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Re-Imagining Rice Agriculture Place an image in exactly the same - - PowerPoint PPT Presentation

May 27, 2023 253 likes •414 views

Important instruction: Re-Imagining Rice Agriculture Place an image in exactly the same position as this grey box. Thailand Rice Convention 2019 28 th May 2019, Bangkok Select the image. [Mac] in the menu, select Arrange and then

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Important instruction: Place an image in exactly the same position as this grey box. Select the image. [Mac] in the menu, select ‘Arrange’ and then ‘Send to Back’. [PC] right click and then ‘send to Back’. This will then render the green box on top of the image.

Re-Imagining Rice Agriculture

Olam International Ltd

Thailand Rice Convention 2019

28th May 2019, Bangkok

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High global inventories: All exporting countries have higher stocks

1 USDA FAO IGC USDA FAO IGC USDA FAO IGC India 22,600 21,800 22,700 25,000 25,700 21,900 25,500 27,550 Thailand 3,009 5,600 3,200 3,174 5,400 3,100 3,624 5,600 Vietnam 1,034 3,100 3,800 1,145 3,000 3,700 1,045 2,950 USA 933 930 900 1,702 1,700 1,500 1,867 1,580 Pakistan 1,424 1,324 1,224 South Amer 1,818 690 1,100 1,530 670 900 1,363 480 600 China 109,000 105,100 92,900 115,000 106,500 98,500 117,000 106,500 Other Asea 1,361 1,481 1,481 Total Non Ch 30,818 32,120 31,700 33,875 36,470 31,100 34,623 38,160 YoY Diff 3,057 4,350

  • 600

748 1,690

Fundamental Comparisons Table: USDA, FAO, IGC, Olam

For Major Exporting Regions Ending Stocks (in 1,000mt)

2017/2018 2018/2019 2019/2020

  • Over the last few years, Thailand has been able to achieve very large export figures due old crop

availability

  • Lower Inventories in Thailand Post liquidation of the government stock
  • Thailand ending stock has dropped from over 12Mn MT in 2013/14 to around 3Mn now
  • As that crop availability dwindles, exports are adjusting lower and more in-line with the country’s

production

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High global inventories: Stocks-to-use

2

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9

0.05 0.1 0.15 0.2 0.25

Global Stocks to Use: Exporters, Importers, and China

Exporters (Left Axis) Importers (Left Axis) China (Right Axis)

  • Inventories in exporting countries (mainly India) will remain high
  • Importing countries will continue to see a drawdown in inventory as major importers

pursue self-reliance policies

  • Higher Inventories in China are expected to flatten in 2020
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3

5 10 15 20 25 30 35 40 45 50 1/12/2007 1/8/2008 1/4/2009 1/12/2009 1/8/2010 1/4/2011 1/12/2011 1/8/2012 1/4/2013 1/12/2013 1/8/2014 1/4/2015 1/12/2015 1/8/2016 1/4/2017 1/12/2017 1/8/2018 Millions of Metric Tonnes

Major Rice Exporters: 12-Month Moving Aggregate; Jan 2007 - Mar 2019

Thailand OtherASEAN Vietnam China India Brazil Pakistan US

China 840 Brazil (inc Argentina/Paraguay/Uruguay) 490 Vietnam 376 Pakistan 11 OtherASEAN

  • 343

India

  • 367

US

  • 445

Thailand

  • 1,017

Volume Gain Loss (12M on 12M)

000 mt

China discounts continue to drive demand to China Philippines improves Viet

Global Export demand is robust despite the loss of Bangladesh and Indonesia

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Thai Rice Prices Remains At A Premium

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200 400 600 800 1000 1200 1400 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19

USD Month

Thai HomMali, Viet Jasmine(Monthly Prices) Jan 2015 - Apr 2019

ThaiHomMali VietJasmine

  • Increasing supply of lower cost fragrant rice from Vietnam drives Thai export

demand lower

  • Thai Hommali has been able to remain steady at higher prices on the back of

domestic demand, Core Exporting countries Demand and lower stocks

Fragrant Prices

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300 320 340 360 380 400 420 440 460

Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19

USD

Month

WR 5% for Thai, Viet, Pak, India (Monthly Prices) Jan 2015 - May 2019 Thai5 Viet5 Pak5 India5

5

WR Prices have reverted back to 2015 lows as:

  • Exceptional import demand from Bangladesh and Indonesia has dried up
  • The major Exporting countries (especially India) continue to see high inventories
  • China has begun exporting cheap old crop; taking less imports (especially cross-border)

