Disillusioned Thai rice exporter turns to Cambodia

27 Jan 2013
Reuters

BANGKOK: Capital Rice Ltd, Thailand’s third-largest rice exporter, is shifting some of its business to Cambodia as the Thai market shrinks because of government intervention that has diverted grain into state stockpiles or made it too expensive to ship.

“We have built a medium-sized milling house in Cambodia, expecting to start processing rice and export by the first quarter of this year,” Wanlop Pichpongsa, the deputy managing director, told Reuters.

For the moment, Capital’s plans for Cambodia are modest: this year it expects to export around 30,000 tonnes of rice, whereas in normal years it used to handle around 20 percent of exports from Thailand or some 2 million tonnes. But it shipped only around 1 million tonnes in 2012, when overall Thai exports fell sharply due to the intervention.

Capital’s move illustrates a growing trend: Asia Golden Rice Co. Ltd, Thailand’s second-largest exporter, set up shop in neighbouring Cambodia early last year and others are sourcing rice from rival countries such as Vietnam and Pakistan, shipping it direct to customers from there.

“We can’t deny that the intervention scheme has forced us to move to Cambodia as rice there is much cheaper than at home,” Wallop said.

“We’re not ignoring the rice business at home but it will get smaller anyway if the government continues its intervention,” he said, adding Capital was concentrating in Thailand on premium-grade fragrant rice, which was still selling.

The Thai government won an election in July 2011 with a promise to pay 15,000 baht ($500) a tonne for paddy and buy every grain of rice from the millions of farmers in the country if that proved necessary to raise their income.