Vietnam Poised To Topple Thailand As World's Largest Rice Exporter

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TOP RICE EXPORTER

VN poised to topple Thailand

Petchanet Pratruangkrai

The Nation

Vietnam will eclipse Thailand as the world's biggest rice exporter this year as the government's pledging scheme artificially inflates Thai prices, exporters predicted.

The Thai Rice Exporters Association projects exports will drop to 6.5 million tonnes - their lowest level in a decade - this year. The country's share of the global market will fall to 20-25 per cent from 30.2 per cent last year, it said.

Other negative factors facing Thai rice exports include an expected increase in shipments from India as export quotas there expire in February; Vietnam's announcement that it would double jasmine rice exports to 800,000 tonnes this year; an increase in the number of countries exporting rice, including Brazil and Uruguay; Cambodia's projection that it will export 1 million tonnes this year; and an acceleration in exports from Burma, particularly of parboiled rice.

A few years ago, concerned private-sector groups had warned the government that there was a risk Thailand would lose its No 1 position if the government continued to subsidise rice prices, creating unreasonably high prices both domestically and for export.

Defending the policy, Deputy Prime Minister and Commerce Minister Kittiratt Na-Ranong said yesterday that he did not believe rice exports would drop to 6.5 million tonnes. He insisted the government would not revise the rice-pledging scheme, because demand for Thai rice in the world market remained high.

"We believe in our bargaining power and have great confidence in the quality of Thai rice, which brings a high price, so Thailand should not worry about what export volume our rivals can achieve. Buyers will still have to buy Thai rice," Kittiratt said.

Thai exporters do not appreciate the country's bargaining power, he said. He also pointed out that Thai rice production was damaged by last year's floods, and insisted that exports by India will not affect Thailand's exports.

Exporters association president Korbsook Iamsuri said yesterday there is a strong possibility that Thailand will lose its No 1 ranking because the pledging policy was making Thai rice uncompetitive.

"Thai prices are too high compared with those of our rivals. The government's inflexibility in terms of adjusting the pledging project in accordance with the changing trading environment after India announced a return to exports has caused difficulties for Thai rice exports," she said.

The government will lose several billion baht through the price-subsidy programme, Korbsook said, adding that it will create a domino effect as farmers grow rice they cannot sell.

The total estimated export volume of 6.5 million tonnes of rice this year represents a drop of 38.1 per cent from last year's 10.5 million tonnes. Of the total exports this year, white rice is expected to account for 3 million tonnes, jasmine rice 2 million tonnes, parboiled rice 1 million tonnes, and other grains, sticky rice and Pathumthani Rice the remainder.

Chookiat Ophaswongse, honorary president of the association, said the government should revise its pledging policy in accordance with the current trading situation. He advised the government to turn back to a price-guarantee subsidy rather than proceed with the rice-pledging programme. A price guarantee would set a suitable price for Thai rice and ensure that farmers benefit, he said.

"Thailand accounts for only 7 per cent of global rice production; the country will not be able to set the price of rice and direct global trade as the government expects," he said.

Somkiat Makcayathorn, who sits on the association's board of directors, said association officials had tried to seek an appointment with Kittiratt, but were ignored. The private sector wants the government to find efficient ways to promote Thai rice exports, Somkiat said.

Association vice president Charoen Laothamatas said Thai jasmine rice exports could drop to 1 million tonnes this year due to expected price increases. Although the pledging project has not yet driven up the price of jasmine rice to US$1,300 (Bt41,366) per tonne as projected, the current trading price of $1,000 has reduced Thailand's competitiveness; Vietnam's price has been quoted at $700 per tonne.

-- The Nation 2012-01-17

[waza]

Looks like its building up to the perfect financial storm for Thailands economy. With the floods having a dramatic effect on Thailands agricultural, tourist and manufacturing industries. The continuing economic fallout from the GFC, while still carrying the debt burdon of the 97 crash, the expenditure required for the current governments populist policies and a 20% corruption surcharge. It seems Thailands economy is in for a wild ride.

[OzMick]

"Buyers will still have to buy Thai rice," Kittiratt said..................after everybody else's rice has been sold. Good luck with that.

[REM]

"Buyers will still have to buy Thai rice," Kittiratt said..................after everybody else's rice has been sold. Good luck with that.

Agreed. After everyone has bought (and eaten) the other rice, they will be full and Thai rice will sit on the shelf of the store!

You didn't have to be an expert to see this comming though. Artificially inflated prices, people who demand higher prices for supplying who don't realize that means a higher retail price, which means lower demand. Simple supply and demand at work here.

The world markets don't work like the fledgling Thai markets. I've never heard anyone requesting Thai rice outside of Thailand. People like jasmine rice, not Thai rice. Vietnam will now sell jasmine rice cheaper than Thailand. If they lower the price of Thai rice, then that will be passed straight to the Thai farmers, and there will be riots in the streets. Say bye bye number one!

