupons or credit for the purchase of fertiliser, seeds and agricultural equipment.
In order to ensure export competitiveness, the government and private enterprises should cooperate closely on developing rice farming and marketing, said the director, adding that the authorities must restructure the industry’s organisation and increase participation among farmers, millers and exporters.
Thailand should have a single overseas marketing team, involving representatives from government agencies and exporters, to promote Thai rice abroad.
In the long run, the government should promote farmers to rely less on chemical fertiliser, and support organic-rice production, or high value-added rice.
The study forecast that Thailand would lose a total of Bt87.5 billion (or Bt8.7 billon per annum) in rice export value through to 2022 if a serious effort is not made to develop the sector, with the country’s share of the world market dropping to 2.3 per cent – compared with 2.5 per cent last year. 
According to the centre, the Kingdom’s market share in Asia would slump from 1.3 per cent in 2013 to just 0.3 per cent in the next 10 years because other rice-exporting nations – mainly Vietnam, Cambodia and Myanmar – would play a more significant role in supplying the continental market. 
Market share for Thai rice shipments in Asean are also predicted to decline sharply, from 1.4 per cent to 0.7 per cent, while sales to Europe would be unchanged at 1.4 per cent, those to the Middle East would increase from 5.6 per cent to 8 per cent, and exports to Africa would rise from 25.9 per cent to 30.1 per cent during the next decade.