Exporters Shift To Non-Thai Rice: Special Report

[webfact]

SPECIAL REPORT

Exporters shift to non-Thai rice

Petchanet Pratruangkrai

The Nation

If last year was bad for the world's former No 1 exporter, this year could be even worse

BANGKOK: -- 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.

-- The Nation 2013-01-14

[Moruya]

You reap what you sow

[GentlemanJim]

Sad

Tragic

Devastating

Shameful

Embarassing

Idiotic

Criminal

[Ricardo]

In the medium/long-term, Unsustainable

For the rice-growing/exporting industry Damaging

For the privileged-few Lucrative

For the country, Disastrous

Yay !

Edited January 14, 2013 by Ricardo

[waza]

"Rice trading is now considered a 'sunset' industry because of the high costs, low margins and intervention by the government," Chookiat Ophaswongse

So when Thaksin has achieved his goal of bankrupting Thai Rice Exporters Association, members (Amart) and takes over. what will he do with 10 million tons of rotting rice?

Edited January 14, 2013 by waza

[siampolee]

Sad to see the price being paid by the Thai people for the benefit of a bail jumping convicted criminal,and his followers, namely his family and their brown nosing acolytes.

Well it was to be expected as the cost of financing a past and no doubt a further civil disorder campaign has to be recouped one way or another.

[Thai at Heart]

I thought the reason that foreign companies weren't allowed to operate in the agriculture industry was that Thai companies weren't ready or capable to compete, yet they are apparently large enough to set up operations in neighbouring countries.

Surely some contradiction here?

[MunterHunter]

"Rice trading is now considered a 'sunset' industry because of the high costs, low margins and intervention by the government," Chookiat Ophaswongse

So when Thaksin has achieved his goal of bankrupting Thai Rice Exporters Association, members (Amart) and takes over. what will he do with 10 million tons of rotting rice?

Give it to the people as a gift displaying his omnipotent status amongst all thai people.

[Skywalker69]

"Rice trading is now considered a 'sunset' industry because of the high costs, low margins and intervention by the government," Chookiat Ophaswongse

So when Thaksin has achieved his goal of bankrupting Thai Rice Exporters Association, members (Amart) and takes over. what will he do with 10 million tons of rotting rice?

Give it to the people as a gift displaying his omnipotent status amongst all thai people.

Thaksin don´t know the meaning of the word "give"

[MunterHunter]

Give it to the people as a gift displaying his omnipotent status amongst all thai people.

Thaksin don´t know the meaning of the word "give"

Maybe he plans to sell it to the people at just below market rate (which is being inflated anyway) lol

[billd766]

But but but Thaksin promised it would be OK the same as he promised all Thais would be rich within 6 months of PTP taking power.

I haven't seen any farmers around here driving around in new Mercedes Benz or even old ones come to that.

[Thai Dreamer]

What does this mean: "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." ????

Are they getting free rice?

[TomTao]

The real price of popularism is being revealed bit by bit, by the time the people see the full cost as its effect becomes obvious to them and the country as a whole, the damage may be too much to reverse in the short term, I wonder who they will blame when it comes time to point fingers?

[scorecard]

The real price of popularism is being revealed bit by bit, by the time the people see the full cost as its effect becomes obvious to them and the country as a whole, the damage may be too much to reverse in the short term, I wonder who they will blame when it comes time to point fingers?

There is of course the possibility that it's all a long-term strategy of the 'get real rich real quick club':

- Drain off as much as you possibly can and quickly, and run up massive debt, then lose an election and pass the total mess to the opposition who cannot fix it all quickly and have to stop lots of populist items to try to fix the economy and pay off loans etc, then criticize the opposition for that, then reoffer popular policies and win and start draining it all again.

[dcutman]

What does this mean: "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." ????

Are they getting free rice?

I believe this is what it means.

BANGKOK: -- The opposition has established a link between the government's rice-pledging scheme and massive money laundering by producing evidence of a dummy company, individuals and old ghosts like President Agri Trading and Siam Indica, which could be found involved in non-existent rice deals.

In the latest deal, the Chinese firm paid Bt300 per sack of rice, rather than market price of Bt1,500-Bt1,555, Varong said. Taking this into account, the men in question would make a profit of Bt20 billion. Also, he said, the rice has not gone anywhere but is being stored in Siam President's warehouse in Phichit, he said. There are some 400,000 sacks of rice in the facility, collected between May 5 and July 16, he added.

[MunterHunter]

There is of course the possibility that it's all a long-term strategy of the 'get real rich real quick club':

- Drain off as much as you possibly can and quickly, and run up massive debt, then lose an election and pass the total mess to the opposition who cannot fix it all quickly and have to stop lots of populist items to try to fix the economy and pay off loans etc, then criticize the opposition for that, then reoffer popular policies and win and start draining it all again.

