Over the past 10 years, Thai rice exports have faced challenges from both internal and external factors, including more frequent droughts, increased global rice production, and competing countries developing better rice varieties. As a result, Thailand has steadily lost market share in the global rice market, while key competitors like Vietnam and India have maintained or increased their export market share.
Thailand's rice exports decreased by 25 percent compared to last year, while Vietnam's rice exports decreased by only 2 percent due to its rice export ban implemented to maintain domestic stockpiles during COVID-19. India's rice exports increased by over 40 percent due to increased production. As a result, Thailand's rice exports have fallen to third place from their previous position.
Let's take a look at why Thailand's market share in the global market has decreased.
Thai rice varieties are not in demand in the market and cannot compete on price because they are "more expensive".“
Thai rice is more expensive than its competitors. In the past, Thai rice was hundreds of dollars per ton more expensive. Currently, the price difference between Thai 5% rice and its competitors is $420, while India is $338, Vietnam is over $370, Pakistan is $358, and Myanmar is over $350. It's worth noting that if the price difference exceeds $50, competitiveness becomes difficult.
Previously, the Philippine government used a government-to-government (G to G) rice import system, with the National Food Authority (NFA) purchasing 700,000-800,000 tons of rice from each country through auctions. However, after the Philippines liberalized rice imports and imposed tariffs under the 30% scheme, the increased tariffs led the Philippines to choose cheaper soft-textured white rice from Vietnam. Consequently, rice exports to the Philippines decreased to only 70,000-100,000 tons between 2020 and 2021, down from 700,000-800,000 tons previously. Vietnam, meanwhile, sold approximately 2.4 million tons of rice to the Philippines.
Our mission now isn't to seek new markets, but to reclaim our existing rice markets, such as Singapore and Hong Kong. Thailand used to have an 80-90% market share, or 300,000 tons per year. Now, these two markets are increasingly buying Vietnamese rice, leaving Thailand with only about 50% of the market share, or 100,000 tons.
The African market used to import 700,000-800,000 tons of blended fragrant rice from Thailand annually, but now there are no imports at all because Vietnamese rice has absorbed most of it. The Australian market, which is primarily for jasmine rice, is also being encroached upon by Vietnam, which exported 30,000-40,000 tons last year. Similarly, Vietnam is entering the US and Canada markets, which are premium markets for jasmine rice, and fragrant rice from Cambodia is also competing there. The same situation exists in the Chinese fragrant rice market, where Vietnamese and Cambodian fragrant rice are entering the market.
Therefore, if Thailand does not change and improve, the premium jasmine rice market will continue to decline. The domestic rice consumption market, which normally accounts for half of the 10 million tons, has also decreased due to the loss of 30-40 million tourists after COVID-19.
One reason why Thai rice is losing its main export markets is that "Thailand lacks soft-textured rice." For example, this year Thailand has only recently started developing "soft-textured rice variety 79," but the price is still quite high and not competitive. Therefore, the focus has to be on the domestic market first. For instance, 5-6 years ago, Thailand started cultivating "Hom Phuang" rice from Vietnam.
With improved production, the price of Thai-grown fragrant rice has dropped from 16-17 baht per kilogram to 13-14 baht per kilogram, or close to the price of white rice at 12-13 baht per kilogram. This means that in 2022, Thai-grown fragrant rice will begin to be exported according to Thai fragrant rice standards.
Because this rice can command export prices similar to Vietnam's "Jasmine Rice 85," while the original Thai Jasmine rice, which used to be very expensive at $1,000 per ton, has now had to steadily decrease in price to only $700-800 per ton. Pathum fragrant rice, on the other hand, sells for around $600 per ton.
Furthermore, it was found that the price of Vietnamese rice is not overly volatile; the price remains stable, making it easy to market and trade with customers. This is different from Thai jasmine rice, where the market price fluctuates, making it difficult to negotiate prices with customers.
The World's Best Rice 2022
The 2022 World Rice Conference was held in Phuket, Thailand on November 17th. A rice variety competition was held with entries from nine countries: Thailand, Vietnam, Cambodia, Myanmar, Laos, India, Pakistan, China, and the United States. The winner of the World's Best Rice award was Phkalamduan Jasmine Rice from Cambodia. Thailand's Hom Mali 105 lost its title, coming in second, and third place went to a fragrant rice variety from Vietnam.
Looking ahead, the jasmine rice of our neighboring countries could all develop into formidable competitors to Thailand. For example, Laos entered a competition this year and came in 4th place, a warning that Thailand must seriously improve itself by developing better rice varieties, reducing production costs, and increasing yield per acre. At the same time, it must develop more diverse rice varieties.
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