The Bank for Agriculture and Agricultural Cooperatives president revealed that at the bank's executive board meeting last week, which was chaired by the Finance Minister, three plans to maintain rice price were approved.
President of the Bank for Agriculture and Agricultural Coopperatives or BAAC, Luck Wajananawat, revealed that during last week's meeting, chaired by Finance Minister Korn Chatikavanij, three plans to manipulate rice prices were approved.
First, farmers will be able to pledge their rice with high moisture levels to the BAAC, as high moisture rice gets a low price in the market.
When rice prices increase and moisture levels decrease, they can sell their rice to buy back their produce from the bank. The budget limit for rice pledging plan is set at 25 billion baht.
Second, the BAAC will provide credit worth up to 20 billion baht to the Public Warehouse Organization or PWO and the Marketing Organization for Farmers or MOF so that they can purchase rice from farmers in a bid to prevent rice prices from dropping further.
After rice prices increase, PWO and MOF will distribute rice stock to domestic and foreign markets.
The budget limit of this plan will be discussed by the Cabinet today.
Third, the BAAC will provide credit worth up to 20 billion baht for participating rice mills in order to improve their liquidity --on the condition that they must purchase rice from the farmers at the referential price announced by the Commerce Ministry.
The participating rice mills will pay only 2.75 per cent interest instead of the normal 4.75 per cent because the government will be subsidizing it by paying two per cent of the rate.
Luck believes the three plans will push rice prices higher. He advised farmers not to rush in selling their harvest and suggested that farmers look into the three plans for the option that will benefit them the most instead.
Luck added that following a flood in Vietnam and a drought in India which caused rice yields in these two major rice exporting countries to drop, the rice prices in the world market are likely to increase.
Source: TANN
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