Kingdom regaining rice crown

Thailand is set to regain its crown as the world’s No-1 rice exporter, but the consequences of the populist pledging policy of the previous government are still hampering the recovery of the sector, the country’s leading exporter of parboiled rice told a major international conference yesterday.

Vichai Sriprasert, president of Riceland International, cited a shortage of dock workers and relatively high export prices – due to too many millers competing for supply from farmers – as problems holding back the industry’s return to its full export potential.

 Speaking at the three-day “Global Rice Market and Trade Summit”, arranged by the International Rice Research Institute (IRRI) in Bangkok, he said the rice-pledging scheme had left the country with 18 million tonnes of stockpiled rice, which must either be exported or consumed domestically before it turned rotten. However, the current shortage of stevedores, resulting from a lower volume of rice exports when the costly scheme was still in effect, has contributed to recent port delays, he told delegates.

Vichai expects the Kingdom to ship around 10 million-12 million tonnes of rice this year, which would make it the world’s biggest exporter of the grain once again, but overseas shipments could be even higher – but for the shortage of dock workers.

Last month alone, shipments of around 500,000 tonnes were delayed, mainly due to this factor, he added.

“Thai rice is selling like crazy since we regained our price competitiveness, but we cannot deliver to [meet] demand because of the sins committed by the previous government in the past two to three years,” he said.

“We have exported 30-40 per cent less than what we can, due to the rice-pledging scheme, and this has led to a shortage of stevedores, many of whom previously fled the industry due to a lack of jobs – and this problem has resulted in a bottleneck for the export of rice at the moment,” he said. 

Meanwhile, Vichai said the price of Thai rice, which was now cheaper than that of Vietnam, was still higher than what it should be due to millers increasingly competing for supply.

This has been caused by the same populist policy, as more millers entered the market during the period when the “disastrous” subsidy scheme was implemented, he explained.

He said the number of millers had increased over the past two to three years as they had been able to profit from and take advantage of the corruption that surrounded the “price-distortion scheme”, and now there were three times more millers than needed for the overall supply of rice.

In other news, Samarendu Mohanty, head of the Social Sciences Division at the IRRI, told the summit that cyclone Hudhud had damaged around 500,000 hectares of rice fields in India and that this, along with other effects from drought and flood problems in the previous growing season, had lowered the country’s rice production to about 100 million tonnes this year. India is also likely to export less next year, due to the expected increase in competition from Thailand, he added.

India produced 106 million tonnes of rice last year, and normally exports around 10 million tonnes per year. While the export amount is expected to be in this region this year, it could fall to around 7-8 million tonnes in 2015, since Thailand is going to find a way to offload its 18 million tonnes of overstock, said Mohanty.

Meanwhile, the effect of the Ebola epidemic in Guinea, Liberia and Sierra Leone will have damaged India’s rice exports more than Thailand’s, since India supplies 70 per cent of the 900,000 tonnes imported annually by the three countries, 

The Commerce Ministry’s third auction for 207,000 tonnes of rice attracted many traders offering good prices, encouraging  the ministry to continue with the fourth bidding next month.