Monday, January 30, 2012

Rising rice prices create rough waters for Thai river barges

Bangkok - Large steel rice barges floating down the Chao Phraya River behind tiny tugboats have long been a popular sight for tourists staying at Bangkok's posh riverside hotels.
Equally popular are cruises up the Chao Phraya on old wooden rice barges that have been converted into small pleasure boats for tourists.
The boats were replaced by the barges decades ago when Thailand surpassed neighbouring Myanmar as the world's largest rice exporter and Thai traders required bigger barges to transport their rice to bulk carriers in the Gulf of Thailand.
But tourists are seeing fewer of the barges this year as declining rice exports threaten the trade.
Thailand sold 10.5 million tons of rice overseas last year, but rice exporters were anticipating a 30- to 40-per-cent drop in exports in 2012 because of growing competition and a rice-pledging scheme introduced by the government late last year that threatens to see Thailand replaced by Vietnam as the biggest rice exporter.
Under the scheme, introduced by the Pheu Thai Party, which won the July 3 elections on a host of populist policies, farmers have been promised 15,000 baht (500 dollars) per ton of plain white rice and 20,000 baht per ton of jasmine rice, regardless of world prices.
Designed to boost farmers' incomes, the scheme has been criticized by rice exporters for pricing them out of the world market.
Over the past two months, rice exports have dropped more than 50 per cent when compared with the same period last year. The impact can be seen on the barge business.
'I've had no work this month because there haven't been any new orders,' said Banjong Kornphom, who rides rice barges with his wife for a living.
Thai white rice currently sells for 530 dollars a ton on the world market, compared with India's 430 dollars, while Thai jasmine sells for 1,000 dollars, compared with Vietnam's 560 dollars.
'If you look at the figures for December, rice exports were down from about 1 million [in 2010] to 450,000 tons [in 2011], so the barge business must be affected,' said Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association.
Exporters predict Thailand will export 6.5 million to 7 million tons of rice this year and lose its title of world's largest rice exporter, which it has held since the mid-1960s.
About 60 to 65 per cent of Thailand's rice destined for export is transported from warehouses along the Chao Phraya River in flat-bottomed barges to the island of Ko Si Chang in Chonburi province, where it is loaded onto ocean-going vessels too big to come up the river.
Making the barges has been the trade of Chaopayar Constructed Co Ltd, located just north of Bangkok, for three generations, or more than 60 years.
Anop Phuangkhao, the director of one of Thailand's oldest and biggest barge makers, said his grandfather founded it.
'My grandfather learned to make steel barges from the Japanese during World War II,' Anop said. 'The Japanese started building barges here during the war to transport provisions to their troops.'
The firm is located in Pathum Thani province's Sam Koke district, home to nine other barge builders. Ayutthaya province, just upstream, also hosts many barge makers.
They have faced numerous troubles recently. Most had to shut down for at least two months last year because of floods in October and November.
Thailand's exports of tapioca and sugar, also transported on barges, were expected to decline this year because of lower demand from China.
Barges also face growing competition from container ships, docked at the Chonburi port of Laem Chabang, where commodities are delivered by container trucks.
'I would say the future for barge transportation will be down a bit from the past because of the competition from containers, which nowadays is getting more and more cheap,' Chookiat said.
Anop said he believes there is still a place for river barges in Thailand.
'This is still the cheapest way to transport for exporters,' he said. 'One barge can hold 1,300 tons of rice, which is more than 10 trucks can carry, and you don't need to worry about petrol prices, replacing tyres or paying bribes.'
But Anop has an eye on the future, too.
'I'm the new generation, and I'm hoping to make some improvements,' he said. 'I'm thinking about converting barges into floating hotels and have them docked on the Chao Phraya or maybe off an island in the Gulf of Thailand.'

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