Thailand plans to increase paddy price

Thailand will propose increasing the buying price of paddy by 200 baht a tonne to shore-up grain prices and support farmers. 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.

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.

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.

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. Low paddy price may lead to protests from farmers. We may be blamed for only solving political problems rather than finding solutions for farmers.

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.