Myriad risk factors still loom over rice exports this year, notably the volatility of exchange rates, the declining competitiveness of Thai rice, intense price competition, the impact of the El Niño weather phenomenon, and India's restrictive export policy, according to the Thai Rice Exporters Association.
Chookiat Ophaswongse, the association's honorary president, said the latest data from the US Department of Agriculture predicted global milled rice production would remain stable at 513 million tonnes this year, with China the largest producer at 144 million tonnes, followed by India at 132 million tonnes. Thailand is expected to produce quantities close to the previous year, totalling about 20 million tonnes.
Regarding the forecast, Mr Chookiat said around 7.5 million tonnes valued at 150 billion baht are projected, a decline from an estimated 8.7 million tonnes valued at 178 billion baht last year.
Despite the dip, he said Thailand remained the world's second-largest rice exporter last year, trailing only India with 16.5 million tonnes.
"There is a risk for Thailand to be able to maintain its second position in rice exports, as Vietnam is showing significant growth in its rice exports. Vietnam, typically exporting around 6 million tonnes annually, surpassed 8.1 million tonnes in 2023," said Mr Chookiat.
He said the Thai government's ongoing plans to beef up government-to-government (G-to-G) rice deals have become more challenging, as each rice-buying country has now changed the methods of rice purchase, preferring private entities to handle the rice imports to charge import taxes to raise proceeds to support farmers. The Philippines has opted for this approach, which provides more flexibility.
Mr Chookiat said Thailand's G-to-G processes take more than two months, involving the National Rice Policy Committee, the Attorney-General Office and the cabinet before finalising contracts. In contrast, private sector decisions can be made within a week.
In addition, Thai rice exports face other risks, such as exchange rate fluctuations and the possibility of India reviewing its rice export restrictions, which could impact global prices. The effects of El Niño on production levels must also be closely monitored, he said.
Charoen Laothammatas, president of the Thai Rice Exporters Association, said the Thai rice price depends on both production and export conditions, which can impact domestic paddy prices.
In the first month of 2024, data from the Foreign Trade Department's rice export permits revealed that Thailand has exported over 1 million tonnes, rising 44% year-on-year, he said. If this export trend of exceeding 1 million tonnes continues for several consecutive months, it will undoubtedly positively affect domestic prices.
According to Mr Charoen, a key concern that requires government attention is the exchange rate stability and the accelerated development of Thailand's competitiveness in rice. This includes the development of new rice varieties demanded by the market, with high yields per rai to compete with Vietnam and India, aligning with the development of irrigation systems.
More importantly, he said attention must be given to transportation costs, particularly with the significant increase in shipping freight rates, which have seen a fourfold increase from last year to $4,000-$6,000 per container to Europe and the US.