Trend in  Rice consumption in Thailand1/

 

Somporn Isvilanonda2/

Kasetsart University, Bangkok

 

I.     Introduction

 

Rice has long been a traditional crop and  a dominant economic activity in rural  Thailand. Not only does over half of agricultural labor force  engage in rice production, but also half of cultivated area is allocated for rice production and produces around 26 million ton of paddy per annual  in recent year. Despite two-fifth of rice suppy is export, the rest is used for domestic consumption. Whereas rice remains Thailandfs staple food, both economic prosperity and rapid urbanization in the recent past led some changes in peoplefs consumption habits. In addition, rising income has inevitably stimulated consumers to diversity their diets away from rice  in favor of meat and horticultural products. The practice of eating out associated with urbanization has also reduced per capita rice consumption. Continued development of these behaviors could further slacken the demand for rice in the domestic market and depresses farm price and farmersf income. Since rice farmers share a majority of the Thai farmers, an increasing development in this situation would worsen the rural economy and widening the income gap between rural and city. This paper attempts to analyze the trend of domestic rice consumption in Thailand. The usage of rice and rice by products for feed and food processing industries are also discussed.

 

 

II. Economic development, population growth and household food expenditure

               

                Economic development in Thailand over the past few decades has successfully transformed her agricultural economy toward an increasing importance of non-agricultural sector. This can be observed by  a declining share of agriculture from one-fifth in the gross domestic product(GDP) in 1980 to less than one-tenth in 2005. As the agriculture has begun to gradually loss its comparative advantage, the manufacturing exports and tourism quickly replaced the agriculture as the source of her economic growth. Despite the interruption of financial crisis in 1997 which Thailand had to devalue her currency, the economic growth in recent years  was about  5% which is a considerable rate.

----------------------------------

1/ A paper presents at the symposium on gWorld Rice at Stakeh during March 13-14, 2005 at Heart Inn Nogizata Hotel, Tokyo.

2/ Associate professor, Department of Agricultural Economics, Faculty of Economics, Kasetsart University, Bangkok 10900, Thailand

 

                During the past three decades, the performance of Thailand economy can be reflected by the population income. The average per capita income at constant price increased double from 21,670 baht per annual during 1981-85 to 48,436 baht per annual during1996-00 (Table 1). A rapid  growth  from 1981-1995 has consistently generated an economic boom until facing the economic crisis in 1997 which declined the growth rate in a later period to 2.5%

                Besides a successful in transforming her economy, the average annual population growth in Thailand has continuously declined from 2.72 %  during 1976-1970 to 1.32% during 1996-00. It further declined to 0.75 during 2001-03. The average mid-year population in Thailand during 2001-03 is about 62.7 million people (Table 2). A rise in per capita income in coupled with a diminishing population growth would stimulate de declining trend in domestic  rice consumption in Thailand.

 

 

Table 1 Thailand gross domestic product(GDP) per capita  at 1998 price and annual

             growth, 1971-01

Period

GDP per capita

at 1998 price(baht)

(1)

Annual growth in

GDP per capita(%)

(2)

1971-75

Na

-

1976-80

Na

-

1981-85

21,670

-

1986-90

28,991

6.76

1991-95

43,031

9.69

1996-00

48,436

2.51

2001

48,697

0.53

Source: (1) from Bank of Thailand. (2) Otherfs calculation

 

 

Table 2 Thailand mid-year population and annual growth, 1971-03  

Period

Mid- year population

(1,000 people)

(1)

Annual growth in

 Population(%)

(2)

1971-75

38,125

-

1976-80

43,304

2.72

1981-85

48,514

2.41

1986-90

53,939

2.24

1991-95

57,150

1.19

1996-00

60,911

1.32

2001-03

62,730

0.75

Source: (1) from Department of Provincial Administration, Ministry of Interior

 

 

III.            Household  rice consumption

 

Food consumption patterns in Thailand have been gradually changed over the past few decades. There has been an increasing trend in per capita consumption of the more nutritive foods such as meats, fruits, and vegetables and a declining trend in per capita rice consumption (Konjing and Veerakitpanich, 1985; SEP, 1992). In the household food budget, the share of rice and cereal has declined from 17% in 1990 to 11% in 2002. Rapid economic growth, urbanization and improvements in marketing networks and education induce a change in consumersf habit as well as their food consumption expenditures.

