THAILAND

The value of food exports may decline by 3% this year from a targeted 830 billion baht if the baht strengthens to 31 to the US dollar in the remaining months, says Pornsil Patcharintanakul, deputy secretary-general of the Thai Chamber of Commerce.

"The baht is one of the factors that will affect our ability to compete. It will probably reach 30 to the dollar this year; we won't see it weaken. For the rest of the year, the average should be 31 baht," he said, adding that climate change would also have a marked effect.

Amorn Ngammongkolrat, executive vice-president of the National Food Institute, said the estimate for food exports this year was 830 billion baht, or US$25.9 billion based on an exchange rate of 32 baht to the dollar. The currency was trading at 31.46 to the dollar on Wednesday.

That estimate represents a 10.1% increase from 754 billion baht last year. Food exports for the first half of the year totalled 411 billion baht.

Nophadol Siwabutr, vice-chairman of the Federation of Thai Industries' Food Processing Industry Club, said the baht's strengthening against major currencies would affect the rice and shrimp sectors, as their costs are in baht.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said each gain of one baht against the dollar would increase the free-on-board price of rice by about $20 a tonne for white rice and $32-35 for fragrant rice.

"Therefore, our ability to compete in the world market is declining compared with that of Vietnam, which recently devalued their dong," he said.

"However, the situation we have now is that Vietnam is delaying sales of its rice since it's already sold a lot, resulting in a narrowing of the price gap."

Thailand's price for 5% white rice was quoted at $470 a tonne this week, against $450 for Vietnamese rice. Last week's figures were $460 and $400, respectively, while three weeks ago they were $450 and $350.

"Thus, Thailand has a better opportunity to sell, but we don't know how long this situation will last," said Mr Chookiat.

Thailand is expected to sell a total of 8.5 million tonnes of rice this year.

"Earlier, we thought 8 million tonnes would be good enough," said Mr Chookiat.

Panisuan Jamnarnwej, president of the Thai Frozen Foods Association, said even though shrimp exporters would find raw materials cheaper due to the stronger baht, prices have increased from last year.

Thailand exports 60% of its food products to Asean, Japan, the US and the EU.