[stickyrice2000]

When I bought the rice in the supermarket, I did not even look to see if it was from Thailand or Vietnam. The cheaper one will have my money.

[Reasonableman]

My impression is that Vietnam wishes to topple Thailand's predominance in the region on many fronts. Rice is but one of them. Thailand should not be complacent, as Vietnam is highly motivated, competitive, and gaining socio-economic ground rapidly.

[kurnell]

Been eating rice for 40 years and still can't taste the difference between jasmine and whatever the other types are.

[chooka]

Will not just topple Thailand in rice exports, Vietnam is becoming a destination of choice for tourism in S/E Asia as well. Cheap flights, accomadation and attractions. The country has everything that Thailand has with less scams and 1/2 the price. Whilst the rest of S/E Asia is paddling down stream with the current, Thailand is paddling up stream with one paddle. Time to turn around and go with the flow.

[lovelomsak]

In my humble opinion this is a none issue. Thailand will be the major buyer of Vietnam rice and sell to the rest of the world. Vietnam and Thailand will deal in baht which will be to the advantage of both countries for asian trade. Thailand will simply be in control of the rice trade for asia.

[MikeOboe57]

In my humble opinion this is a none issue. Thailand will be the major buyer of Vietnam rice and sell to the rest of the world. Vietnam and Thailand will deal in baht which will be to the advantage of both countries for asian trade. Thailand will simply be in control of the rice trade for asia.

So you think Vietnam will obediently sell their rice at USD 700 to Thailand and the clever Thais will sell on the same rice netting a USD 300-600 profit per metric ton, probably relabelling it as a high quality "Thai Product"?

Who will buy Vietnamese rice he can get in the country of origin at USD 700 from a Thai company at USD 1000-1300? This will only work on the assumption that all farangs are idiots.

The Thai rice scheme is a great opportunity - for the competition.

[Reasonableman]

In my humble opinion this is a none issue. Thailand will be the major buyer of Vietnam rice and sell to the rest of the world. Vietnam and Thailand will deal in baht which will be to the advantage of both countries for asian trade. Thailand will simply be in control of the rice trade for asia.

Why am I always suspicious when people say things are simple? Why on earth do you think Vietnam, a fierce competitor, will allow Thailand to monopolize its rice trade? Or perhaps you were being facetious.... ;-)

[Reasonableman]

Will not just topple Thailand in rice exports, Vietnam is becoming a destination of choice for tourism in S/E Asia as well. Cheap flights, accomadation and attractions. The country has everything that Thailand has with less scams and 1/2 the price. Whilst the rest of S/E Asia is paddling down stream with the current, Thailand is paddling up stream with one paddle. Time to turn around and go with the flow.

Don't rely on the Mekong, you'll soon need to be paddling flat out, even downstream! 8-]

[waza]

Will not just topple Thailand in rice exports, Vietnam is becoming a destination of choice for tourism in S/E Asia as well. Cheap flights, accomadation and attractions. The country has everything that Thailand has with less scams and 1/2 the price. Whilst the rest of S/E Asia is paddling down stream with the current, Thailand is paddling up stream with one paddle. Time to turn around and go with the flow.

Don't rely on the Mekong, you'll soon need to be paddling flat out, even downstream! 8-]

The Vietnamese rice industry relies on the Mekong.

[bigbamboo]

"Buyers will still have to buy Thai rice," Kittiratt said..................after everybody else's rice has been sold. Good luck with that.

Agreed. After everyone has bought (and eaten) the other rice, they will be full and Thai rice will sit on the shelf of the store!

You didn't have to be an expert to see this comming though. Artificially inflated prices, people who demand higher prices for supplying who don't realize that means a higher retail price, which means lower demand. Simple supply and demand at work here.

The world markets don't work like the fledgling Thai markets. I've never heard anyone requesting Thai rice outside of Thailand. People like jasmine rice, not Thai rice. Vietnam will now sell jasmine rice cheaper than Thailand. If they lower the price of Thai rice, then that will be passed straight to the Thai farmers, and there will be riots in the streets. Say bye bye number one!

The keyword here as you rightly say is 'jasmine'. In America they even sell 'jazzman' rice to the unsuspecting locals!

[Bakseedaa]

And while everyone is looking the other way.... Burma will overtake everyone.... They already sell so much rice in Bangladesh and India... and China, and the Burmese hate Thailand with a grudge... Watch this space..!

[taichiplanet]

saw a news piece on TV about 3 months ago (can't remember what channel) about a Agricultural Trade Show in Cologne Germany. The Thai rice exporters were ringing their hands in despair as orders were way down due to the fact that Indian rice was about 30-40% cheaper.

