Southeast Asian rice pact in limbo

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Thailand’s push to reach a rice pact with Cambodia, Laos, Myanmar and Vietnam faces headwinds as it remains unclear how the countries can reach consensus on rice prices, Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association (TREA), was quoted by the Bangkok Post on November 14.

He said under the current situation is would not be easy to jointly fix prices. Thailand is also reluctant to share information on rice production, technology and know-how with the other countries.

“If cooperation occurs, this will help cut rice production costs among producing countries and help develop rice trading zones,” Ophaswongse said.

Rut Subniran, Board Executive Advisor at TREA, told Inside Investor in an interview that the association is not happy with the current rice pledging scheme of the Thai government, which grants rice farmers prices far above world market levels and thus is distorting the entire rice business.

“Thailand is sitting on huge stockpiles of rice”, Subniran said,” but it is difficult to sell it at up to $250 a tonne more expensive than Vietnam and India does it.”

The association fears that Thailand will lose its rank as the world’s leading rice exporter if the pledging scheme continues, even if Thai rice is of higher quality.

“That way we cannot compete with Vietnam”, he told Inside Investor.

TREA is regularly publishing their own quotes for milled rice in accordance with world market prices. These quotes are significantly higher than government prices for rice.

Thailand’s 5 per cent broken grade white rice is currently offered at $600 per tonne, well above the same grade from India and Vietnam at around $430 per tonne.

To support the millions of poor farmers in Thailand, the government is paying them 15,000 baht ($480) per tonne for unmilled rice, well above market price of around 9,000 baht.

As a result, government stocks of unmilled rice now stand at a record high of 12.6 million tonnes and seem sure to push higher before the intervention scheme expires at the end of June.

“Thailand needs to look for new sales channels for its rice, be it via government-to-government contracts or cooperations in food security,” Subniran said.

Pact approved

On November 12, he Thai cabinet approved the commerce ministry’s plan to develop a rice trading partnership with the above mentioned countries to stabilise international rice prices.

The pact includes meetings with government officials from all five countries as well as representatives from the ASEAN rice cooperation committee and ASEAN rice millers and traders’ associations.

Thailand wants to get Vietnam, so far the second-biggest exporter and in line to take the top spot this year, and Cambodia to sell at better prices and not undercut Thai rice. Another aim is the exchange of price and stock information to manage exports in a way that would benefit all sides.

Tikhumporn Natvaratat, deputy director-general of the Foreign Trade Department, said Thailand will propose the conceptual framework for the partnership during the ASEAN Summit on November 17-18 in Cambodia. He expects it to be signed during the meeting.

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Reading Time: 2 minutes

Thailand’s push to reach a rice pact with Cambodia, Laos, Myanmar and Vietnam faces headwinds as it remains unclear how the countries can reach consensus on rice prices, Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association (TREA), was quoted by the Bangkok Post on November 14.

Reading Time: 2 minutes

Thailand’s push to reach a rice pact with Cambodia, Laos, Myanmar and Vietnam faces headwinds as it remains unclear how the countries can reach consensus on rice prices, Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association (TREA), was quoted by the Bangkok Post on November 14.

He said under the current situation is would not be easy to jointly fix prices. Thailand is also reluctant to share information on rice production, technology and know-how with the other countries.

“If cooperation occurs, this will help cut rice production costs among producing countries and help develop rice trading zones,” Ophaswongse said.

Rut Subniran, Board Executive Advisor at TREA, told Inside Investor in an interview that the association is not happy with the current rice pledging scheme of the Thai government, which grants rice farmers prices far above world market levels and thus is distorting the entire rice business.

“Thailand is sitting on huge stockpiles of rice”, Subniran said,” but it is difficult to sell it at up to $250 a tonne more expensive than Vietnam and India does it.”

The association fears that Thailand will lose its rank as the world’s leading rice exporter if the pledging scheme continues, even if Thai rice is of higher quality.

“That way we cannot compete with Vietnam”, he told Inside Investor.

TREA is regularly publishing their own quotes for milled rice in accordance with world market prices. These quotes are significantly higher than government prices for rice.

Thailand’s 5 per cent broken grade white rice is currently offered at $600 per tonne, well above the same grade from India and Vietnam at around $430 per tonne.

To support the millions of poor farmers in Thailand, the government is paying them 15,000 baht ($480) per tonne for unmilled rice, well above market price of around 9,000 baht.

As a result, government stocks of unmilled rice now stand at a record high of 12.6 million tonnes and seem sure to push higher before the intervention scheme expires at the end of June.

“Thailand needs to look for new sales channels for its rice, be it via government-to-government contracts or cooperations in food security,” Subniran said.

Pact approved

On November 12, he Thai cabinet approved the commerce ministry’s plan to develop a rice trading partnership with the above mentioned countries to stabilise international rice prices.

The pact includes meetings with government officials from all five countries as well as representatives from the ASEAN rice cooperation committee and ASEAN rice millers and traders’ associations.

Thailand wants to get Vietnam, so far the second-biggest exporter and in line to take the top spot this year, and Cambodia to sell at better prices and not undercut Thai rice. Another aim is the exchange of price and stock information to manage exports in a way that would benefit all sides.

Tikhumporn Natvaratat, deputy director-general of the Foreign Trade Department, said Thailand will propose the conceptual framework for the partnership during the ASEAN Summit on November 17-18 in Cambodia. He expects it to be signed during the meeting.

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