The Rice Value Chain: a Case Study of Thai Rice

Abstract

The rice value chain has been transforming throughout Asia since the 1990s, although with some unique differences in Thailand. Starting from the farm, the Thai rice value chain behaves more like a collection of streams than a monolithic chain, as in other countries. In Thailand, different types and grades of rice are kept separate throughout the value chain, starting from the point of production ('upstream'), continuing through its processing, storage, and marketing ('midstream'), and ending with different consumer groups ('downstream'). This paper describes the ecological, socio-economic, technical, and management conditions that underlie the rice value chain in Thailand. Upstream, a wealth of local varieties, strengthened by support from a publicly-funded, national, rice breeding program and seed system, allows rice farmers in Thailand the choice of growing either traditional varieties with premium quality and price or modern high-yielding varieties, as dictated by their own ecological and economic circumstances and preferences. Midstream, the paddy harvest from a multitude of farms is sorted into different branches of the value chain as rice of different types and grades are separately processed, stored and marketed. Paddy price differentials are signaled back upstream to influence farmers' decision in the next season. Innovations of mechanical drying and parboiling facilitate fragmenting the paddy market into 'dry' and 'green' rice, each with different price setting criteria. Increased production of modern high-yielding varieties, which is milled into ordinary white rice, has not led to a glut in the market, because of demand from the parboiling industry. The Thai government has played an important role in securing property rights to Thai Hom Mali, the brand name for Thai jasmine rice, in important export markets, as well as enacting laws that explicitly define the grades for differently priced types of milled rice. Technological innovations, including combine harvesting that has reduced labor costs as well as grain breakage during milling due to timely harvesting, mechanical drying and parboiling, novel utilization of the rice husk as fuel, and extraction of high quality oil from the rice bran, have all added substantial value to each ton of rice. Downstream, pre-packaged, branded rice has become the norm in small provincial and district markets, as well as supermarkets in urban centers. Development of local, small-and medium-sized, modern mills has allowed farmers to enter the retail milled-rice market and facilitated development of new branches of the value chain with the emergence of local specialty rice.

Rice quality improvement. A review

“…The role that social and economic considerations play in determining rice quality is indicated by consumers' preference and the choice for grain of specific type and price range. This is shown by enduring traditional preference in the north and northeast for glutinous rice and in the central plain and other parts of the country for non-aromatic non-glutinous rice with a firm dry texture when cooked, while economic consideration is the primary criterion in choosing rice for those with limited income (Rerkasem 2017). Grain with higher amylose content absorbs more water, resulting in a greater volume expansion ratio (Juliano 1993), i.e.…”

“…Development of highly efficient small-to medium-sized modern rice mills that process 0.5-20 tons of paddy a day has enabled commercialisation of local rice varieties with limited production volume to serve the community or special quality rice, e.g. rice with pigmented pericarp, organic rice or 'sushi' rice, to directly supply restaurants, retailers in the city or overseas (Rerkasem 2017). For milled or white rice, the form of rice most commonly traded in the retail market and consumed, unbroken grain is almost universally preferred (Unnevehr et al 1992) and is consequently priced higher than the grain that is broken into small fragments.…”

“…In the absence of sorting to segregate the rice of different grain types and grades, loads of paddy with heterogeneous quality are bulked together to be processed into milled rice of inferior grade, with no reward for either farmers or mills to manage for grain quality (Demont and Rutsaert 2017;Ba et al 2019). Interviews with paddy buyers, mill operators and farmers in Thailand revealed how the paddy market can operate as a place for sorting rice from the multitude of farms into different types, grades and prices, for segregated processing, storage and marketing, while signalling back to inform farmer's decision on the choice of variety, type of rice and other farming management decisions in the next season (Rerkasem 2007;Prom-u-thai 2010;Rerkasem 2017). The sorting process begins with the price paid to farmers according to the type and quality of their paddy harvest, followed by separate processing, storage, transportation and trading of rice with different types and grades.…”

“…The main types of grain actually produced, traded and consumed in each country and region are, however, more diverse in their quality. Softness and aroma are distinctive quality features of jasmine rice, but the rice produced and consumed in Southeast Asia is mainly non-aromatic, with jasmine rice being in the minority in Thailand (Rerkasem 2017), and accounting for an even smaller share in Southeast Asia as a whole. Whiteness and aroma clearly do not apply to parboiled rice, which accounts for most of the rice grown in South Asia and consumed by the majority population of the region (Bhattacharya 1985;Choudhury 1991).…”

“…As income rises, demand for rice with high quality is expected to grow (Unnevehr et al 1992;Calingacion et al 2014). However, in spite of their prices at double to triple the price of milled rice of ordinary types with lower grades, Basmati accounts for only 3% of India's annual rice production (APEDA 2017), Japonica one quarter of China's (Peng et al 2009), and Hom Mali less than one third of Thailand's (Rerkasem 2017). While quality is an obvious concern in commercial rice production, it can be an important criterion that overrides advantages in yield and disease resistance in rice variety evaluation by those who grow rice for their own consumption (Rerkasem and Rerkasem 1984).…”