Asia Golden Rice still looking overseas
Asia Golden Rice, the country's second biggest rice exporter, will maintain its focus on expanding overseas - particularly in Cambodia - this year, even though prices might tumble, as the government's pledging scheme has created artificially high costs.
The company has been venturing abroad for years, mainly in Asia. It is establishing a presence in Cambodia with a rice mill, which is planned to be completed within one-and-a-half years at a cost of more than Bt1 billion.
The investment in Cambodia is aimed not only at ensuring production but also at maintaining price stability in the rice market in the future. The company sees Burma as another country with investment potential.
President Sombat Chalermwutinan said last week that the company is operating in Cambodia under a joint venture with a local partner, with businesses covering the local market.
Last year, the company shipped about 18 million tonnes of rice, or 18 per cent of the country’s total exports, while the biggest exporter, Capital Rice, achieved 19 million tonnes.
Asia Golden Rice sells several varieties abroad, including jasmine, white, parboiled and broken rice. Africa is its largest overseas market with a 70-per-cent share, with the rest of its exports going to Asia.
Last year, Sombat set up a holding company called AGR Holding to oversee all subsidiaries – Asia Golden Rice, Thama Nuparb, Siam Healthy Oil, Siam Poly Sacks and companies that operate its rice mills, namely Siam Thanyachart, Sin Chai Sri, Ubon Thanyachart, Sin Udom Mongkol and Sub Kaset Siam.
The organisational restructuring allows the company to plan for future expansion, such as forming joint ventures with investors in Cambodia and other countries.
Sombat is worried that the government’s pledging scheme will distort the market and lead to export prices crashing this year. With the pledging rate set at Bt15,000 for paddy rice, Thai exports will cost US$800 (Bt25,400) per tonne compared with the market price of $420 for 5-per-cent white rice.
The world market is now facing tougher competition after India lifted its export ban. India’s rice stocks have hit a historic high of 30 million tonnes, although they targeted only 18 million-19 million tonnes.
“Thai exporters have to wait and see until next month whether India will further extend its export period. If it does, Thai rice will find it hard to compete against Indian rice,” he said.
If the government’s pledging prices remain unchanged, it will cause difficulties for Thai rice exporters.
The government’s rice-pledging scheme will expire at the end of next month. Exporters are closely eyeing the government’s next step, as the second crop will enter the market in March. However, jasmine rice will not come up during the period so its price should be revised down.
Thailand’s rice exports will reach 8 million tonnes this year compared with 10.5 million tonnes last year. However, the export situation in the second half of this year should be monitored closely, as that period would drive export volume, Sombat said.
The government has already stored 2 million tonnes of rice, which should be released soon to ensure warehouse space is available for the next harvest, he added.
