|Copyright 2014 Thai News Service
All Rights Reserved
Thai News Service
February 28, 2014 Friday
Thailand: High cost to drive Thailand behind ASEAN in rice exports
Thailand will likely lag ASEAN in rice exports due to increasing competitors and farmers' low income, a Thai economist said.
He suggested the government to scrap the rice pledging scheme and subsidize 40 per cent of farmers production cost, twice a year.
University of the Thai Chamber of Commerce's Center for International Trade Studies (CITS) Director Dr Aat Pisanwanich expressed concern that Thailand may lose rice markets upon the upcoming formation of the ASEAN Economic Community (AEC).
He suggested the government to ditch the controversial rice pledging scheme and set up a fund of around 196 billion baht a year, in order to support 40 per cent of the rice production cost of farmers.
Normally, the production cost is 9,763 baht for each ton of rice. Under the new scheme, the Thai farmers will, twice a year, directly receive 3,900 baht for each ton of rice. This will save the government's spending of up to 300 billion baht annually.
Dr Aat noted that Thailand may lose the status of leading rice exporter in ASEAN due to increasing competitors including Myanmar and Vietnam, while country's major rice buyers namely Indonesia, Philippines and Malaysia are likely not increasing rice imports. Thai rice also has the highest production cost in ASEAN, which makes Thai farmers earn less profit at only 1, 555 baht/ton.
The U.S. Agriculture Department says Thailand will this year rank as the world's third-largest rice-exporting country. The Thai rice export is projected at 6.5-6.8 million tons this year, a drop of 0.2-0.5 million tons year-on-year. India would top the world's largest rice exporter this year at 9.3 million tons, while Vietnam likely ranks second at 7.8 million tons.
Permanent Secretary of Commerce, Srirat Rattapana, meanwhile, said January exports fell 1.98 per cent year-on-year at USD17.9 billion, while imports were valued at USD20.4 billion, a decline of 15.5 per cent.
She said rice from Thailand especially fragrant rice saw an obvious plunge in exports, while natural rubber also hit its lowest in four years. Exports to high potential markets like ASEAN saw a contraction of 5 per cent, Hong Kong at minus 14 per cent and India at minus 11 per cent.
However, positive signs were seen in major markets as Japan saw a growth of 1.8 per cent, US 0.4 per cent and Europe 4.6 per cent.
As a result, she said she was certain that Thailand's exports this year will grow 5 per cent as targeted, only if the country's growth is not threatened by political instability and drought problems.
(Kasikorn Research Center: 27 February 2014)
Copyright © 2010 LexisNexis, a division of Reed Elsevier Inc. All Rights Reserved.
Terms and Conditions