Thai rice: with the Southeast Asian market in flux, where next for the world’s biggest exporter?

Power is shifting amongst Southeast Asian rice exporters, with current world -leader Thailand set to reduce its rice exports between 10 and 30 per cent this year. High prices are a large contributing factor to the anticipated fall in exports from 11 million tons in 2011 to 7 millions tons in 2012. The Thai Opposition and Thai Rice Exporters Association hold the Thai government’s costly rice scheme accountable for the high price of the country’s rice. In response, the government has purchased paddy rice at twice the pre-scheme market rate at approximately $472 US dollars per ton since October 2011.

Frustrated with its government, the Thai Rice Exporters Association has threatened that Myanmar could become the world’s leading exporter in coming years. While being highly inconceivable given that Myanmar’s years as the world’s largest rice exporter in the 1960s are well behind it, the statement highlights Myanmar’s strengthening as an exporter, having recently secured a deal with Indonesia for 200,000 tons per year. Some Thai rice exporters are turning their attention to cheaper quality rice across the border in Cambodia, which has the potential to boost production and aims to expand its exports in coming years to one million tons but currently lacks the processing capacity to achieve this goal.

Thailand’s exports to formerly leading importers Indonesia and the Philippines are waning as both countries move towards rice self-sufficiency. Indonesia recently sought to renege from a 300,000 metric ton per annum import deal with Thailand. Furthermore, Thailand is acutely aware of the implications of the Philippines slowing its rice imports. On a recent visit to the Philippines, Thailand’s Prime Minister Yingluck Shinawatra appealed for the country to consider Thai rice as a means for food security and a source for emergency reserves.

With demand in Southeast Asia in flux, Thailand’s closest rice export competitor, Vietnam, is taking innovative approaches to seeking additional market share. Its latest export strategy is in Africa, the region with the fastest-growing rice consumption in the world. Vietnam is exporting not only milled rice but Mekong Delta rice variety seeds and farming practices to at least eight African nations.

The shift away from long-held rice trade patterns between Southeast Asian countries is one more indicator that the rice economy is in transition. Once its rice scheme is complete mid-2012, Thailand will need to urgently rethink its export strategy to remain competitive in and relevant to the world rice market.