Despite big increases in both rice prices and the trading volume in global markets, Thai exporters may not benefit from the flourishing exports due to the firmer baht.

Sumeth Laomoraphorn, president of CP Intertrade, said Thailand should enjoy high export prices as the world's biggest rice-exporting country but the baht's appreciation would eat into that.

"Although rice prices have increased by 10 to 30 per cent, it will not compensate exporters for the baht's appreciation. The exchange-rate problem will give exporters lower returns," he said.

The baht is stronger than other currencies in the region. In particular, the Vietnamese dong is stable against the US dollar, which will reduce Thai export competitiveness.

Vietnam is the world's second biggest rice-exporter. The export price per tonne for Thai rice is US$30 (Bt1,056) to $40 higher than for Vietnamese rice.

Droughts will directly affect world rice production. Rice-importing countries such as Indonesia and the Philippines will have high demand.

Sumeth suggested that exporters should not rely only on US dollars but also other currencies to reduce export risks. Small and medium-sized rice-exporters will suffer the most from exchange risks due to poor management

efficiency and a lack of financial support.

The government, particularly the Small and Medium Enterprise Development Bank of Thailand and the Export-Import Bank of Thailand, should provide soft loans to SMEs, he said.

Meanwhile, a source from the Commerce Ministry said that despite the baht's strength, Thailand's total rice export volume was expected to reach 8.5 million tonnes this year. The source suggested the government continue its rice-pledging programme to stabilise prices. The government has shouldered a loss of Bt1 billion in its price-intervention programme.

Rising world rice prices will reduce the need for price intervention in accordance with the government's policy to gradually decrease such subsidies in the agricultural sector.

The government will consider other kinds of support for farmers such as hybrid rice seeds and advanced farm technology.

Petchanet Pratruangkrai

The Nation