Do you see Thaksin or his Acolytes relinquishing power willingly? They would be thinking what money/scams they would be missing out on and then would have to spend vast amoutns of cash funding the next armed insurrection.

Edited January 14, 2013 by MunterHunter

[bigbamboo]

Sad

Tragic

Devastating

Shameful

Embarassing

Idiotic

Criminal

What? Thaksin........ or his rice pledging scheme?

Edited January 14, 2013 by bigbamboo

[mic6ard]

I thought the reason that foreign companies weren't allowed to operate in the agriculture industry was that Thai companies weren't ready or capable to compete, yet they are apparently large enough to set up operations in neighbouring countries.

Surely some contradiction here?

Not really, I think that originally this was aimed at Europeans/US companies with higher efficiency and therefore would out compete the Locals. However these companies that went to set up operation outside are probably using the neighbouring countries, and therefore would possibly be more efficient than the locals. Myanmar for example, has just open up, a ripe target there I would think.

[siampolee]

GentlemanJim, on 2013-01-14 08:29:12, said:

Sad

Tragic

Devastating

Shameful

Embarassing

Idiotic

Criminal

What? Thaksin........ or his rice pledging scheme ?

Ne'er the twain could ever be separated., they are Siamese twins..

Edited January 14, 2013 by siampolee

[TheGhostWithin]

Not really, I think that originally this was aimed at Europeans/US companies with higher efficiency and therefore would out compete the Locals. However these companies that went to set up operation outside are probably using the neighbouring countries, and therefore would possibly be more efficient than the locals. Myanmar for example, has just open up, a ripe target there I would think.

I realise that you do not work for the Thai government, but are we in agreement here that the Thai government is therefore applying protectionist anti-competitive policies whilst expecting foreign governments to allow Thai companies to operate freely without penalty in their own countries? The same could be said for the purchase of assets of non-profit making nature.

No more Thai rice in any of my local Asian supermarkets anymore, it is all Vietnamese rice. Thai rice was all there was (except the "yuck stuff" for the Bangladeshis) up until 2-3 months ago. Shows you that such titles as "worlds biggest rice exporter" are given for skill and effort, not prowess and reputation.

And the Amart will not sell their rice to Thaksin, they will sell their assets internally, as they have in the Kingdom for as long as it has stood. A smart man never sells a gun to his enemy, nor his last bowl of rice to his enemies child, for that enemy will use the gun to shoot you, and that bowl of rice to ensure his child will live whilst our blood line fades into the pages of the past.

[Thai at Heart]

I thought the reason that foreign companies weren't allowed to operate in the agriculture industry was that Thai companies weren't ready or capable to compete, yet they are apparently large enough to set up operations in neighbouring countries.

Surely some contradiction here?

Not really, I think that originally this was aimed at Europeans/US companies with higher efficiency and therefore would out compete the Locals. However these companies that went to set up operation outside are probably using the neighbouring countries, and therefore would possibly be more efficient than the locals. Myanmar for example, has just open up, a ripe target there I would think.

So are they big enough now to compete?

[GentlemanJim]

What does this mean: "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." ????

Are they getting free rice?

I believe this is what it means.

BANGKOK: -- The opposition has established a link between the government's rice-pledging scheme and massive money laundering by producing evidence of a dummy company, individuals and old ghosts like President Agri Trading and Siam Indica, which could be found involved in non-existent rice deals.

In the latest deal, the Chinese firm paid Bt300 per sack of rice, rather than market price of Bt1,500-Bt1,555, Varong said. Taking this into account, the men in question would make a profit of Bt20 billion. Also, he said, the rice has not gone anywhere but is being stored in Siam President's warehouse in Phichit, he said. There are some 400,000 sacks of rice in the facility, collected between May 5 and July 16, he added.

You know, sometimes when I read stories like the OP and the post above, I feel glad that living here I can choose to pull my ace out of my sleeve, and that is not to turn the news on TV, don't buy a paper, turn off the computer and live in the happy ignorant bliss that I do.

[TheGhostWithin]

You know, sometimes when I read stories like the OP and the post above, I feel glad that living here I can choose to pull my ace out of my sleeve, and that is not to turn the news on TV, don't buy a paper, turn off the computer and live in the happy ignorant bliss that I do.

Jim,

I think quite a few Thais spend a lot of their life in that same mode. Unfortunately it is the same reason the country is the way it is: lack of practical understanding of ensuring things are done in the best interests of the country.

Sadly for us, your practical knowledge does not count: you were born speaking the wrong tongue and without a master.

