Rice exports are projected to plunge to only 6.5 million tonnes this year, the lowest volume in a dozen years, because of uncompetitive prices.
"The price gap between Thailand and rice-exporting rivals has been widening because of the high pledging price and the baht's strength. Local exporters are having a tougher time competing with other rice growers, especially Vietnam, whose prices are lower by US$170 a tonne," Chookiat Ophaswongse, honourable president of the Thai Rice Exporters Association, said yesterday.
Local exporters have been forced to sell neighbouring countries' rice to ensure their survival, he claimed. This would re-emphasise Thailand's fall from the king of rice exporters to third place after India and Vietnam for the second year running.
The association has forecast that rice exports will slip to 6.5 million tonnes this year from 6.9 million tonnes last year. Export value would also be lower than last year's Bt147 billion because of the baht's appreciation.
Thai exports will also weaken further this year because world demand has not increased and India and Vietnam have plenty of rice to sell, it says. For instance, 5-per-cent Thai white rice is quoted at $550 a tonne, while the same category of Vietnamese rice goes for $375 a tonne.
Thai jasmine rice is quoted at $1,200 a tonne against Vietnamese fragrant rice's asking price of $500 a tonne.
The stronger baht has caused Thai rice to become too expensive. Exporters do not dare to quote prices because they would suffer huge losses, the association says.
According to the association, for every Bt1 of appreciation, the price of Thai white rice increases by $20 a tonne and for jasmine rice $40 a tonne.
Charoen Laothamatas, vice president of the association, said local exporters could not sell their Thai rice as usual because of the exorbitant price. Many of them have turned to trading cheaper rice from neighbouring countries such as Cambodia and Myanmar.
"It's the hardest time for rice exporters because of the high cost of rice and tougher competition. Exporters have been forced to trade other countries' rice, as every grain has been pledged to the government. This situation has gummed up the market mechanism," he said.
Commerce Minister Boonsong Teriyapirom said Thai rice exports would reach between 8 million and 8.5 million tonnes this year.
The baht's strength could threaten that forecast, so the government will closely monitor the moves of the Bank of Thailand to weaken the currency to help the export sector, he said.
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Article source: http://www.thethailandlinks.com/2013/05/09/high-prices-strong-baht-batter-exports/
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