By Erich Parpart
"Such a foundation has never existed in Thailand," Nipon Poapongsakorn, an economist and distinguished TDRI fellow, said yesterday.
"The institute will be in charge of maintaining Thailand’s share of the global market by providing market intelligence to operators, researching advanced strains to increase export channels and draw up a mid- to long-term policy regarding the development of exporting," he told a rice seminar arranged by the institute.
The proposal is expected to be forwarded – after further discussion with the private sector, which is in general agreement with it – to the National Rice Policy Committee (NRPC) in coming weeks and the Cabinet this or next year.
"Even though the best structure for the institute is under a public structure as proven in other countries’ experience, the best way for such an institute to be effective in Thailand is for it to be an independent foundation.
"Then it can be kept away from the hands of politicians, who always look to use the rice policy to promote their popularity, as seen in the past," he said.
The RMDI will require about Bt2 billion to support its first six years with expected expenses of Bt60 million per year, but the return on investment is expected to reach Bt16.83 billion in the first few years of its existence.
The Agriculture Ministry’s Bt500 million rice export quota to Europe can be allocated as seed funding in the first year, followed by annual funding of about Bt300 million for the second to sixth year.
To help with the operating feesof the institutionwhich expected to generate around Bt65.5 million- Bt131 million per year for the institution, 10 per cent of the 0.75-per-cent withholding tax Thai rice exporters have to pay the Customs Bureau can also be allocated.
"The investment is cheap but the return is huge as targeted research and correct market information will allow the country to export more rice with better quality, more varied strains and grades of rice along with new rice products to both mass and premium markets," he said.
The Thai Rice Exporters Association expects rice exports this year to fall to 8 million-8.5 million tonnes from 10.96 million tonnes last year, since competition in the world market has increased from a higher supply of rice while many importing nations are struggling with weak economies.
Thai rice is trading at about US$430 a tonne, while Vietnam’s is quoted at $360 a tonne.
Charoen Laothamatas, president of the association, agreed with the need for such an institute to cope the heightened competition.
The most important thing is a clear, continuous and long-term strategy that will help with the development of Thai rice and its market, Charoen said.
"Vietnam is catching up because they have a continuous strategy and they do research on many types of strains and various grades, which allows them to produce quality rice at cheaper prices and penetrate the mass market more than Thai rice, which is concentrated in the premium market," he said.
"The problem is that every time there’s a new government, the rice policy will be changed by politicians who have no experience in the matter but are in control of the regulations.
"So I agree with the setting up of the RMDI and the most important thing is the creation of a continuous and long-term strategy without interference from politicians," he said.
For example, Vietnam has used Thai jasmine rice as a prototype and has developed a strain that might have less quality but is still good enough to penetrate the US market.
"It can also penetrate the pocket of lower-income earners in the US who are willing to pay a little bit more for better quality rice since they cannot afford Thai jasmine rice."
Manat Kitprasert, president of the Thai Rice Mills Association, said the RMDI will help small and medium rice operators by providing more correct and useful information on the export situation.
However, the institute should also be allowed to include its representatives on the NRPC so that they can influence some of the decision-making regarding the nation’s rice policy, he added.