Industry Trend Analysis - Rice: Infrastructure, Traceability Hampering Mekong's Frontier Markets - SEPT 2017

BMI View: Cambodia and Myanmar have struggled to gain market share in international rice markets due to infrastructure deficiencies and inadequate quality control systems. Both could prosper in an environment of low international prices were these issues addressed. In the meantime, Vietnam and Thailand will continue to dominate.

There is abundant potential for rice production in the Greater Mekong Sub-region (GMS), a regional grouping consisting of China's two Mekong provinces (Yunnan and Guangxi), Cambodia, Lao PDR (Laos), Myanmar, Thailand, and Vietnam. However, there is a clear divide between the region's major rice exporters (Vietnam and Thailand), those who aspire to export (Cambodia and Myanmar) and those whose main objective is to remain self-sufficient (China and Laos).

International rice prices have been trending downward since the food price spike of 2008/2009. We do not stray far from the trend, only forecasting a modest increase in prices out to 2021. Prices have been held down by the combination of a record output in several producing countries and the gradual release of stocks in Thailand, where an ill-fated government purchase programme had brought stocks to unsustainable levels. Oversupply conditions have emerged in parallel with a trend of a growing worldwide demand for premium varieties of the grain as consumers in major importing countries in Asia become wealthier and more demanding. Thailand has been the main beneficiary of these trends, given its strong government support programmes and the price premiums associated with high-quality Thai fragrant rice.

Mixed Picture For Mekong Rice
Greater Mekong Sub-Region – Rice Production Balance ('000 tonnes)
f = BMI forecast. Source: BMI, USDA

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