“Can Thailand remain the world’s biggest rice
Thailand was hit by the worst flood in 2011 causing vast damage to Thai economy as a whole. The floods have damaged 10 million rai (1.6 million hectares) of rice land, mostly in the Chao Phraya River basin, cutting the main harvest to about 19 million tons from 25.1 million tons and thus causing the reduction about 6 million ton of rice production in 2011. However, this research paper found that the reduction in our rice production in 2011 will be offset by the recovery in the rice growing after the first half in 2012. Moreover, Thailand’s reduction in the world rice export did not cause much fluctuation in the price of the world market. However, this research paper found that the main concern whether Thailand can remain its position as the number one rice exporter is not due to the short-run shock by the flood but rather the competition from Vietnam rice in terms of R&D, productivity, domestic policy and cost factors. Vietnam had gained more and more market share in rice export in the world market since 2005 and already become number 1 in Southeast Asian market and number 2 in the world market. Thus this situation posted the big challenge for Thailand in its long-term policy to cope with such problem in order to maintain the rank as number one rice exporter in the world market.
Key Question: “Can Thailand remain the world’s biggest rice exporter after the flood incident in 2011 and fierce competition from Vietnam rice?” I. Introduction It cannot be denied that Thailand had been the world’s biggest exporter of rice for almost half the century. We can look back in the year 2010, Thailand had exported rice to the world market for more than 9 million ton which accounted for one third of the total rice export in the world market. However, currently Vietnam rice has gained more and more market share in the world market and already become No.1 in ASEAN region with 67.5% market share.1 Thus it is interesting to see whether how Thailand can cope with this issue and see how Thailand can react to such circumstance. Also due to the recent flood catastrophe in 2011 which was the worst one during the past 50 years, many rice paddies are being destroyed. Thus this might also reduce Thailand’s capacity to export rice in the future as well. Thus this paper aims to answer whether Thailand can remain the world’s No.1 rice exporter by analyzing the damage from the recent flood in 2011. Also with the comparison with Vietnam policy toward rice production, this paper expects that some conclusion can be drawn from such evidence. II. Literature Review 1. C. Peter Timmer (2010) in ADB working paper “The changing role of rice in Asia’s food security” said that the food security in Asia had traditionally focused on rice- its production, marketing and consumption. However, rice production faces serious challenges and is likely to be more unstable in the future. He agrees on the strategy that presented for an international role in building larger rice reserves as a means to stabilize rice price on global rice markets. 2. SCB Economic Intelligence Center: SCB EIC (2011) had analyzed the threat from the rise of Vietnam rice to Thai rice export in terms of productivity, domestic policy toward rice production, R&D and lower logistic cost compared to Thai rice and how these factors contribute to the rapid growth in export of Vietnam rice during the past 5 years since 2005.
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