Bangkok: The Thai Rice Exporters Association has expressed skepticism over the possibility of foreign capital, particularly from China, dominating the Thai rice milling industry. The association clarified that there is no confirmed information regarding Chinese investors acquiring rice mills in Thailand's northeastern region.
According to Thai News Agency, Mr. Chukiart Opaswong, Honorary President of the Thai Rice Exporters Association, addressed social media reports suggesting Chinese investments in regional rice mills. He emphasized the absence of confirmed acquisitions as reported and explained that the industry includes both successful and unsuccessful operators. While individual mills may be sold to new investors, including foreigners, due to operational challenges or owners wishing to exit, the association believes it is unlikely for foreign capital to monopolize the sector.
The complexity of the rice milling industry, characterized by a multitude of players and the requirement for close management, makes it difficult for foreign investors to gain market dominance. Mr. Chukiart highlighted that unlike other agricultural products with specific end markets, Thai rice enjoys a broad range of export destinations. This diversity allows rice mills to sell to multiple exporters or target domestic consumers, reducing the risk of market control by any single investor.
Despite exporting roughly 8 million tons of rice last year, only about 500,000 tons were sent to China. This indicates that Thailand's rice market is not heavily reliant on China. Nevertheless, this year's exports to China, particularly jasmine rice, have declined, influenced by competitive pricing from other countries like Cambodia.
Currently, Thai jasmine rice is priced at approximately US$1,200 per ton, while Cambodian fragrant rice is available at a substantially lower price of US$800 per ton. This price discrepancy has prompted some buyers, including China, to favor Cambodian rice, reflecting the intense price competition and the ability of buyers to switch sources based on market conditions.
Mr. Chukiart reiterated that the rice market's broad scope and diverse participants make it resistant to monopolization. He also noted that previous foreign investments in Thailand's rice-related businesses often faced challenges due to the necessity of understanding the market intricacies and maintaining close management.
The Foreign Business Act B.E. 2542 classifies 'rice milling and flour production from rice and field crops' as a business requiring government approval for foreign participation. This regulatory framework further complicates the prospects of foreign dominance in the Thai rice milling sector.