Thursday, October 7, 2010

Thailand's no.1 rice position under threat

Taken from Bangkok Post:

Thailand's position as the world's leading rice exporter will come under threat from Vietnam in the next 10 years.

Vietnam's rice exports are expected to average 7.5 million tonnes annually, while Thailand's will remain around 8.6 million tonnes in that period, said the Center for International Trade Studies at the University of the Thai Chamber of Commerce.

Vietnam's rapidly increasing rice exports are attributed mainly to relatively cheap prices and improved quality.
The UN Food and Agriculture Organisation predicts Thailand will ship about 10 million tonnes of rice this year, with Vietnam exporting 6 million tonnes.

Aat Pisanwanich, director of the centre, said Thailand needed to improve its competitiveness, particularly in the Asean market, where Vietnam has a 59.9% share and Thai rice represents 39.6%.

The centre's latest study shows Thailand cannot compete with Vietnam in rice exports because of 10 factors including lower productivity, higher production costs, lower prices and fragmented marketing.

Vietnam's rice productivity in the current season averages 862 kilogrammes per rai, the highest rate in Asean, while Thai rice productivity averages only 448 kg per rai, lower than that of Cambodia, Laos and Burma. Thai productivity is also well below the world average of 680 kg.

The study found that production costs of Vietnamese rice at Can Tho, 169 kilometres from Ho Chi Minh City, were 4,979 baht per rai in 2008, while Thai production costs in Ayutthaya province were as high as 5,800 baht a rai.

More importantly, Vietnam encourages its farmers to cut the use of chemical fertilisers, pesticides and rice seeds, while its government has extended co-operation with neighbouring countries by, for instance, setting up the Cambodia-Vietnam Food Co (Cavifoods) in Cambodia to operate a comprehensive rice business. It plans to expand the joint venture to Burma.

Mr Aat said the Vietnamese government had also cut farmers' production costs with policies such as subsidising loan interest for buying raw materials and equipment. It tries to ensure its farmers enjoy profits of at least 30% of production costs.

Vietnam has established a rice-trading market in Hau Giang province, set up a large warehouse covering 100 rai in Vinh Long province and extended partnerships with several countries to set up warehouses.
As well, it has only one marketing team for two state enterprises.

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