Thailand may lose its status as the world's top rice exporter to Vietnam by 2015 as higher costs and a weaker Vietnamese currency eroded its price competitiveness, the Thai industry association for shipments said.
Shipments may drop to 8 million tons this year, Chookiat Ophaswongse, an adviser and former president of the Thai Rice Exporters Association said in an interview on Monday. Exports were 8.6 million metric tons last year, compared with Vietnam's 6 million tons, according to the US Foreign Agricultural Service.
"We have to admit that maybe in the next five to six years, we probably won't be the largest exporter of rice," Chookiat said while attending a conference in Ho Chi Minh City. "We cannot compete with Vietnam anymore."
Thailand's loss of market share in its US$5.05 billion rice industry, according to the Commerce Ministry, deals a further blow to its economy after political turmoil this year hurt tourism. Thai politics have contributed to driving up costs via guarantees of minimum prices for farmers, designed to win the support of rural areas, Chookiat said.
Thailand's ability to export parboiled rice, which Vietnam doesn't currently ship, will enable it to maintain its advantage for the time being, Chookiat said. "On a white-rice basis, we're already dead," he said.
Thailand bypassed the US as the world's biggest rice exporter in 1980, based on figures posted on the website of the International Rice Research Institute. Vietnamese exports, which at the time were negligible, passed 1 million tons in 1988.
The average gap between the price of comparable varieties of Vietnamese and Thai rice has widened. Thailand's 5 percent broken-grain variety was an average of $12 per ton more expensive than Vietnam's in 2007, according to figures from the Food & Agriculture Organization (FAO) of the United Nations.
Thailand's 5 percent broken-grain was $68 more expensive than Vietnam's in 2008, and in 2009 the gap widened to $123, according to figures from the FAO's latest Rice Market Monitor.
"Our cost structure is much higher," said Chookiat, referring to labor, land and logistics costs.
A weaker currency has also contributed to Vietnam taking market share away from Thailand over the past two years, Rut Subniran, managing director of rice exporters Herba Bangkok S.L., said on Monday at the conference.
Vietnam devalued the dong at the end of 2008, in November 2009, and in February of this year, leaving the currency trading at around 19,015 per dollar, about 11 percent weaker than two years ago. Over the same period the Thai baht has strengthened from 33.53 per dollar to 32.38 now.
"Look at transportation," said Rut. "In Vietnam they use rivers, where in Thailand we use trucks, which need gasoline."