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Vietnam may replace Thailand as the biggest rice exporter in 2012

With the overly high export prices, and the recent big floods which affected 70 percent of the storehouses and processing workshops, Thai rice exporters are worried that the rice export volume of the country would fall by a half in 2012. If this occurs, the position of the Number One rice exporter would be transferred to Vietnam.

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Vietnam rice paddy field

According to the Thai Rice Exporters’ Association, by early December 2011, the country had exported 10.3 million tons of rice, an increase of 29.94 percent over the previous year. However, what worries them most is that the export has been slowing down recently.

With the overly high export prices, and the recent big floods which affected 70 percent of the storehouses and processing workshops, Thai rice exporters are worried that the rice export volume of the country would fall by a half in 2012. If this occurs, the position of the Number One rice exporter would be transferred to Vietnam.

The government plans to pay its farmers more than double the market value for rice. “We have been very concerned about this, mostly because this is going to affect [African] markets – definitely,” said Aliou Diagne, an economist with the Benin-based Africa Rice Center. USAID last month warned that prices were likely to climb 20 percent over the next three months, while others predict the greatest short-term impact has already been felt.

What happens next, economists say, depends on how Thailand implements the programme. In the long term, analysts said they expect it to encourage other countries to step up exports and thus dampen the price of rice – consumed by three billion people daily.

But some say what Thailand is doing is unsustainable, and doubt it will last long.

“This is going to be detrimental to the rice sector in Thailand, especially in the long term,”

said Concepción Calpe, a senior economist with the UN Food and Agriculture Organization FAO in Rome.

“They’re pricing themselves in a manner that doesn’t make them competitive.”

Vietnam rice paddy field

High rice price from Thailand will help competing exporters such as Vietnam and India. Picture : adb.org

This has been attributed to the recent big floods which affected 70 percent of the storehouses and processing workshops in the country. Especially, a lot of processing factories still have not resumed their production after the floods had gone down. They said that they need to wait two or three more months to see the workshops’ ground returning to the normal conditions.

However, the biggest reason behind the sharp decrease of the rice export volume in 2011 is the uncompetitive price. With the new policy applied by the Thai government which commits to buy rice from Thai farmers at high prices, the Thai export price is much higher than the prices offered by Thai rivals such as Vietnam and India.

In early December 2011, five percent broken rice of Thailand was offered at 595 dollars per ton, while the same kind of rice was offered by Indian exporters at 450-470 dollars per ton only.

Korbsook Iamsuri, Chair of the Thai Rice Exporters’ Association, said that in 2012, Thai rice export volume may drop to 7-7.5 million tons. Meanwhile, Thai rice exporters seem to be more pessimistic about the export volume in 2012, saying that if there is no big change in the policy, Thailand would export only five million tons in 2012.

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