Thailand has less inventory and also sees risk of further shortage due to drought. Thai and Indian white rice prices have also been able to offer stability even as other markets fell to near-term lows

Bangladesh Demand Indonesia Demand

Thai Rice Prices Remains At A Premium

WR Prices

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6

Nigerian Cluster PB Demand:

  • Indian volumes come up as the Thai prices are relatively expensive
  • Recent dominance by Thailand would continue without a larger spread

Other West African PB Demand: Indian volumes dominate this region South Africa PB Demand: Thai would continue to dominate this market

  • 80
  • 60
  • 40
  • 20

20 40 60 80

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19

Price Differentials (USD) Market Share (%)

Date

Nigerian Cluster's Imports (MT) from India and Thailand (left axis) vs Price Differentials (Thai - India) for PB (right axis) NC - India NC - Thailand Price Differential (Thai - India)

Thai Rice Prices Remains At A Premium

PB Prices

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7

For Thailand rice:

  • Lack of overhang of the government inventory – No Cheap rice to export;

Market would substitute Thai Old Crop stock with Chinese Old Crop

  • Lower Ending stock compared to the other exporting countries – Firmer Prices
  • Weather related risk and derived shortages – Thai Rice at a Premium
  • Thai Rice continues to enjoy a High Quality Reputation

Thai Rice Global Market Outlook

“Re-Imagining Thai Rice” Maintain Thai Rice Premiums by meeting the Changing Consumer needs and develop the “core export demand”

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Sustainability: Maintaining Thai Rice Premiums by meeting consumer needs

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“Involved with the local community” Berlin “Sustainable, healthy” Berlin “Not too expensive Compared to Regular alternatives” Stockholm “Transparent supply chain” LA “Minimal environmental

  • impact. Eco friendly

packaging” LA “Info on pkg on how it is produced” LA “Good for the environment” LA

Note: quotes from consumers Research Mar/Apr 2019

“I want them to be ‘green’” Denver “I am a firm believer in Sustainability and good farmer relationships” Denver

Consumers are increasingly ethically-minded Food products with ethical claims is a US$250bn category with 4% growth per year Sustainable rice is gaining momentum

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Traditional premium-led model is very limited for Rice

9

  • Premium Model: Higher income rice consumers,

who can afford to pay a premium for sustainable rice

  • These consumers purchase Premium Products

such as Thai Hommali Rice, mostly in high-end packaging

  • These niche markets can maintain a similar

model to coffee/cocoa, but only accounts for a about 10% of the global rice market

  • Sustainability can deliver the High end

Products that can command the premium

  • Sustenance Model: Majority rice consumers eat

cheap, non-fragrant rice, and its byproducts (e.g. brokens) as a cheap staple carbohydrate

  • Premium model will struggle with lack of margin
  • Sustainability Projects can help reduce the cost of

farming, improve milling yields – overall reduce the Cost

RICE

500 MM mt

Total Palm Oil consumed per year, 68.645 MM mt Total Cocoa + Coffee consumed per year, Combined 16.66MM mt

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Thailand should be at the forefront of Sustainable Rice efforts

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Thai Rice Department, GIZ & Olam led partnership from 2016 which aims at moving 16,000 farmers in Thailand to Sustainable standards

  • Olam has been the Pioneer in Sustainable Rice Initiative
  • Only Private company in the world to offer Sustainable rice in this scale
  • Premium Quality rice
  • Volume – Scalability
  • All assurances as per the SRP standard

Positive Impacts we have been able to achieve 1. Farmers have seen a 9% reduction in cost 2. Quality improvements have also improved incomes by a further 10% 3. Word of mouth has led us from 70 farmers in 2016, to 2,300 Farmers in 2018 and expected to be 6,000+ farmers in 2019 4. Water savings as high as 40%

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Thailand should be at the forefront of Sustainable Rice efforts

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Thai Rice Department, 10 Thai Ministries, GIZ, Olam, and others in NAMA in 2019 which aims at moving 100,000 farmers in Thailand to Sustainable standards by 2023

– ’

é ’

To achieve transformational change through a paradigm shift from conventional to low-emission farming in Thailand

Goal

▪ Farmers have adopted the SRP Standard/GAP++ and thereby reduce GHG emissions and realize additional co-benefits. ▪ Mitigation services are provided in the market ▪ Innovative incentive schemes are established

  • n the national level to support the

transformation of the whole rice sector to low- emission production. ▪ 5 years from Aug 2018 – July 2023 ▪ 14.9 million Euro

Duration Budget Objectives

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12

“Re-Imagining” Thai Rice Industry for a Sustainable Future

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