Idle Thai Rice Exporters May Shift Expertise to Burma
By Apornrath Phoonphongphiphat 23 March 2013
Thai rice exporters, who have seen volumes slump in the past 18 months because of a government intervention scheme, could shift some of their activities to Burma, which is working to revive its rice sector under an outward-looking government.
Burma was the world’s top rice exporter when it was a British colony shipping a record 3.4 million tons in 1934, but the sector deteriorated during half a century of military rule until 2011.
Thailand, in contrast, was the world’s top exporter from 1983 until 2012, when it was overtaken by India and Vietnam because the Thai intervention scheme pushed up the price of its rice and make it uncompetitive on world markets.
“Last week, we met the Myanmar Rice Federation and they informed us they would welcome our investment in their rice industry,” Korbsook Iamsuri, head of the Thai Rice Exporters Association, told Reuters.
She said Thai rice exporters could invest in the rice milling business or set up trading houses in Burma to trade local varieties, but will await clarity on government policy before making any final investment decisions.
Korbsook said Burma had high hopes of becoming a major rice exporter again due to its fertile soil and government policy of opening up to foreign investment.
However, most rice trade in Burma is currently done via border trade to China, and the country will need a few years to develop logistic systems and port facilities, she said.
“At this stage, we see that Yangon port is quite small, but we hope it could be developed within a few years,” Korbsook said.
Burma mainly sells a low-quality, 25 percent broken grade of white rice at a relatively cheap price of about $370 a ton. The same grade from Thailand costs $540 per ton.
Korbsook said that, to boost exports, Burma needed to push up rice production to have a bigger surplus.
According to the United States Department of Agriculture (USDA), Burma would produce 10.7 million tons of milled rice in its 2012/13 crop, while consumption would be 10.3 million tons, leaving only 400,000 tons for export.
Private surveyor SGS (Myanmar) Ltd put exports through normal trade at around 430,000 tons in the first 11 months of fiscal 2012/13 (April/March).
Myanmar Agrobusiness Public Corporation, a private company, put total exports in the fiscal year at about 1.3 million tons as of Feb. 15. Soe Tun, its director, said about 800,000 tons of that went to China in border trade.
Some Thai exporters have also started investing in Cambodia, another neighboring country keen to expand its rice business.
Asia Golden Rice Co. Ltd, Thailand’s second-biggest rice exporter, is among them. It said it could secure cheaper rice in Cambodia as costs rise at home and was confident of finding a market in the European Union because of EU concessions.