A government-to-government (G2G) deal with Indonesia is in works within the government of Thailand, who is looking to sell one million tonnes of rice in a year.
The signing of a memorandum of understanding (MoU) is set to be done during the last week of March according to Commerce Minister Jurin Laksanawisit. It will cover one million tonnes, at most, of 15% to 25% white rice each year over the span of four years.
The sales of rice do not disregard special conditions, which depend on the rice price across the globe as well as the production of Thailand and Indonesia.
No G2G deals were signed between the two countries over the last five years due to Indonesia’s self-sufficiency policy, which aimed to patronize and promote local production of the rice. The last G2G transactions between the two countries occurred in 2016 as part of a four-year contract where a total of 925,000 tonnes of rice were sold.
Despite this, natural conditions have still caused Indonesia’s rice production in recent years to plummet. The COVID-19 pandemic has likewise pushed the government to import rice and serve the people’s needs. In the past year, 89,406 tonnes of rice were imported from Thailand, marking a 46.3% increase from the previous year.
Thailand is also aiming to sign a similar G2G deal, this time with the government of Bangladesh for parboiled rice and white rice, according to Mr. Jurin.
However, the Thai Rice Exporters Association president Chaoren Laothammatas says that the contract is not yet signed and therefore will have no effect on the rice market of the country.
The rise in value of the baht has caused rice from Thailand to be more expensive than its competitors, posing a challenge in exporting Thai rice to the global market.
To compare, Thailand’s 5% white rice is quoted at $549 per tonne. Vietnam’s similar grain is priced at only $513-517, Pakistan at $438-442, and India having the lowest price among the group at $398-402 per tonne.
The same holds true for parboiled rice. Thailand stands at a whopping $557 per tonne, while competitors India and Pakistan sell at $383-387 and $457-461, respectively.