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Thai food export to decline on higher costs

Thai food exports in the second and third quarters of 2012 are projected to decline owing to the slowing global economy and higher Thai production costs, according to the National Food Institute (NFI). In April-June, the production is likely to slow in tandem with exports.

Aishwarya Gupta

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Rice bags Import

Thai food exports in the second and third quarters of 2012 are projected to decline owing to the slowing global economy and higher Thai production costs, according to the National Food Institute (NFI). In April-June, the production is likely to slow in tandem with exports. 

Food exports in particular are forecast to drop 2.3 per cent valued at nearly Bt250 billion, said NFI Director Petch Chinnabutr. Exports of rice, frozen shrimp, processed tuna and processed fruit and vegetable are projected to decrease. Food exports are likely to continue slowing into the third quarter, but will rebound in the fourth quarter.

Rice bags Import

Vietnam will eclipse Thailand as the world's biggest rice exporter this year as the government's pledging scheme artificially inflates Thai prices, exporters predicted.

Overall in 2012, food exports are projected to drop in quantity but prices will tend to rise, so that Thai food export value is likely to surpass one trillion baht, an increase of 5.1 per cent. Risk factors that should be monitored are global energy costs, effects from the minimum wage rise and higher prices of raw materials for agricultural production. Regarding the increase of the daily minimum wage in April, most entrepreneurs experienced higher production costs but 75.9 per cent of those still capped the prices while 20.3 per cent will increase prices, and another 38 per cent may raise their prices in the next three months. Thai food exports projected to decline this year

Thailand has been the largest rice exporter in the world for nearly five decades, when the volume of Thai rice exports steadily increased from 1 million tons in 1974-75 to more than 10 million tons in 2010-11. The country’s share in the global market peaked at 43% in 1988-89; since then, it has been fluctuating between 25% and 30%.

During this period, however, global rice trade has tripled from 11 to 33 million tons in the wake of trade liberalization among many countries in the late 1980s and the 1994 General Agreement on Tariffs and Trade (GATT). As part of their GATT market access commitments, countries partially opened up rice trade, which increased the volume more than 50% in the past decade.

The expansion of trade came along with the emergence of Vietnam and India as growing exporters in the global rice market. In the last decade, Vietnam and India together have accounted for nearly a third of global rice trade.  Despite losing market share, Thailand has been able to steadily increase its volume of exports and maintain its status as the largest exporter in the world.

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