Rice:Vietnam challenges Thailand

A touch of free-market thinking combined with hard-working farmers and efficient irrigation has turned Vietnam into a major rice producer and exporter in less than a decade. The country shipped 4.56 million tonnes last year, up from barely 100,000 tonnes annually in the late 1980s, an increase that worries Thai rice traders who fear weakening prices.

Sutep Limthongkul, director of the Rice Research Institute in Thailand, said one reason for Vietnam's great strides was the introduction of a freer economy that rewarded farmers for growing more rice. As well, the Vietnamese worked harder than their Thai counterparts. "They [Vietnamese] spend all day in the rice field tending their plants, while some Thai farmers have to work in various other industries for extra income," Mr Sutep said.

About 80% of farmland in Vietnam is properly irrigated compared with only 20% in Thailand, allowing the Vietnamese to plant three rice crops a year. Mr Sutep said it would take a huge investment for Thailand to match Vietnam's irrigation system. "With our unstable economic situation, to plan such an investment is not the priority."

In 1999, Vietnam's paddy output was more than 600 kilogrammes per rai compared with about 400 in Thailand. However, Mr Sutep said the development of Thai rice strains was ahead of that in Vietnam. "With good climate and plantation techniques, some of our strains can produce up to a tonne of paddy per rai."

The Agriculture Department is developing several new rice strains that are resistant to brown plant hoppers and drought. Ananta Dalodom, director of the department, said the strains were named Phitsanulok 2, Pathum Tani 1, Surin 1 and Sanpatong 1. They would yield 500 to 1,000 kilogrammes per rai, compared with 350-380 from current varieties, and could increase annual production by 1.5 million tonnes.

Thailand last year produced 21 million tonnes of paddy, and was the world's biggest exporter at 6.6 million tonnes. Vietnam's paddy output this year is estimated at 30 million tonnes, and it is seeking to build on its ranking as the second-largest exporter. Both Thailand Vietnam sell white rice, from the best grade of 100% to broken rice, to many of the same markets.

Somboon Pathaichan, manager of the Rice Exporters' Association, said Vietnam's rice business could significantly rival Thailand's if Hanoi improved its delivery procedures. Vietnam could well rival Thailand in the high-quality rice market very soon as it was exporting increasing quantities of top-grade rice. A Commerce Ministry official said Thailand's share of the markets in Indonesia and the Philippines could be eroded. Last year, Vietnam shipped 545,000 tonnes of rice to the Philippines and 1.6 million tonnes to Indonesia.

Thailand exported 1.1 million tonnes to the Philippines and 200,000 tonnes to Indonesia. "But we have not yet taken orders from the two countries this year," the official said, although Vietnam had shipped a total of 84,000 tonnes to both markets in the first quarter. Vietnam quoted both countries prices US$30-40 a ton cheaper than Thai rice. Thai exporters had wanted $200 a ton for 15% rice.

"There is no big difference in quality between Thai and Vietnamese rice, so price is significant," the official said. However, Thailand could guarantee delivery on time, unlike Vietnam.

He said Vietnam was reluctant to expand sales to Africa and Latin America because of the long distance involved. But Thai exporters, worried by financial constraints, were not keen on those markets either. "To compete with Vietnam, we have to improve our rice quality to stay ahead," the official said. Rice associations of the two countries last week signed a memorandum to increase co-operation in the rice trade. But observers are sceptical as each side is competing hard for export revenue

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