Saturday, April 10, 2010

The world's rice bowl

Burma's decline in the 1960s opened the door for Thailand to become the world's biggest rice exporter, a position it continues to hold today.

Source: Bangkok Post
Published: 10/04/2010

Newspaper section: News

Major political changes that accompanied the seizure of power by Ne Win in 1962 significantly weakened the rice exports of Burma, the world leader at the time, but accelerated the performance of its long-time arch-rival, Thailand.

A report by the United Nations Food and Agriculture Organisation in April 1965 revealed that Thailand had replaced Burma as the biggest rice exporter in a market of 7.8 million tonnes traded globally in 1964.

In that year, Thailand earned about 4.4 billion baht from shipments of 1.89 million tonnes of rice, which was a world record at that time, declared a Bangkok Post headline on May 10, 1965.

The rice export revenue - together with income from other major items including teak, rubber and tin - brought substantial foreign currency into Thailand. The trend persisted until the country's export structure began to change in the early 1980s and industrial products - textiles and garments, electronics and computer parts - became major contributors.

Rice is a staple food in many countries in Asia and some of the richest cultivation sites are in the Chao Phraya River Basin in Thailand, and the Irrawaddy Delta.

Burma, known as the rice bowl of the world, had enjoyed the leading role in the rice export industry for years until the country opted for socialism in 1962 after strongman General Ne Win overthrew the elected civilian government of Prime Minister U Nu.

It exported about 1.4 million tonnes in 1964 but the volume declined sharply to a mere 540,000 tonnes after five years of political change.

Domestic tension and war in Southeast Asia throughout the 1960s and 1970s also limited rice exports of other major rice producers, Vietnam and Cambodia in particular.

The Vietnam war reduced annual rice exports of the country to only 2,000 tonnes in 1973 and 1974 from the peak of 230,000 tonnes sold in 1963. Cambodia's rice exports had been sluggish and plunged to zero for nearly a decade after the Khmer Rouge took over the country.

Thailand maintained its role as the world's biggest seller but with some new competitors, notably the US, which posed stiff competition on price.

The Ministry of Economic Affairs called the US the direct competitor of Thailand in the European market, especially in Britain where American rice cost one pound sterling a tonne less than Thai rice.

But the popularity of Thai rice continued to rise, with the Middle East and African markets emerging as big buyers and offsetting the drop in sales to Europe.

Thailand's new role as the global rice champion became a source of great pride at a time when attention was focused on regional political tensions and anti-communist propaganda from the government under the control of the National Revolutionary Council led by Field Marshal Thanom Kittikachorn.

The agriculture sector was given significant emphasis in the first National Economic and Social Development Plan, introduced in 1961, and the second phase from 1964 to 1966.

Thanom had stated in the national plans a goal to support the growing and expansion area of rice as well as other cash crops, hoping to drive gross domestic product from the farm sector to 24.78 billion baht, part of the total GDP of 72.7 billion baht in 1965.

Export earnings from rice at the time were 4.4 billion baht, or about 2,000 baht a tonne. The crop was highly lucrative when one considers per capita national income at the time was 2,400 baht a year. The government further encouraged the crop by promoting plans to grow rice twice a year.

About 50,000 rai were designated for a second crop in 1964 and the area expanded to 300,000 rai a year later. Today second-crop planting covers 9 million rai out of a total of 57 million rai of rice fields.

Along with the government support, overseas Chinese merchants played an important role in Thailand's rice industry. Several Chinese rice traders, including Wang Lee, had established business in the early Rattanakosin era on the bank of the Chao Phraya River close to the capital. They largely influenced the development of the modern rice business Thailand knows today.

Korbsook Iamsuri, president of the Thai Rice Exporters Association, said that while external circumstances, such as Burma's drift towards isolationism, benefited Thai rice exports, strong cooperation among parties in the business also helped the trade.

The Siam Rice Association was formed in 1918 by a rice merchant, Ngow Pek Ngam, with the objective to be a centre for local rice merchants. Later on, members extended to cover Bangkok rice millers and exporters along the Chao Phraya River.

The industry was dominated by overseas Chinese who had established operations on Song Wat Road, a narrow street on the riverbank in Chinatown, which is still a landmark of the country's rice export industry.

Mrs Korbsook said that for decades overseas Chinese had shipped in goods from Hong Kong and sent back rice loaded in Bangkok.

"Those who worked on board ships, like my grandpa, had upgraded to become exporters and resided at Song Wat or nearby areas, which is still the hub of many big exporters such as Huay Chuan Rice, Nanaphan and Chaiyaporn Rice," she said.

Today, the industry is steered by the Thai Rice Exporters Association, and the volume of exports reached 9 million tonnes in 2009 fetching more than 180 billion baht in revenue.

The association now groups 191 exporters who control more than 90% of the country's total rice exports.

"With support from the authorities, the association played a crucial role in pushing export shipments to surpass those of Burma and the cooperation remained strong, which has helped keep Thailand as the world's biggest rice exporter," said Mrs Korbsook, the first female president of the association.

Cooperation with the government has included overseas trips to explore new markets and has been successful in helping the industry expand sales to 130 countries.

Campaigns such as the Thailand Hom Mali Rice Contest and the Thailand Rice Convention are major activities that have raised the profile of Thai rice in the global market, she said.

Although Thai rice exports have increased by one million tonnes every four or five years, potential to expand the market in recent years has been limited because of intense competition from Vietnam. Vietnam exported about 6 million tonnes of rice in 2008, up from 4.6 million the year before, and became the second largest in world rice exports in terms of volume.

In recent years, even Burma has become more active again in the rice business, especially this year as the military-ruled country cautiously opens up to the world ahead of a general election due later in 2010.

Burma had exported about 30,000 to 40,000 tonnes a year in 2005 and 2006, but the amount surged to 500,000 tonnes in 2008.

"Local millers, traders and exporters in Burma have been upbeat about improving the industry," said Pramote Vanichanont, the honorary president of the Thai Rice Mills Association.

They have sought cooperation from foreign investors including Thais in rice business, either in milling, exporting, and technologies for producing better-quality strains, according to Mr Pramote, who met with Burmese rice industry leaders last year.

The improvements, if successful, could revive the former rice bowl of the world but there would still be a long way to go for Burma to reclaim its top place, Thai traders observe.

"Most importantly, the return of Burma could substantially reduce poverty among Burmese farmers," said one trader.

1 comment:

Bhathiya99 said...

Ya Thailand, Burma is the best rice countries, In my Country Srilanka now it is growing up the rice cultivation