            Traditionally, the Thai dietary habits rely mainly on rice. By analyzing the Thailandfs household socio-economic survey data in 1992, Isvilanonda and Poapongsakorn (1995) showed that the per capita rice consumption per annual was estimated at 119 kg of milled rice (or 180.3 kg of paddy equivalent). Per capita consumption in urban area was only 43% of the level in rural area and consumption in semi-urban area was about 14% lower than in rural area. In rural area the consumption of the top 25% of the income group was 11% lower than that of the bottom 25%; for semi-urban area, the difference was 14% and for urban area it was 20% 9table 3).

In ten year later or in 2002, the per capita rice consumption has further declined to be 101 kg of milled rice. The top 25% of income group was 56 % lower than that of the bottom 25% In rural area the consumption of the top 25% of the income group was 29% lower than that of the bottom 25%; for urban area, the difference was 36%. That is, the average per capita consumption of rice declined 15% in  the past ten years. The gaps are even bigger for the high income class than that of the low income class.

 

Table 3. Per capita annual consumption of rice (kg of milled rice) by region and income

              group in 1990 and 2002.

Income group

Average per caipta consumption(kg)

 

Rural

Semiurban

Urban

All average

19901/

Bottom25%

151

133

97

142

Middle50%

146

125

89

127

Top25%

134

115

78

106

Total

146

125

83

119

20022/

Bottom25%

128

-

121

125

Middle50%

111

-

93

100

Top25%

91

-

77

80

Total

114

-

93

101

Note: 1/ data in 1990 from  Thailand Socio-economic Survey in 1990. Adopted from

          Isvilanonda and Poapongsakorn

          2/ Owned calculation by using the Thailand Socio-economic survey data in

             2002. In This survey, the semi-urban area was included in urban area.  

 

Using this average per capita consumption at 101 kg per annual  for estimating the domestic household rice consumption, it is found that about 6.4 million ton of milled rice or 9.7 ton of paddy equivalent was used in 2002. Anyway this estimation do not yet take into account the outside home consumption of rice.

 

 

 

IV. Rice production , export and farm price movement

 

                Rice is grown in many parts of the country. The share of rice area is around half of the total cultivated area. The rainfed ecosystem accounts for nearly 80% of thwe total rice area. Water scarecity prevented the development of irrigation system that would allowed rice cultivation during dry season. Thus, dry season irrigated rice has accounted for only 10% of the total  rice area in Thailand and about 19% of total rice production (Isvilanonda, 2002). The major rice-growing belt located in the norteast region accounted for almost half of the countryfs rice cultivated area. A single rice crop grown with traditional high-quality rice varieties, particularly Jasmine rice or KDML 105 is the predominant cropping pattern in the region. Meanwhile, the average rice yield in this region is very low. Commercial rice production is mostly concentrated in the central plain and lower northern region where a substantial area is irrigated. Modern rice varieties are commonly grown in this environment with a high production yield.

                The production of rice has increased nearly double over the past three decades. The average production rose from 13.86 million ton of paddy during 1971-75 to 26.14 ton during 2001-2003 (Table 4). Despite the increase in rice production in the early period was a result of the expansion of cultivated land, hower, the rise in production in the recent past was due to improvement in rice cropping intensity, particularly in irrigated areas.

 

During 1971-75, rice exports averaged 1.99 million ton or 14.49% of the total  production. An increase in total production stimulated the volume of exports in subsequent periods. Exports reached 9.14 million ton or about 40% of the total production in 1996-00. The export even increase further to 11.11 million ton in recent years (Table 4).

