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Source: www.asiaecon.org |

THAILAND'S RICE EXPORTS


Recent figures show that Thailand's rice exports are likely to miss their target in 2009. According to the Thai Rice Exporters Association, rice exports dropped by 38% year-on-year in January to about 630,000 tonnes and are expected to drop further in February. This figure is far below the target of an average of 708,333 tonnes per month to achieve an overall 8.5 to 9 million tonnes of exported rice in 2009. The drop was blamed on weak demand and the relatively high price of Thai white rice. The current high prices of Thai white rice are sustained by government intervention in the domestic market.


Recent figures show that Thailand’s rice exports are likely to miss their target in 2009. According to the Thai Rice Exporters Association, rice exports dropped by 38% year-on-year in January to about 630,000 tonnes and are expected to drop further in February. This figure is far below the target of an average of 708,333 tonnes per month to achieve an overall 8.5 to 9 million tonnes of exported rice in 2009. The drop was blamed on weak demand and the relatively high price of Thai white rice. The current high prices of Thai white rice are sustained by government intervention in the domestic market.

Thailand’s rice industry has historically been one of the more successful ones among other rice-producing and exporting countries. It has a tradition of producing high-quality, long-grain, white rice, and selling it at a premium price in the world market. Before World War II, rice was mainly produced by peasant farmers in central Thailand along the Chao Phraya River delta. Most of these peasant rice farmers owned their land and were well protected by the government from aristocratic landlords and urban merchants who wanted to control the rice industry. As a result, the country became relatively self-sufficient in their rice supplies. Overall rice production in the past was modest, enough for the peasants to survive on.

Starting in the 1950’s, the Thai government enacted policies to increase rice production. With the help of international institutions such as the World Bank, they invested in irrigation, infrastructure, and other projects that would eventually expand the area of rice paddies and substantially increase rice production. In particular, production of rice was increased in northeast Thailand after new infrastructure connected the region to the shipping cities on the coast. The Thai rice industry also took advantage of the so-called green revolution occurring among the world’s agricultural industries. Rice farmers and exporters were able to use new rice varieties, strains, fertilizers, and other technological advances to boost rice production and exports. By the mid-1960’s, Thailand had become the world’s leading rice exporter and had maintained that status for decades, exporting more rice than Vietnam, India, the U.S. and China. In addition, Thailand is one of the top producers of rice, placing sixth behind China, India, Indonesia, Bangladesh and Vietnam.

In 2008, Thailand’s rice industry enjoyed a “golden year”, as described by Apichart Jongskul, the Secretary-General of the country’s Agricultural Economics Office. The lack of natural disasters and sufficient water supply helped domestic production of rice. Moreover, increasing demand from emerging markets, high global rice prices and the absence of competitors pushed Thailand’s rice export revenues to high levels.

Thai rice export prices sky rocketed in 2008, reaching over $1,080 per tonne last May, as global demand for rice increased and their main competitors, India and Vietnam, cut back on their rice exports to satisfy domestic demand. Over 10 million tonnes of rice were exported in 2008.

According to the Thai Rice Exporting Association, sales of rice exports rose by 53 percent in the first nine months of 2008 to an average of 19,920 baht per tonne, compared to 13,009 baht in 2007. The 2008 export shipments earned the association about 15 million baht.

But the auspicious conditions of 2008 seem to have disappeared in 2009. Thai rice exports are expected to drop this year because of a decrease in global demand for rice, as countries struggle to pay for imports amid the global economic downturn. In addition, India’s and Vietnam’s re-entrance to the rice export market will cut into Thailand’s rice export revenues, especially because India and Vietnam offer rice exports at lower prices.

Yet despite the gloomier predictions for the industry’s performance this year, it is evident that the Thai rice industry will continue to be productive and profitable for many years to come, so long as they continue to improve their ways of producing and exporting rice.

Source: AsiaEcon.org
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Source: www.asiaecon.org |


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