Thailand Hommali Rice Faces Competition from Cambodia Jasmine Rice in AEC, Say Thailand Exporters

[geovalin]

Thailand rice exporters are concerned that free trade under the ASEAN Economic Community (AEC) may increase competition for Thai Hommali fragrant rice due to the entry of less expensive fragrant rice from neighboring countries such as Cambodia, according to local sources.

The AEC is likely to be formed in late 2015. It aims to integrate all the economies in the ASEAN region and allow free movement of goods, services, investment, skilled labor and free flow of capital among members. Thailand rice exporters say that the economic integration may lead to an influx of Cambodian aromatic rice into Thailand and may eventually hurt Thailand’s fragrant rice sector if Cambodian fragrant rice gains popularity among Thai consumers.

Thailand rice exporters are worried because Cambodian jasmine rice, phka malis in Khmer, is getting widely recognized in the world market after winning world's best rice award for two consecutive years in 2012 and 2013. However, Cambodian local operators lack experience in marketing and exporting rice. In such a situation, the AEC would offer an opportunity for the Cambodian exporters to find good markets for their rice. As of today, Cambodia phka malis fragrant rice is quoted around $890 per ton, down about 6% from Thai Hommali’s export price of around $950 per ton. Vietnam jasmine rice is quoted much lower at around $505 per ton.

The Honorary President of the Thailand Rice Exporters Association (TREA) says that Thailand rice producers have to step-up efforts to develop and upgrade rice varieties, especially Thai Hommali rice, after the government's rice-pledging scheme has undermined the Thai rice market over the last three years. He says that Thai Hom Mali rice has declined in quality partially due to the pledging scheme. Farmers ignored improving quality of their grains due to the government scheme, he adds. He also warned that farmers should stop mixing cheap Pathum fragrant rice varieties with more expensive Hommali rice.

The AEC is also expected to provide an opportunity for Thai rice millers to set up rice mills in Cambodia, which lack sophisticated rice mills. Local sources say that several Thai rice millers are planning to set up rice mills in Cambodia to take advantage of lower production costs there.

http://oryza.com/news/rice-news/thailand-hommali-rice-faces-competition-cambodia-jasmine-rice-aec-say-thailand