 

 

 

 

 

 

 

 

 

 

Table 4 Average  production, rice export, and domestic use, 1971-03

Period

Total rice use

 

(1)

Export

 

 

(2)

Seed use

 

 

(5)

Domestic use availability

after seed use

(4)

Per capita domestic disappearance

(5)

(million ton of paddy)

(kg)

1971-75

13,862

1,995

559

11,308

290  (192)

1976-80

15,665

3,674

654

11,337

257  (170)

1981-85

18,708

5,749

692

12,623

245  (162)

1986-90

19,707

7,659

701

11,374

203  (134)

1991-95

19,415

7,767

742

10,908

293  (128)

1996-00

23,019

9,145

953

12,921

211  (139)

2001-03

26,141

11,112

1,104

13,925

216  (143)

(%)

1971-75

100.00

14.39

4.03

81.58

-

1976-80

100.00

23.46

4.17

72.37

-

1981-85

100.00

30.74

3.70

65.56

-

1986-90

100.00

38.86

3.56

57.58

-

1991-95

100.00

40.00

3.82

56.18

-

1996-00

100.00

39.73

4.14

56.13

-

2001-03

100.00

42.51

4.17

59.85

-

Note:  Number in  parenthesis  is milled rice

Source: (1) and (3) from Office of Agricultural Economics. (2) from Department of

              Custom. (4) and (5) from authorfs calculation.

               

 

 

 

                Despite Thailand is the largest  exporter in international rice market,  a green revolution in many parts of the world over the past three decades has continuously raised the trend of world rice supply. This situation when combines with a slackening trend of world rice demand has further declined the international rice price. Since domestic and international rice markets are integrated, a declining trend of the export price transmitted to the declining trend in domestic price of milled rice (figure 1).

 

 

                           

 

                     

V. Domestic rice availability

 

                The domestic availability of rice in each calendar year is estimated after deducting the volume of exports from total prduction, which inevitably includes annual changes in rice stock. On the other hand, domestic disappearance comprises industrial and domestic consumption but excludes seed use.

                The total amount of seed use is associated with area and seedling technique employed. The widespread adoption of pregerminated direct seeding and broadcast seeding in many areas in the past few decades has resulted in an increase in demand for seed. During 1971-75, seed use avreaged around 0.56 million ton of paddy(4.03% of total production) and increased to 1.1 million ton or 4.17% during 2001-03.

                The use of rice and rice by products for  agroindustry and feed mills is rather limited. Howeveer, it is difficult to quantify the volume of industrial use because of unavailable data.

                In Thailand, reliable time series data for rice stocks are not available. The per capita disappearance per annual in Table 4 is obtained by taking a three year moving average (to reduce the effect of annual change in rice stock on domestic availability). It is found that the domestic use availability is nearly stable over the past few decades. It slightly increased from 11.31 million ton(in term of paddy) in 1971-75 to 12.26 million ton in 1981-85. During 1986-90 and 1991-95, the domestic use availability slightly declined from  11.35 to 10.91 million ton, respectively. However, it increased marginally from 12.92 million ton during 1996-00  to 13.92 million ton or 59.85% during 2001-03.

Despite a rise in population, the trend of per capita domestic dissappearance (in term of paddy) declined continuously from 290.30 kg per capita (or 191.60 kg of milled rice) in 1971-75 to 193.30 kg per capita (or 127.60 kg of milled rice) in 1991-95. However, during 1995-00 to 2001-03, the domestic  per capita domestic disappearance  increased slightly from 210.80 kg(or 139.10 kg of milled rice) to 216.50 kg(or 142.80 kg of milled rice), respectively.

 

VI. Industrial Rice Usage

 

                The data for industrial rice usage can be estimated by deducting the domestic availability with household consumption. In 2002, the estimated industrial use of rice was around 4.23 ton of paddy equivalent or 2.79 ton of milled rice.

 

                6.1 The usage of rice by products in feed  industry

During the past few decades, the share of poultry and meat in household food expenditure has continuously risen in both rural and urban areas. This change in household food consumption patterns in coupled with the rapid growth of  exported volume of poultry products, particularly chicken,  has inevitably induced an expansion of the livestock sector  as well as a demand for livestock feed (Poapongsakorn, 1985; Sutabuttra, 2000). The quantity of feed demand has risen from 8.66 million ton in 1999 to 10.006 million ton in 2004 with a growth rate of 3.1% per annual. Among  raw materials used in animal feed industry,  the usage of broken rice is less than four times that of corn. The share of broken rice is appeared in only swine and duck feed industries (Table 5).

