CHAROEN Laothamatas, president of the Thai Rice Exporters Association, said yesterday that growng strength of the Thai currency has negatively impacted on the country’s exports of rice and other farm products such as rubber |sheet, tapioca and sugar. These products have 90 per cent local content, so the baht’s rise makes them more expensive than those of our competitors.
“The Thai currency has risen by 8.5 per cent against the US dollar, whereas the Vietnam dong has just risen 2 per cent agianst the greenback, resulting in Thai rice exporters losing market shares to their counterparts in Vietnam ,” he said.
Thai rice exports totalled 985,879 tonnes last month at a combined value of Bt15.1 billion, down 0.1 per cent and 2 per cent respectively from the figures in July.
Fall in exports of white rice and Thai Hom Mali, a fragrance rice, in August, contributed to the overall decline when compared with rice exports in the previous month. Export of Hom Mali dropped sharply by 39 per cent to 166,215 tonnes while limited demand also played a part in the export slide. White rice export dropped by 4 per cent to 394,542 tonnes during the month.
However, export of parboiled rice rose by 49 per cent to 395,160 tonnes, mainly due to the recent floods in Bangladesh affecting rice production in the country, but it is unusual, said Charoen.
Charoen has also expressed concern about the quality of Thai Hom Mali as Vietnam has been successful in developing new rice strains including fragrance rice. “We don’t have new rice strains but Vietnam has developed new variety that could be introduced to the global market, it is worrying for Thai rice exporters,” said Charoen.
Regarding to rising baht, Charoen said that many Thai rice exporters do not have the capacity to hedge against currency volatility due to the high fees charged by banks.
The Bank of Thailand’s Monetary Policy Committee meeting on Wednesday left its policy rate unchanged at 1.5 per cent although the Finance Ministry called for rate cut in order to weaken the baht.
“We can do nothing when the MPC did not take action ,we just try to tell the authorities that we have problems,” added Charoen.
In a related development, the Bank of Thailand has released its monthly economic report suggesting that the growth in August would continue.
BOT said exports rose by 15.8 per cent year on year or 12.7 per cent when taking gold out of the calculation. Exports of rice, rubber, and fruit increased when compared with the same month last year.
Exports of processed farm products such as sugar also increased. Other increasing exports are electronics and electrical appliance while petroleum-related products also rose in line with higher crude prices, said BOT.
Agriculture production rose 17.1 per cent during the month but a 16.4 per cent fall in prices have lowered the income of farmers. Non-farm income increased slightly but consumers remained cautious on spending with just a slight increase in the purchases of durable goods. The durable index expanded 3.2 per cent in August, representing a growth deceleration from last year.
The manufacturing production index expanded 3.7 per cent due to expansion in the production of cars, rubber products, electronics and petroleum-related products. Capacity utilisation was 63 per cent, compared with 61.4 per cent in July.
The service sector also rose when compared with last year. Indicators suggested expansion in whole sales, retail, transportation and communication. The number of tourist arrivals were estimated at 3.1 million, up 8.7 per cent , contributing to growth in the service sector, especially transport.
Private investment slightly increased from same month last year with the investment index rising 0.7 per cent.