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13 Jul 2007

Agriculture

Chinese Rice: Thailand’s Trade Partner and Rival Worth Watching(Business Brief No.2012)

China is presently a key export destination for Thai Hom Mali rice and sticky rice, accounting for 12.4 percent and 15.0 percent of Thailand's total export value of these two products. China's rice market thus holds the key to the future of Thai Hom Mali rice and sticky rice. Simply put, prices of locally-grown Hom Mali rice and sticky rice will depend mainly on demand for the produces in the Mainland. Remarkably, competition in the Chinese rice market is tougher due to increased rice outputs from China itself and other rivals including Vietnam, the US, Pakistan and Laos. In the midst of rising rice output and ebbing rice consumption in China, it is expected that China may emerge as Thailand's archrival in the white rice and brown rice markets. Among the major markets for Chinese white rice and brown rice are Japan, South Korea, Russia, Ivory Coast, Liberia and Nigeria which are also the target markets being penetrated by Thai rice exporters. Despite China's moderate rice export value, its growth is worth watching. Given this, Thai rice exporters should, sooner or later, brace for intense competition from their Chinese counterparts.
Thai rice exporters should keep watching on China from its significance as a number one importer of Hom Mali rice at present and China's future status in becoming Thailand's rival in rice exports. In the short-term, China will compete only in the exports of low quality rice, but in the long-term, it will be a competitor in exports of high quality rice, including rice products. This is due to China carrying out research and development invariably of which objectives are to lift both the quantity and quality of rice to be sufficient to the demand for direct consumption and to be the raw material for other continuing industries. The interesting point that is worth studying is China's policies that aim to reduce low quality rice production and have enabled its rice market to produce more high quality rice, and so should be applied to Thailand's policy designation, as they will be helpful in developing the competitiveness of Thai rice in the future.

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