THE PRICE of Thai rice has plunged to the lowest level in six years, even lower than Vietnam's despite higher cost of production, due to the deposed government's pledging policy.

The Thai Rice Exporters Association reported last week that the price of 5-per-cent white rice had dived about 60 per cent to US$375-$389 per tonne from the all-time high of $1,020 in April 2008.

Compared to $395 quoted for Vietnamese rice, it is also the first time in history that Thai rice is cheaper.

Chookiat Ophaswongse, president of the association, blamed this on the ousted government's rice-pledging scheme. Exporters are not happy with the price trend, which should boost exports, as the cost of production has been on the rise and Thai rice quality is superior to Vietnam's.

"Thai rice should be more expensive than Vietnamese rice. Our price has, however, dropped gradually since late last year, because the government released stocks in haste," he said.

According to Chookiat, Thailand's paddy rice price is also priced lower than Vietnam's, at about Bt7,000-Bt7,500 a tonne against Bt8,000.

The pledging scheme, which quotes Bt15,000 or about $500 per tonne, has encouraged farmers to sell rice to the government. In the first two years of the scheme, the inventory exceeded 10 million tonnes.

Late last year, the dissolution of the lower House left the scheme struggling, as the government could not find the cash to pay farmers for their rice. Under pressure to raise money quickly, the stockpiles were dumped into the market, leading to the sharp drop in price.

Many foreign buyers have piled on orders for Thai rice because of the cheap price, he said.

That is supported by the Foreign Trade Department's figures for the first four months of this year. By volume, Thailand exported 3.21 million tonnes, which was 26.6 per cent higher than the 2.05 million tonnes in the same period last year.

However, by value, exports rose only 17.5 per cent in baht terms to Bt51.5 billion and only 8.3 per cent in dollar terms to $1.47 billion.

Chookiat hopes that the Commerce Ministry, after the military coup, would slow down the stockpile releases and this should prop up the price.

However, the United States Department of Agriculture projects that in the 2014-15 crop year, rice production would hit a new record of 480.7 million tonnes, up 4.6 million tonnes from the previous year. Assuming normal weather, record crops are projected for the major exporters including India, Thailand and Vietnam.

Global rice supply and consumption are projected to reach record levels of 592 tonnes and 482.2 million tonnes.

Source: The Nation