Capital Rice on course for record

The company will also remain the biggest rice exporter, with export volume forecast to reach 1.9 million tonnes. Its exports grew 50 per cent to 1.3 million tonnes year on year during the first seven months of 2008.

Higher rice prices have created tougher competition and more competitors. However, the company is ambitious to retain a strong position through its business plan, which has been designed to be flexible and closely adapt to variable factors.

"Despite forecasts of a demand slowdown in the second half of the year, we will try to maintain our average sales at 120,000 tonnes a month," said Wanlop Pichpongsa, deputy managing director.

Wanlop said that due to unusual demand in the first half of the year, monthly exports reached nearly 200,000 tonnes compared with the usual average of 150,000 to 170,000 tonnes.

He pointed to important factors that will hit export markets in the remainder of this year - increased exports from India and Vietnam, rising demand in the global market, particularly from African countries, and the importtariff elimination in Nigeria which will enhance imports.

Rice trading businesses now rely mainly on prices rather than other factors such as exchange rates and interest rates as in the past. The rice price is a very sensitive factor influenced by climate change, the unsustainable supply of food crops in the world market and speculation. The daily price changed by Bt5 to Bt10 per 50-kilogram per sack in the past, but due to many factors the price now fluctuates wildly by Bt50 to Bt100 per day.

Wanlop said the company now had to closely monitor both domestic and export prices every day to avoid export risks. It also carefully manages stock before taking orders. In the past, exporters would close an export deal with importers before buying rice to fill stockpiles. However, this tradition has changed and now exporters must have assured stockpiles for export as prices change sharply.

Some exporters faced huge losses early this year due to having no stockpiles for export as the price increased sharply.

Capital Rice has a capacity of 300,000 tonnes for stocking rice.

In addition, instead of focusing only on export volume, the company is concentrating on rice quality, in particular organic rice, in order to increase value for the product.

The company's promotion of organicrice growing in Chiang Rai by villagers indicates its social commitment and makes for harmonious relationships, Wanlop said. In Chiang Rai, Capital Rice grows rice on more than 5,000 rai.

The company is planning to undertake contract farming covering 1,000 rai in the Central region to support higher demand for organic rice in overseas and domestic markets. The selling price for organic rice is about 30-50 per cent higher than normal rice prices.

Capital Rice is trying to take into account consumer behaviour in importing countries, particularly where consumers demand highquality rice. Customers in the Middle East, particularly the United Arab Emirates, Yemen and Saudi Arabia, are likely to have higher demand for quality rice, so Thai jasmine rice should win consumers, said Wanlop.