[lovelomsak]

In my humble opinion this is a none issue. Thailand will be the major buyer of Vietnam rice and sell to the rest of the world. Vietnam and Thailand will deal in baht which will be to the advantage of both countries for asian trade. Thailand will simply be in control of the rice trade for asia.

Why am I always suspicious when people say things are simple? Why on earth do you think Vietnam, a fierce competitor, will allow Thailand to monopolize its rice trade? Or perhaps you were being facetious.... ;-)

I like your suspicions. The reason Vietnam will sell to Thailand is they will want the baht more than the American dollar for trading within Asia. The strenght of the baht and stability, has more value for local trading (Asia) than the American buck.Vietnam is willing to let China and Thailand deal with the American dollar trading.The rice can still be shipped from Vietnam around the world but before it leaves the dock it will be owned by a Thai company.

[harryfrompattaya]

In my humble opinion this is a none issue. Thailand will be the major buyer of Vietnam rice and sell to the rest of the world. Vietnam and Thailand will deal in baht which will be to the advantage of both countries for asian trade. Thailand will simply be in control of the rice trade for asia.

You are right plus as a rice eater I can tell Thai rice is the best. Once again complaining about the price of any thing now it is rice you are claim to rich but you all all so cheap/

[Priceless]

In my humble opinion this is a none issue. Thailand will be the major buyer of Vietnam rice and sell to the rest of the world. Vietnam and Thailand will deal in baht which will be to the advantage of both countries for asian trade. Thailand will simply be in control of the rice trade for asia.

[buzz]

In my humble opinion this is a none issue. Thailand will be the major buyer of Vietnam rice and sell to the rest of the world. Vietnam and Thailand will deal in baht which will be to the advantage of both countries for asian trade. Thailand will simply be in control of the rice trade for asia.

Why am I always suspicious when people say things are simple? Why on earth do you think Vietnam, a fierce competitor, will allow Thailand to monopolize its rice trade? Or perhaps you were being facetious.... ;-)

I like your suspicions. The reason Vietnam will sell to Thailand is they will want the baht more than the American dollar for trading within Asia. The strenght of the baht and stability, has more value for local trading (Asia) than the American buck.Vietnam is willing to let China and Thailand deal with the American dollar trading.The rice can still be shipped from Vietnam around the world but before it leaves the dock it will be owned by a Thai company.

what a load of crap u speak - no idea ...

[buzz]

And while everyone is looking the other way.... Burma will overtake everyone.... They already sell so much rice in Bangladesh and India... and China, and the Burmese hate Thailand with a grudge... Watch this space..!

Spot on ... i listened to a press interview by a couple of the leading exporters recently ... Burma is the sleeper here ... they have a much better supply of water for growing rice (3 main rivers) compared to thailand, and it won't be long before they start exporting large quantities same like they did previously 40 years or so ago ...

This Thai gov't has totally stuffed-up Thai being the #1 rice exporter in the world for the past 30-40 years ... it should be not long before the new thai gov't rice monopoly policy takes affect - they will have stockpiles of overpriced rice (on the world markets) - which loses it's 'freshness' - and they will be telling the farmers not to grow so much ... what a joke they are !

Not mention, surely domestic prices will rise in the near future ... the 'real' poor will have to pay more tks to these idiots in power ...

Edited January 17, 2012 by buzz

[puipuitom]

Will not just topple Thailand in rice exports, Vietnam is becoming a destination of choice for tourism in S/E Asia as well.

When I compare Thai attitude with that of Vietnam, but especially China, I am astonished the Thais are still on ANY market. Being in food business since 1977, I see Thai sellers waiting at their e-mail inbox till an order drops in, NEVER any market update, price quotations ONLY when you specifically ask for, and close-to-zero activity to convince foreignt buyers to buy from THEM.

A far below standard product knowledge , never any idea about the products of their competitors, Thai or other S.E Asian or even other tropical origins, never check how much really can be loaded in a container ( is it 1700 crt or 1800 or even 1850crt.. why bother farang pays always, the heck to their transport costs)

Just see Myanmar, who is getting soon a lift in EU and other " Western" boycots: soon many tourists want to see the much nicer temples in Myanmar and not for the second or third time the new build Thai temples again, so tourism will go down too.The Th

ais are so narsissistic, they have no idea what is happening around and in the rest of the world.

For myself: over 90 % of my business already is switched away from Thailand.

[loong]

A few years ago, concerned private-sector groups had warned the government that there was a risk Thailand would lose its No 1 position if the government continued to subsidise rice prices, creating unreasonably high prices both domestically and for export.

I may not be an expert at economics, but I understood that when a government subsidises a commodity, it results in lower prices, not higher ??

All I know is that I am paying double the price for rice now compared to about 3 years ago. Are the farmers actually receiving any benefit from these higher prices?

