The fierce price competition makes the Thai rice industry hard

According to Mr. Kriangsak, the price of 5% broken rice and sticky rice is very low. Jasmine jasmine rice in the crop will be exported and old rice will be consumed domestically. Local media quoted Kriangsak as saying that Jasmine rice exports are expected to fall to 1.2 million tons, while the total rice exports will be reduced to 8 million tons from the annual average of 9, 5-10 million tons or 10-11 million tons of the last few years.

The impact of the strong baht

The strong baht has kept Thailand's rice export price, the second-largest rice exporter in the world after India, much higher than other Asian rice export centers. This can reduce the needs of the customers. Thailand is losing market share before its major competitor, Vietnam, due to the appreciation of the baht. The currency rose the most among Asian currencies, reaching its highest level in more than six years in July.

In September, the price of Thai 5% broken rice decreased from 410 – 422 USD / ton to 400 – 418 USD / ton, while the price of 5% broken rice of India increased from 366 – 374 USD / ton to 373 – 379 USD / ton, and the price of the same kind of rice in Vietnam decreased from 325-330 USD / ton to 325 USD / ton.

A trader said it is difficult to find new customers because prices are likely to continue to rise in the near future, mainly because of exchange rates and domestic supply concerns in the context of the country. facing the worst drought in a decade. According to this trader, from the beginning of the year until now, Thailand has only had relatively small transactions with regular customers.

The deal that Thailand signed with COFCO, a state-owned food trading group of China, the world's largest rice importer and the country's third-largest market, was suspended in 2015. stagnant due to the country's abundant rice supply. By the end of 2018, Thailand had exported 700,000 tons to China under this agreement, but since then there have been no new orders.

Kriangsak pointed out that the proportion of Thai rice in the global market is currently low due to cheaper prices of competing countries. In the highly competitive global market, Thailand's competing countries have chosen to offer cheaper prices to attract customers.

To solve this problem, Thailand may need to re-examine the entire rice export system. However, to do that, when looking back at market trends, quality and price direction, the problem is definitely production costs. Mr. Kriangsak also said that it is advisable to increase the quality of rice on the land area to meet demand, while looking for new markets for all types of rice.

According to the Honorary President of the Thai Rice Exporters Association, Chookiat Ophaswongse, many Thai rice exporters have suffered losses due to the country's baht appreciation, but are still trying to “hold on” to protect the market. part.

Output and exports declined

Rice exporters are concerned that low rainfall could affect the harvest until the government urges farmers to postpone planting schedules. The drought has affected more than a dozen provinces in Thailand's main rice-growing region in the north and northeast, where rainfall is the lowest in 10 years. The main planting season in Thailand starts in May, the beginning of the rainy season and harvest in August – October.

According to the Exporters Association Thai rice, this country in the first half of this year saw rice exports fall 19.6% over the same period last year. In the period from January to September 2019, Thailand exported 5.9 million tons of rice, showing strong competition from other rice exporting countries.

Rice exports of the country in 2019 are forecast to reach only about 8-8.1 million tons, down 3.5 million tons compared to 2018 and lower than the plan. According to Honorary Chairman of the Thai Rice Exporters Association, Chookiat Ophaswongse, the forecast is lower than the export target of 9 million tons of rice set for the year.

Thailand exported a total of 11.09 million tons of rice in 2018, down from 11.67 million tons in 2017. The country's rice export turnover in 2018 increased by 8.3% compared to 2017, reaching 5.61 billion USD. Export rice price reached an average of US $ 507 / ton in 2018, an increase of 14.1% compared to 2017. Export turnover this year is expected to reach about US $ 4.7 billion.

Normally, Thailand's rice exports are at an average of 10 million tons / year, of which white rice accounts for 50%. However, Thailand's export volume of white rice this year is forecast to be only at 3 million tons, down 35% from 5.49 million tons last year, as the baht continues to rise. making Thai rice more expensive than rice from other countries.

By the end of August 2019, the Thai Cabinet approved a 59 billion baht (more than US $ 1.94 billion) budget for price and subsidy programs for rice and palm oil. Of which, 13.3 billion baht for the rice price guarantee program, 21.4 billion baht for palm oil and 25 billion baht to subsidize production costs for rice growers.

TRMA President Kriangsak raised the question of whether the government's policy to support the production area, including rice farmers, would be sufficient to help the entire rice trading system. According to Mr. Kriangsak, millers are operating in a much weaker state than before and need to be cautious about the direction to maintain business in this situation of pressure.

According to VNA in Bangkok