Thailand Commerce minister plans to increase paddy price

The Commerce Ministry will propose increasing the buying price of paddy by 200 baht a tonne to shore-up grain prices and support farmers, Commerce Minister Porntiva Nakasai says. The ministry wants to increase the purchasing price of white-rice paddy with 15% moisture to 9,233 baht a tonne as a supplementary measure. Its previous initiative - buying 20,000 tonnes of the grain from farmers at market prices - has failed to increase the price of paddy. The ministry will also seek cabinet approval to establish an exchange where farmers can swap their new-crop paddy for rice from the government's stock pile which they can then sell in the domestic market. Mrs Porntiva said the exchange ratio would have to be determined carefully so the government's rice stock would be worth more than the paddy to prevent criticism that the scheme favoured millers or rice packers over farmers. The ministry will first discuss the matter with Prime Minister Abhisit Vejjajiva before submitting the two measure for cabinet approval. "We want to informally discuss the matter with the prime minister before submitting a formal proposal based on information gathered from various parties in the rice industry," she said. "We need to move quickly because the low paddy price may lead to protests from farmers. We may be blamed for only solving political problems rather than finding solutions for farmers." Mr Abhisit earlier rejected the idea of buying paddy at higher-than-market prices because the policy contradicted the current rice-option plan. Under the option plan, farmers are compensated for the difference between guaranteed rice prices and benchmark prices. If the benchmark price is lower than the guaranteed price, the ministry will compensate farmers the difference. The ministry will this week begin selling rice through government-to-government deals starting with Malaysia. The neighbouring country used to buy up to 500,000 tonnes of Thai rice a year, but that has fallen to 100,000 tonnes as it purchases cheaper grains from sources such as Vietnam. "At the moment, the ministry will release the government's rice stock only through government-to-government deals," Mrs Porntiva said. The ministry plans to sell to at least one million tonnes of rice from its 5-million-tonne stockpile through deals with more than 10 governments, such as Bangladesh, Indonesia, Singapore, Iran, United Arab Emirates, Libya, Ghana, India, Untied States, Australia and South Africa. Cabinet approval will also be sought for the signing of a memorandum of understanding with the Philippines which agreed to waive import duty on 367,000 tonnes of Thai rice as compensation for its failure to comply with tariff reductions under the Asean Free Trade Area agreement.