ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintSite TitleTitle ChevronIcon Twitter
Commodities

Thailand diversifies rice production to retain global market share

Growing more varieties to help offset decline in premium-grade exports

The Thai government has begun providing financial incentives for production of varieties other than the premium-grade fragrant rice that the country is famous for.   © Reuters

BANGKOK-- With production of its premium-grade fragrant rice declining, Thailand is looking to develop more varieties of the crop in order to compete with major exporters like Vietnam and India.

The Thai Rice Exporters Association has been trying to ecourage farmers to diversify the strains they grow by paying them above the market rate for a soft, middle-grade product, which is in high demand in China and other major Asian markets, according to Charoen Laothamatas, the association's president.

In the first year of the scheme, exporters anticipate having accumulated around 5,000 tons of middle-grade, long grain white rice, an inexpensive variety the association hopes will prove popular.

"This rice is not as fragrant, but it has the soft-texture favored by most clients in Asia. We expect it to help us grab a larger market share in the region in the long term," said Charoen.

Thailand's 13 million low-income rice farmers form a substantial voting bloc, and will often throw their support behind politicians who promise financial incentives.

The Thai government and the association predict that exports for 2018 matching the record high of 11 million tons marked last year due to strong global demand. But instability in production weighs heavily on the commodity's long-term prospects.

Production of premium-grade Thai white rice has fallen by 40% this year due to poor weather. The signature product helped the country claw its way out of the low-end market dominated by Vietnam and India, but can only be grown in a specific area in northeastern Thailand, making it particularly susceptible to climatic conditions.

The variety, called hom mali locally and jasmine rice elsewhere, is normally sold to upscale restaurants in China, Singapore, and Hong Kong, as well as Thai restaurants in Europe.

Total output of premium Thai rice is expected to fall to around 4 million tons from 6.1 million tons (in paddy base) in 2017, according to the association.

The decline has pushed the price of premium-grade rice to a record high of $1,200 a ton -- it would stand at about $800 a ton in a normal year. This has cut exports of fragrant rice by 20% so far this year, according to Charoen.

Mainland China's imports of the product have fallen by 35%, while Hong Kong's have dropped by 14%.

"With higher costs and an unfavourable exchange rate, we can't compete with Vietnam and India in selling common-grade white rice in the low-end market," said Charoen. "At the same time, [only] producing premium grade is not stable, we need to have more rice strains that meet diverse demand in order to retain market share."

Charoen pointed out that this is the first year in several decades that changes in the market and consumer appetite have forced both exporters and farmers to adapt.

"It might be a small number at this stage, but it is a good start and we expect to encourage farmers to produce other grades of rice to gain a bigger market share in the future, particularly in China and other traditional markets in Asia," added Charoen.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media