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.

AFET to offer Hom Mali futures trading

AFET, Agricultural Futures Exchange of Thailand, preparing to introduce trading of Thai Hom Mali Rice Grade B contracts on July 14. Thai Hom Mali Rice 100% Grade B contract would be traded under the symbol BHMR, with a contract size of 15 tonnes per unit. Trading would be allowed for both options as currently executed for 5% white rice. Under the both-options regime, traders are allowed to settle contracts in cash or by physical delivery. In the past, only cash settlements were allowed.

Hom Mali exports have grown steadily by 10% on average over the last three years, with last year's figure reaching 1.864 million tonnes. For the first five months of this year, Hom Mali shipments amounted to 917,000 tonnes, up 21% from a year earlier. Last year, three of the top 10 Hom Mali importers _ Senegal, Ivory Coast, and Ghana _ were in Africa. Senegal alone imported up to 540,000 tonnes.

Successful negotiation for expansion of jasmine rice market in China

A negotiation for an expansion of Hom Mali or fragrant rice and rice product market in China has been successful more than expected, according to Thailand's Foreign Trade Department.

Apiradi Tantraporn, the department’s director-general, said she had recently assigned her deputy Vijak Visetnoi to take a team of trade representatives to Xiamen, a coastal city in southeastern Fujian province of China, for the negotiation to expand the fragrant rice and rice product market there.

During the trip, many activities had been conducted to promote consumption and distribution of Thai jasmine rice in Wal-Mart Department Store.

In addition, an exhibition of the fragrant rice was organised in the city where rice ambassadors and media members paid much attention to the rice and its products such as rice oil and noodles. It led to a signing of six contracts with Chinese importers.

In the first five months of this year, Thailand’s rice exports totaled 3.3 million tonnes. Of this, 1.19 million tonnes are jasmine rice.

The rice exports to China totaled 174,894 tonnes. Of this, 118,059 tonnes are jasmine rice.

China to buy more fragrant rice

Negotiations for an expansion of Hom Mali or fragrant rice and rice product market in China has been successful more than expected, according to Thailand's Foreign Trade Department.

In the first five months of this year, Thailand’s rice exports totaled 3.3 million tonnes. Of this, 1.19 million tons are jasmine rice. The rice exports to China totaled 174,894 tonnes. Of this, 118,059 tons are jasmine rice.