Quality not enough to support high rice for Thai rice in HK

Thailand cannot count on its reputation for producing high-quality rice and charge too much for it, as the global market is highly competitive and consumers are more willing to accept slightly lower quality to save money on this staple food, Hong Kong traders and Thai exporters agree.

Thailand's Hom Mali (jasmine) rice is losing a large share of the Hong Kong market, which has been one of its major importers, because its price is too high compared with competing varieties from other countries, mainly Vietnam and Cambodia, they said.

After meeting with the Thai Commerce Ministry recently, Kenneth Chan, chairman of the Rice Merchants Association of Hong Kong and vice chairman of the Hong Kong Rice Suppliers Association, said that if the price of Thai rice were US$100 (Bt3,063) per tonne lower, it would regain its lost market share.

"Hong Kong consumer behaviour has changed to lower-quality rice because of high prices of Thai rice and slowing economic growth. The Thai government should set a competitive price for rice, which should be lower than the current price by $100 a tonne in order to narrow the gap between Thai [rice] and its rivals," Chan said.

According to Thailand's Foreign Trade Department, the Kingdom's rice exports to Hong Kong dropped sharply year on year, by 20 per cent, to 177,176 tonnes in the first 10 months of 2012. Of this, about 121,076 tonnes was jasmine rice, or 85.4 per cent of the total volume. Thailand currently has 55 per cent of the Hong Kong rice market, a drop from 90 per cent in 2008.

Meanwhile Vietnam now holds 33 per cent of the Hong Kong rice market, a rapid rise from less than 20 per cent in 2008. Other major rice suppliers to Hong Kong are mainland China with an 8-per-cent share, then Pakistan, Australia and the United States with 2 per cent each.

Lawrence Chong, managing director of Season Rice and Food Holdings, said Thai rice was facing a difficult time due to its overly high price.

"Consumers' behaviour has been changing because Hong Kong people want to buy cheaper products, not only rice. Thailand needs to adjust [to the needs of] Hong Kong consumers to ensure that the country will be able to keep [its current] market share and regain the loss of market share next year," he said.

To promote Thai rice, Chong suggested that the country ensure competitive prices and target direct marketing activities at modern traders and restaurants. The Thai government should also advertise more about methods of preparing Thai rice dishes and prevent the contamination of quality with substandard varieties.

Vuttiphon Wanglee, managing director of Chaithip, a long-time exporter of Thai rice, said the government should focus on marketing and create a competitive price for the product.

Currently, Vietnamese fragrant rice is quoted at only $650 a tonne, while the price of Thai jasmine rice is $1,050.

Vuttiphon said some importers and local restaurants In Hong Kong needed to combine Thai rice with product from other countries to lower their costs.

Chaithip is a major bulk supplier of Hom Mali rice to Hong Kong, exporting about 20,000 tonnes annually.

Samphan Jantrakul, rice export manager of Toumi Foods and Products, said the price of pure Thai Hom Mali rice was 90 Hong Kong dollars (Bt355) for an 8-kilogram bag, while a mixture of Hom Mali and other grains went for HK$75-$80.

He expressed concern about reduced quality of Thai rice resulting in lower market share in the long run.

Toumi Foods and Products has shipped about 20,000-30,000 tonnes of rice to Hong Kong each year, but shipments have dropped by 10 per cent because of lower demand, Samphan said.