The government soon plans to announce the cancellation of its bidding for 2.6 million tonnes of rice under Commerce Ministry management.

The ministry today will call on the Cabinet to ask the Office of the Council of State to rule whether the auction can be withdrawn. It will also ask the Cabinet to set clear regulations governing bidding prices for other agricultural products, including corn, tapioca and rice. The move is aimed at ensuring that new bidding rounds do not result in unclear results or conflict between government agencies and bidders.

Government plans to expand its rice-pledging scheme will lead to a new round of corruption and pave the way for unscrupulous traders to reap benefits from the high subsidy price instead of farmers, rice-industry sources and academics said yesterday.

Rice millers urged the government to increase the subsidised volume from 4 million tonnes to 6-6.5 million tonnes for the second crop of paddy rice. If that were approved, the government would lose at least Bt26 billion to Bt28 billion from the additional pledges.

One academic whose expertise is in rice systems said the government had faced a complicated problem with rice management ever since the Samak Sundaravej government mistakenly set too high a guaranteed price.

"Rice farmers have not relied on normal trading system ever since, because the pledging price has been much higher than the normal market price. The present government has therefore suffered by continuing this wrong-headed policy of setting too high a price," said the source.

The source said the government's financial stability could suffer if it incorrectly increased the guaranteed volume. Farmers would ignore other crops and grow only rice, because of the high guaranteed price.

"The government should not be responsible for trading in farm or any other goods, but rather only administrate the country in the right direction," the source said.

To ensure a sustainable system for growing and trading rice, the government must cancel its pledging scheme. Instead, it should support farmers by paying only the price gap when farmers cannot sell rice at the minimum price. Direct subsidies could be in the form of providing fertiliser or reducing production costs for growers.

The comments came after rice farmers rallied at the Commerce Ministry on Monday to pressure the government into increasing the guaranteed volume for the second rice crop.

Growers said they could not sell rice in the normal market, because millers would buy their crop only at Bt6,000 to Bt7,000 a tonne, while the pledging price was Bt11,800.

An industry source said the government's expansion of the pledging project would create another round of corruption and unscrupulous traders.

"Rice production for the second crop should not be as high as farmers or millers have cited. Increasing the volume of the pledging project would pave the way for corrupt traders to buy rice from the government bidding, then sell it back to the government," said the source.

The present pledging target of 4 million tonnes will soon be meet.

Meanwhile, the Agriculture Ministry estimates the volume of paddy rice not yet pledged with the programme at 3 million tonnes, while the Interior Ministry and provincial governors have reported 5.3 million tonnes.

Thai Rice Exporters Association president Chookiat Ophaswongse said the remaining rice should not be much more than 4 million to 5 million tonnes, because the government had already purchased a large volume in the pledging scheme.

He said increasing the volume could create greater difficulties for rice exports this year in the form of too high of a price.

Thai Rice Mills Association president Chanchai Rakthananon said about 5 million tonnes of paddy crop remained for the pledging scheme and that he thought the government should consider opening bidding on another 2 million to 2.5 million tonnes.

After meeting with millers and exporters, Internal Trade Department director-general Yangyong Phuangrach yesterday said the government would try to determine the exact volume of rice that had not been harvested.

The government will submit the results of Yangyong's discussions to the subcommittee responsible for the pledging scheme, in order to find the best outcome for farmers and traders.

Source: The Nation