 

Table 5 Estimated broken rice, rice bran, and yellow corn usage, 2004

Feed industry

Broken rice

Rice bran

Yellow corn

(metric ton)

Chicken feed

-

341,200

2,938,000

Swine feed

896,000

435,000

733,000

Duck feed

75,000

30,000

20,000

Dairy feed

-

81,000

61,000

Aqua feed

-

63,000

107,000

Total

971,000

950,200

3,859,000

Source: Thai Feed Mill Association

 

The high price of broken rice and rice by products relative to corn price limits the usage of rice by products in animal feed industry (Figure 2).

 

Source: Adopted from Punyawan  (2005)             

 

               Figure 2 Comparision of broken rice, rice bran, and corn prices

 

 

 

6.2  The  rice processing industry  

                The usage of rice and rice by products as a raw materials in  food and non-food industry is relatively small in Thailand. It was approximated that 8.79% of milled rice production was used in these processing industries. Using the International Standard Industrial Classification (ISIC), the rice processing industries  can be classified into rice cracker, rice flour, rice vermicelli, and rice starch. In 2002, there were 1,731 rice processing plants registered at the Department of Industrial Plants, Ministry of Industry. Judging from the registration number, the share of small plants is high or about 86% of the total number. Many large and medium scales are involved in producing rice processing products for export. Despite the average value of export has increased from 2,325.7 million baht during 1991-95 to 3,445.5 million baht during 1996-2001, the export quantity on the other hand has declined from 124.1million ton to 110.4 million ton during the same period (table 6 and 7). In terms of both exported value and quantity growth, the rice cracker and the rice sheet are still very high potential for Thailand to export these products.

At present, the industrial performance for rice processing products in Thailand is continuing adjusting toward a change in market environment and technology. This

 

 

 

reflects by the shrunken of export quantity but the risen of  the export value. Thailand has still a large room to improve her value added from rice processing products. In recent years, the value share of her rice processing products export is accounted for less than 5% of the total rice export value which mostly in term of  milled rice grain.

 

VII. Conclusion

 

A successful economic development over the past few decades has influentially made an improvement in per capita income of the Thais and consequently stimulated  a change in household rice consumption patterns. In all types of community development, a decline in per capita  rice consumption in households was found whereas the income  level increase. The per capita consumption even declined further from 1992 to 2002. This has  diminished the total household rice consumption in recent years. In Thailand, the usage of rice and rice by products as a raw materials in feed and rice processing industries is relatively small. As a result, almost of the excess rice supply are exported as milled rice grain. The value share of rice processing products export is negligible. Since Thailand mostly exported rice in the form of grains, a continuously declining the world rice price  simultaneously affected the domestic price. 

It is necessary for Thailand for enhancing the countryfs rice consumption demand situation through technological development for improving new forms of rice and rice processing products. Forms of  promotion strategies are also essential for alleviation a declining trend of household rice consumption patterns.

 

 

References

 

1.              Isvilanonda, S. and Poapongsakorn, N. (1995). gRice supply and demand in Thailand: the future outlook, Thailand Development Research Institute, Bangkok, Thailand.

2.              Konjing, K. and Veeraketpanich, M. (1985). gFood consumption and nutrition in Thailandh in Food Policy Analysis in Thailand edited by Theodore Panayotou (Bangkok: Agricultural development Council).

3.              Poapongsakorn, N. (1985). gThe commercial broiler and swine industries in Thailandh, in  Food Policy Analysis in Thailand edited by Theodore Panayotou (Bangkok: Agricultural development Council).

4.              Punyawan, A. (2005).  gRice and rice by products as raw materials in feed industryh a power point presented at the workshop on Rice Consumption Promotion Strategies in Asia on January 7, 2005 at KU.-Home, Kasetsart University.

5.              Sectoral Economic Program (SEP)(1992). gFood situation outlook in Asia: a case study of Thailandh, Thailand Development Research Institute (TDRI), Bangkok, Thailand.

6.              Sutabuttra, T. (2000). gStrategic plan for agricultural and agro-industry research according to national research agenda during economic crisis for country developmenth, Kasesart University, Bangkok, Thailand.