Saudi Arabia has restored full diplomatic ties with Thailand following more than 30 years of frozen relations. The move has opened up a lot of economic opportunities for both countries ranging from trade, and tourism to labour and agriculture.
For the agricultural sector, the Thai government recently came up with an ambitious idea to develop Basmati rice plantations with the goal of exporting the results to the Saudi market. Basmati is one of the favourite rice grains in the Middle East.
Government spokesman Thanakorn Wangboonkongchana last week said Prime Minister Prayut Chan-o-cha instructed relevant agencies to expand cooperation with Saudi Arabia in the agricultural sector including developing plantations of Basmati for export to Saudi Arabia, which demands levels of the aromatic rice variety of up to 30 million tonnes a year.
The plan, if it succeeds, will generate substantial income for farmers and stakeholders in the supply chain.
Due to lower annual production, the price of Basmati is higher than that of Jasmine rice which is the flagship rice product of Thailand. As a result, it is a good initiative to promote Basmati cultivation in the country as an alternative crop.
There are still questions to answer, however, including whether the country can really produce high-quality Basmati rice and, if the answer is yes, whether Basmati production in Thailand is competitive enough.
Thailand's rice production yield and competitiveness have proven controversial even in Jasmine production. There remain several crucially unsolved problems which are detrimental to the competitiveness of Thai rice production and exports in the long run.
They include fierce competition in the world market, low productivity, and lagging in developing high-yielding rice varieties. Thailand's average yield for rice production (465kg per rai) appears to be the lowest among its competitors. Vietnam's yield is at 934kg per rai, Indonesia (765kg per rai), India (643kg per rai), China (1,128kg per rai) and the United States (1,363kg per rai).
All governments have spent a large amount of money to support farmers due to poverty concerns but no government has focused on strengthening rice strain research and development, which is a sustainable way to help farmers escape poverty.
The Thai government has nevertheless spent a small amount of money each year on rice R&D despite the country currently being the second-biggest exporter in the world rice market.
Given that the Thai rice industry is also under threat from stagnant growth and climate change risks, improved R&D efforts are needed to ensure the sustainability of the country's rice production and exports.
Some Basmati crops are said to have been used to have in Thailand 20 years ago but they could not be sustained due to a lack of competitiveness and marketing strategies.
And how can Thai Basmati compete with that of India which dominates with about 65-70% of the world's Basmati export market with the rest belonging to Pakistan?
The government should not encourage farmers to grow Basmati rice without a solid understanding of the nature of the rice variety and, more importantly, without efficient marketing strategies.
How Basmati crops in Thailand can be developed productively to help farmers gain a competitive advantage is the key question that the government needs to have an answer to before promoting Basmati production in Thailand.