The government is set to tighten controls on fruit trading after more Chinese traders have begun dealing directly with fruit farmers, handling their own exports rather than going through Thai brokers.
This has raised fears the Chinese will soon dominate the market, driving prices down.
Vuttikrai Leewiraphan, a commercial adviser to the Commerce Ministry, said many Chinese traders now talked directly to farmers at Thai orchards and exported directly to China, particularly in Chumphon, Chanthaburi, Rayong and Trat provinces.
Entry of Chinese traders creates more competition among middlemen or brokers, which eventually benefits farmers, he said.
“But we’re afraid over the long term this practice may affect Thai farmers and small local traders if they expand and dominate the market,” Mr Vuttikrai said.
He said the ministry would require all Chinese traders to register with it as well as introduce standardised purchase contracts. The ministry will also propose that the Central Commission on Prices of Goods and Services include wheat, longan, mangosteen and durian on the government’s price control list.
Pongpun Gearaviriyapun, director-general of the Business Development Department, said inspections had found Chinese traders were buying fruit for export.
Aat Pisanwanich, director of the University of the Thai Chamber of Commerce's Center for International Trade Studies, said such practices had gone on in Thailand for many years, mostly via futures contracts due to growing demand from Chinese consumers.
“We've heard some Chinese traders breach their futures contracts, refusing to buy all the longan from farmers at agreed-upon prices if the quality drops,” Mr Aat said.
He proposed the government supervise purchase contracts to ensure fair treatment for farmers and that the government prepare a database of fruit traders in each province based on types of fruits and nationality of the traders.
“We have fruit marketing that focuses on a single country, China,” he said. “This is very dangerous if China denies the purchase.”
Thailand shipped 12.6 billion baht worth of fruit to China in 2014 after only 4.42 billion in 2007. Durian is the favourite Thai imported fruit in China, making up 41% of fruit exports to there in 2014, followed by longan at 21% and mangosteen 12%.
A fruit-trading source said Chinese traders now controlled most of the fruit shipments to China, with roughly 1,000 Chinese traders doing business here.