Edited January 14, 2013 by TheGhostWithin

[Locationthailand]

It all gets down appears to breaking down the growers and buying them out at gutter sale pricing. The hidden agenda by criminal cronies are fairly transparent. Use the population's money by creating populist policies with some creative accounting that only benefits an inner circle and then profit by an oligopoly. But at this point Thailand has shot itself in the foot as far as exports are concerned and allowed competition in. The other countries must be laughing all the way to the bank.

[scorecard]

You know, sometimes when I read stories like the OP and the post above, I feel glad that living here I can choose to pull my ace out of my sleeve, and that is not to turn the news on TV, don't buy a paper, turn off the computer and live in the happy ignorant bliss that I do.

Jim,

I think quite a few Thais spend a lot of their life in that same mode. Unfortunately it is the same reason the country is the way it is: lack of practical understanding of ensuring things are done in the best interests of the country.

Sadly for us, your practical knowledge does not count: you were born speaking the wrong tongue and without a master.

IMHO the first sentence is the reality of the situation:

"I think quite a few Thais spend a lot of their life in that same mode. Unfortunately it is the same reason the country is the way it is: lack of practical understanding of ensuring things are done in the best interests of the country."

It seems to divide into two camps:

- A large percentage of farmers and their families (with all respect to them) who are easily manipulated mostly because they are simply unaware of the big picture.

- A very large percentage of those in paid regular employment, who spend most of their time thinking and worrying about surviving tomorrow, they simply don't have the luxury of being able to set out a plan for next year, etc.

[kimamey]

What does this mean: "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." ????

Are they getting free rice?

I believe this is what it means.

BANGKOK: -- The opposition has established a link between the government's rice-pledging scheme and massive money laundering by producing evidence of a dummy company, individuals and old ghosts like President Agri Trading and Siam Indica, which could be found involved in non-existent rice deals.

In the latest deal, the Chinese firm paid Bt300 per sack of rice, rather than market price of Bt1,500-Bt1,555, Varong said. Taking this into account, the men in question would make a profit of Bt20 billion. Also, he said, the rice has not gone anywhere but is being stored in Siam President's warehouse in Phichit, he said. There are some 400,000 sacks of rice in the facility, collected between May 5 and July 16, he added.

You know, sometimes when I read stories like the OP and the post above, I feel glad that living here I can choose to pull my ace out of my sleeve, and that is not to turn the news on TV, don't buy a paper, turn off the computer and live in the happy ignorant bliss that I do.

With over 3000 posts?

I see you on here all the time. I hope you aren't leaving us. I'll miss you and for once I'm not being sarcastic.

[hellodolly]

"Rice trading is now considered a 'sunset' industry because of the high costs, low margins and intervention by the government," Chookiat Ophaswongse

So when Thaksin has achieved his goal of bankrupting Thai Rice Exporters Association, members (Amart) and takes over. what will he do with 10 million tons of rotting rice?

I think he still has plans to trade chickens for jets and will use the rice to raise chickens.

Speaking of corruption the article says.

"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."

[GentlemanJim]

What does this mean: "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." ????

Are they getting free rice?

I believe this is what it means.

BANGKOK: -- The opposition has established a link between the government's rice-pledging scheme and massive money laundering by producing evidence of a dummy company, individuals and old ghosts like President Agri Trading and Siam Indica, which could be found involved in non-existent rice deals.

In the latest deal, the Chinese firm paid Bt300 per sack of rice, rather than market price of Bt1,500-Bt1,555, Varong said. Taking this into account, the men in question would make a profit of Bt20 billion. Also, he said, the rice has not gone anywhere but is being stored in Siam President's warehouse in Phichit, he said. There are some 400,000 sacks of rice in the facility, collected between May 5 and July 16, he added.

You know, sometimes when I read stories like the OP and the post above, I feel glad that living here I can choose to pull my ace out of my sleeve, and that is not to turn the news on TV, don't buy a paper, turn off the computer and live in the happy ignorant bliss that I do.

With over 3000 posts?

I see you on here all the time. I hope you aren't leaving us. I'll miss you and for once I'm not being sarcastic.

Nah! I just leave the comp on in the office 24/7 . I can't leave here, where else would I find such wit and repartee as there is on TV.

[ratcatcher]

Here I am, the 30th poster, and yet not one supporter of this amazing scheme has dropped by to praise the creator and mastermind behind it.

How can this be?

Please, someone from the other side of the fence please lend a hand here and justify this madness.

[scorecard]

Here I am, the 30th poster, and yet not one supporter of this amazing scheme has dropped by to praise the creator and mastermind behind it.

How can this be?

Please, someone from the other side of the fence please lend a hand here and justify this madness.

Where's righteous? Where's hugo6? Where's g'kid?