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Home \ Exports \ Industry Outlook \ Rice

Agriculture Products, Mineral, Fuels

Rice

Rice is the most important staple food for about one-half of the world’s population and provides over 20 percent of the global calorie intake. As most of the rice is produced domestically, only 4 percent of global production is internationally traded. The world rice economy also features a high degree of concentration, with Asia responsible for slightly less than 90 percent of the global rice production and consumption, about 50 percent of imports and 72 percent of exports.

Thailand has a certain reverence for rice both economically and culturally. “Kin khao”, the Thai expression for “to eat” translates literally as “to eat rice”; and the vast checkerboard of paddy fields on either side of the Chao Phrya River has traditionally provided the Kingdom with its staple grain. When the annual monsoon rains sweep across the plains, the fields are transformed into a sea of vivid green dotted here and there with farming villages and the occasional gleaming Buddhist temple. On average 136 kilograms of rice are consumed per year by every person in Thailand.

Thailand is the world’s largest exporter of rice, sending over 6 million tons of the grain around the globe in 1999, while ranking only sixth in global production. China, India, and Indonesia rank as the top three rice producers in the world cumulatively producing over 63 percent of the global yield. Having over 2 billion people to feed requires these three countries to be net importers of rice. The largest export markets for Thai rice are Indonesia, Nigeria, Iran, the United States and Singapore.

Check Out Our Featured Rice Exporters
Grand Asia Group
Elite International Company
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The local 1999 crop was planted on 9.0 million hectares of land, reaping 22-23 million tons of paddy (un-processed rice), which yielded roughly 15 million tons of milled rice. Of this, approximately 9 million tons were consumed locally while the remaining 6 million tons were exported. Approximately one third of the cultivated area is irrigated, with two thirds being rain fed. The 6 million tons exported in 1998 translated into sales revenue of approximately US$ 2.1 billion. The largest rice producing area in Thailand is the northeast, followed by the central region.

Thailand’s rice exports have been steadily increasing over the past few years, reaching record levels in 1999. The world market has fluctuated quite a bit recently due to strong weather trends, which have affected many countries' production. The weather system El Nino caused drought in many countries during 1998, which lowered production yields and quality, raising rice prices and demand for exports. La Nina, which often shows up in the wake of its cousin, brought floods to numerous rice producing regions in 1999, maintaining the strong demand for exports. The absence of inclement weather has increased the global production of rice, while reducing prices and import demand.

Thailand is competing keenly with competitors in the world’s low quality rice market, facing stiff competition from producers in Vietnam and India who enjoy lower production costs. It is expected that Thailand’s share of this market will gradually erode. The market for high quality rice, where Thailand has captured 25 percent of the global market, is expected to remain strong with continued demand from markets in Malaysia, Hong Kong, Singapore, the USA, the EU, the Middle East and China (in certain years). The strengthened baht, along with competition from lower cost countries and stabilized world production is expected to hurt Thailand’s export volumes in 2000, with some analysts predicting a possible 10 percent drop from 1999 volumes.

The supply chain of rice starts when the farmer sells his paddy to local traders or directly to rice mills. The paddy is treated at the rice mill and then sent into the domestic market through traders and wholesalers, or exported directly either through private companies or government channels.

To export any quantity of rice, the exporter simply applies to the Department of Foreign Trade for an export license, which is usually automatically granted with no quota or price limitation. All rice leaving Thailand must be inspected prior to shipping, which is usually performed by an independent surveyor appointed by the buyer and according to Ministry of Commerce regulations.

The government of Thailand is active in nurturing the rice industry in the country. The Foreign Trade Department actively procures contracts for government-to-government sales of rice, not to exceed 500,000 tonnes a year. Programs run through the Bank for Agriculture and Agricultural Cooperatives support the paddy market and farmers through pledging acceptance of product, granting credits, collection of product along with paddy market intervention. The Export-Import Bank of Thailand is also active in providing financial assistance to traders of paddy, along with rice exporters.

Thailand’s Rice Exports
World Rice Exports
World Rice Production

 

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