Thailand could reclaim its standing as No 1 rice-exporter next year if it urgently restores its reputation for rice quality and offers competitive quotes for next year's crop, the Food and Agriculture Organisation said yesterday.
"It's a good time for the government to lower the price in the next harvest season and find other measures to cut the cost of production," Hiroyuki Konuma, the FAO's assistant director-general and regional representative for Asia-Pacific, told a press conference.
He was referring to the government's decision to set a new pledging price for the 2013-14 harvest year.
"However, the government must lower the price to be competitive in the world market." Konuma said he was confident about the quality of Thai rice.
This year, Thailand's rice inventory is estimated to balloon to 17 million tonnes. Although this looks huge, the government has a good plan to revise the pledging price and release stocks. This would help the government accommodate new supplies to come in the next harvest season, he said.
As Thailand is one of the countries with the biggest stocks, price-cutting could put pressure on global prices, he said.
Thailand lost its No 1 position to India, which has exported 8.6 million tonnes this year. Vietnam is shipping out 8.2 million tonnes, against 7 million tonnes by Thailand.
Thai exporters had complained about the high pledging price - Bt15,000 (S$607) per tonne. The government and farmers are setting a reasonable price for the next season, taking into account foreign exchange rates and other benefits. The Commerce Ministry also plans to sell 500,000-1 million tonnes of rice each month, amid fears of deteriorating quality.
The FAO expects that India will remain the biggest rice producer next year, as it is increasing production, while Vietnam's output may drop slightly. China will be the world's biggest importer, at 3 million tonnes compared to the average 1.2 million tonnes per year from 2009-11, as the country is set to build up rice stocks, followed by Nigeria at 2.7 million tonnes.
Konuma's comment was a rare positive note, as the government is under pressure to scrap the rice-mortgaging scheme due to its huge losses, corruption and poor quality management. Economic guru Virabongsa Ramangkura told an agricultural seminar that the government should shift its focus from promoting conventional crops, including rice, to investing in infrastructure and penetrating more markets.
New technology will help increase global output and Thai farmers' income tends to rise more slowly than the rate of inflation. Higher wages could also affect the agricultural sector, which employs millions of workers but contributes only 10 per cent of GDP, he said.
"The government cannot proceed with subsidies through pledging schemes. This will seriously affect fiscal discipline and lead to a disastrous political crisis. The government's assistance should be towards infrastructure and market penetration and it should leave out other attempts, like zoning. Farmers know better than the government," he said.
The Commerce Ministry had to issue a denial about irregularities in receiving a Bt80,000 cheque after the National Anti-Corruption Commission questioned the unusually small payment for a government-to-government rice deal.
The ministry said that in selling rice to any party, cheques are issued in advance of each shipment, as a huge lot of rice could not be transported in a single shipment. The cheque is for an odd lot, involving 50 100-kilogram sacks, while a normal large lot involves 20,000 sacks.
The ministry said the payment was part of a wholesale deal, but did not specify whether it was a government-to-government deal.
Deputy Commerce Minister Yanyong Phuangrach threatened to systematically take legal action against anyone claiming that Thai rice or the government's rice was tainted with substances harmful to consumers.
The Agriculture Department said later that all brands of packed Thai rice were safe, including those from government-contracted granaries. Director-general Damrong Jirasuthas said dead rats found at certain warehouses were killed by eating rat poison, not by the fumigants.