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Exporters shift to non-Thai rice
Publication Date : 14-01-2013
Last year was the poorest on record for Thai rice exports and this year could be even worse due to high prices under the pledging scheme, which has ruined Thai rice's competitiveness in the world market.
"The more exporters take orders, the more they incur losses. Rice trading is now considered a 'sunset' industry because of the high costs, low margins and intervention by the government," Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said last week.
According to the association, exports of Thai rice, excluding white rice, plunged by 39 per cent last year to 5 million tonnes from 8.2 million tonnes in 2011. Jasmine rice was 1.8 million-1.9 million tonnes. Total exports reached 6.9 million tonnes last year, compared with 10.5 million tonnes in 2011.
Many exporters told The Nation their volumes and incomes dropped by an average of 20-30 per cent in 2012 and their performance this year would decline further because the high subsidy scheme has been extended.
To stay afloat, many exporters have shifted to trading rice from neighbouring countries, have set up rice trading businesses in other Asean countries or have even planned to downsize their business.
"Rice exporters have low margins and some ran losses because they accepted orders, despite facing losses, in order to keep their customers. Exporters cannot raise prices due to the high competition, but their costs have soared in line with the high pledging costs," Chookiat said.
Normally exporters make a profit by selling large quantities as the margin in the industry is very thin at less than US$5 a tonne. However, with the high cost of rice, exporters could not raise prices, so they had to shoulder the higher costs instead.
Only a few companies, which enjoy close connections with the government, can trade rice at a low cost and not suffer tremendously from the high pledging price, a source said.
Chookiat said it was the hardest year for Thai rice exporters because buyers in many countries were not interested in purchasing Thai rice any longer because the price was too high. Trading of white rice and parboiled rice was down severely last year because of the tough competition from rivals. Jasmine rice exports also faced difficulties because fragrant rice from Cambodia and Vietnam is much cheaper.
For instance, Thai jasmine rice is quoted at $1,100 a tonne, while Cambodia's fragrant rice is at $750 a tonne.
Vietnam's fragrant rice exports jumped from 300,000 tonnes a year to 750,000 tonnes last year.
Leading exporters' reflections
Wanlop Pichpongsa, deputy managing director of Capital Cereal, said the company's exports, mainly of white rice and parboiled rice, fell about 30 per cent to about 1.1 million tonnes last year because some customers could not accept the high price of Thai rice.
The firm has had to invest in neighbouring countries to maintain its rice trading business in the Asean region.
Samphan Jantrakul, rice export manager at Toumi Intertrade, said his firm's exports plunged from 250,000 tonnes in 2011 to 200,000 tonnes last year.
He said exports to every market dropped last year, particularly to the European market. The firm expects lower volume this year since the government will continue its high pledging price and hold huge stockpiles.
Vuttiphol Wanglee, assistant to the managing director of Chaitip, said the company's exports dropped 19 per cent to 25,000 tonnes.
Chaitip expects flat sales or lower shipments this year. The firm has tried promoting rice under its own brand in overseas markets.
The survey found that exports of Asia Golden Rice Co, one of Thailand's biggest exporters, declined from 1.9 million tonnes in 2011 to 1.19 million last year. The company has struggled to retain its customer base by trading rice from other countries such as Vietnam and Pakistan.
Shipments to customers abroad of Thai Fa, another major rice exporter, also dived from 350,000 tonnes in 2011 to only 120,000 tonnes last year.