CIMA for the Export of Rice from Thailand Thawatchai Dechachete 28 October 2009

Outlines Thailand rice sector Price Ladders Calculation of the CIMA Difficulties Challenges faced and future study

Thailand rice sector 16 million of Thai people is in the Rice Industry Small scaled farmers only hectare per household Rice production is around 30 million tonne a year 40% of the production is exported

Mojor markets for Thai Rice Thailand exports varieties of rice, premium rice (Thai Jusmine Rice), white rice 100%, white rice 10-15%, white rice 25%, parboiled rice. Major markets for the Thai Jusmine are the US, China, Malaysia. Major markets for the white rice 25% are the Philippines, Senegal, Ivory Coast. Major markets for the parboiled rice are Benin, South Africa, Russia

Rice Trade in Thailand There are 4 persons involved in rice trade; producer, miller, exporter and importer Rice trade is mostly run by private sector Although Thai Government provides “the rice pledging scheme”, it is no subsidies to the Thai rice sector

Rice Pledging Scheme”, Paddy rice 5% broken pledging scheme Unit: Baht/Ton ne (USD/Ton ne) Year Annual Average Price Pledging Scheme Price Price Differece ,771.86, (173.0)(185.5)(-12.5) ,405.76, (192.0)(186.7)(5.3) ,942.26,665.93,276.2 (298.0)(199.8)(98.2)

Major Trade Barriers for Thai Rice High import tariff Monopoly importer Subsidy in developed countries

High import tariff Tariff rates for rice imports by trading countries CountryTariff rate China65% EU416 EUR/tonne Japan341 Yen/kg US11.20% Source: WTO Secretariat

Monopoly importer Quantitative Restriction Rice Import Specification Restriction Rice Import Auction

Price ladder of Thai Jasmine rice exports to the US Descriptions Exporter price (PRX)878 1,002 1,370 Duty – paid price ,054 C.I.F. price F.O.B. price Processed good price Producer level price Exporter government taxes less subsidies (Tax)000 Cost of production (COP)

Price ladder of white rice 25% exports to the Philippines Descriptions Exporter price (PRX) ,686 Duty – paid price ,297 C.I.F. price F.O.B. price Processed good price Producer level price Exporter government taxes less subsidies (Tax)00 Cost of production (COP)

Price ladder of parboiled rice exports to South Africa Descriptions Consumer price ,098 Exporter price (PRX) Duty – paid price C.I.F. price F.O.B. price Processed good price Producer level price Exporter government taxes less subsidies (Tax)000 Cost of production (COP)

Calculation of CIMA BMA = EDT + MTD + (PLC - PLP) + SPC The US Case EDT = 0, MTA = 11.2% of CIF price, PLC = DNA inspection expenses for Jasmine rice PLP = 0 SPC = rice fuming cost

Calculation of CIMA (cont.) BMA = EDT + MTD + (PLC - PLP) + SPC The Philippines Case EDT = 0, MTA = 50% of CIF price, PLC = 0, PLP = 0 SPC = rice fuming cost

Calculation of CIMA (cont.) BMA = EDT + MTD + (PLC - PLP) + SPC South Africa Case EDT = 0, MTA = 0, PLC = 0, PLP = 0 SPC = rice fuming cost

CIMA BMAP = BMA/PRX * 100 CIMA = 1 – BMAP

Summary of the BMAP and CIMA DecriptionsBMAPCIMA Country – Rice Type The US – Thai Jasmine rice The Philippines – White rice 25% South Africa – Parboiled rice

Difficulties Estimation of processor and exporter cost Estimation of meeting standard for export and cost of meeting health and safety standards.

Challenges faced and future study CIMA cannot explain trade barrier caused by quantitative and product specification policy. CIMA cannot show the impact from the rice import licensing auction

Thank you very much Thawatchai Dechachete