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8 Sep 2011


Packed Rice Sufficient, but Rising Prices Expected (Business Brief No.3171)


A situation of packed rice shortages and possibly higher prices after the announcement of the new rice pledging scheme scheduled on October 7 is now monitored by the general public as seen from growing concern in July, thus leading to rice hoarding. As a result, supplies of packed rice at some modern trade outlets have dropped significantly.
Hence, the Ministry of Commerce and rice packers have confirmed supplies are still adequate for domestic consumption, but prices may rise gradually in line with rising costs due to the government's stockpiles of 1.2 million tons and private sector stockpiles of 3.2 million tons. In addition, rice from second round of minor crop amounting to 1.5 tons will enter to the market in September (while around 0.5 million tons have been damaged by flooding). Thus, we will have about 5.9 million tons on hand, excluding rice from major crop that should be released to the market at the end of November.
Total demand for rice over the remainder of the year is expected to be around 5.2 million tons, with 0.7 million tons/month for domestic consumption (calculated from an average consumption of 135 kg./person/year), and averagely 0.6 million tons/month for export over the remainder of this year (based on expected export of 10 million tons for 2011, with 7.12 million tons, or an average of 1 million tons/month, already exported during 7M11).

KResearch expects that the impact of gradually rising prices for packed rice will result in changing consumer behavior. Some consumers may turn to buying bulk rice from vendors in traditional marketplaces. Meanwhile, those who still seek packed rice may shift to other rice brands or varieties, e.g., from Thai Hom Mali to plain white rice varieties. It is noteworthy that consumer choices may largely be based on price. However, the behavior of some consumers may not change, particularly those who tend to consume premium-grade rice as they can contend with higher prices more easily and focus more on quality.