[renaissanc]

We produce in Thailand two bio-fertilizers, which increase the rice crop yield over chemicals by 30% - 40% with costs lower by 40% and higher quality than chemical rice. Vietnam buys an ever-increasing amount of the Thai bio-fertilizers and the Vietnamese government encourages the practice of bio-chemical and organic farming. The Thai government has a perfect corrupt system for marketing chemical fertilizers and sprays and won't encourage bio-fertilizers. Vietnamese rice farmers plant more rice per rai.

Thaksin has promised the farmers an artificially high price on top of this in order to get back to Thailand.

You can see the awful mess that Thaksin is creating for Thailand.

[renaissanc]

Will not just topple Thailand in rice exports, Vietnam is becoming a destination of choice for tourism in S/E Asia as well.

When I compare Thai attitude with that of Vietnam, but especially China, I am astonished the Thais are still on ANY market. Being in food business since 1977, I see Thai sellers waiting at their e-mail inbox till an order drops in, NEVER any market update, price quotations ONLY when you specifically ask for, and close-to-zero activity to convince foreignt buyers to buy from THEM.

A far below standard product knowledge , never any idea about the products of their competitors, Thai or other S.E Asian or even other tropical origins, never check how much really can be loaded in a container ( is it 1700 crt or 1800 or even 1850crt.. why bother farang pays always, the heck to their transport costs)

Just see Myanmar, who is getting soon a lift in EU and other " Western" boycots: soon many tourists want to see the much nicer temples in Myanmar and not for the second or third time the new build Thai temples again, so tourism will go down too.The Th

ais are so narsissistic, they have no idea what is happening around and in the rest of the world.

For myself: over 90 % of my business already is switched away from Thailand.

Good point about tourism! When the hotels in Thailand start to have lower occupancies, The TAT will be scratching their heads and wondering why the tourists are going to Myanmar instead. I really think that they won't have a clue why it will be so.

[JSixpack]

You are right plus as a rice eater I can tell Thai rice is the best.

No.

[Sydebolle]

30 years ago the Vietnamese imported rice for their own domestic consumption. 30 years on they overrun the Thais because a) they got their act together and the government does not screw around with water management by the ignorant agriculture ministry and is, by all standards, considerably less corrupt. In 30 years Thailand will be behind Myanmar and Philippines combined but this is no longer my problem then.....

[Ulysses G.]

and is, by all standards, considerably less corrupt.

You must not have spent much time in Vietnam.

[baboon]

Will not just topple Thailand in rice exports, Vietnam is becoming a destination of choice for tourism in S/E Asia as well.  

When I compare Thai attitude with that of Vietnam, but especially China, I am astonished the Thais are still on ANY market. Being in food business since 1977, I see Thai sellers waiting at their e-mail inbox till an order drops in, NEVER any market update, price quotations ONLY when you specifically ask for, and close-to-zero activity to convince foreignt buyers to buy from THEM.

A far below standard product knowledge , never any idea about the products of their competitors, Thai or other S.E Asian or even other tropical origins, never check how much really can be loaded in a container ( is it 1700 crt or 1800 or even 1850crt.. why bother farang pays always, the heck to their transport costs)

Just see Myanmar, who is getting soon a lift in EU and other " Western" boycots: soon many tourists want to see the much nicer temples in Myanmar and not for the second or third time the new build Thai temples again, so tourism will go down too.The Th

ais are so narsissistic, they have no idea what is happening around and in the rest of the world.

For myself: over 90 % of my business already is switched away from Thailand.

Good point about tourism! When the hotels in Thailand start to have lower occupancies, The TAT will be scratching their heads and wondering why the tourists are going to Myanmar instead. I really think that they won't have a clue why it will be so.

Just jack up the prices. Problem solved....

[RogueLeader]

Myanmar isn't going to overtake Thailand for tourism any time soon: reports of the Tatmadaw's loosening of policy are largely exaggerated. Vietnam, however, might. No one country has everything that Thailand has: fantastic food, culture, amazing beaches, a liberal attitude to sex, reasonably priced booze and an easy smile, but all of these things are available in the rest of SE Asia. Myanmar's is (for the present) far more intact that Thailand's. Cambodia's and Vietnam's beaches have potential, Laos and Vietnam have cheaper and better beer (in fact, Laos has the only drink in SE Asia that I would even describe as 'beer', unless you count Vietnam's bia hoi) and Vietnam and Cambodia have easily-available sex, if not in quite as charming and open a manner as Thailand's.

Thailand is on the map, for now, but it's already gathering a reputation for being expensive largely, I suspect, due to price gouging by traders and rickshaw drivers and creeping privatisation*. In fact, it's approaching extra-Eurozone Eastern Europe in terms of travel costs.

*If you doubt this, compare prices for government bus and train services with prices for private alternatives. Then actually use some of those private alternatives. Your extra money buys you inconvenience and scams.