The government has bowed to mounting pressure from farmers, agreeing to buy an additional 2 million tonnes of second-crop rice. The additional purchase will cost the government 23.6 billion baht, according to Commerce Minister Porntiva Nakasai.

Mrs Pontiva yesterday attended a meeting of the national rice policy committee chaired by Prime Minister Abhisit Vejjajiva. Procurement of unprocessed rice will rise to 6 million tonnes from the 4 million targeted earlier by the government. The pledging price remains unchanged at 11,800 baht a tonne.

However, the committee ruled out any further purchases beyond its July 31 deadline.

Mrs Porntiva said the expansion of the programme was based on the projection that second-crop paddy output this season could reach as much as 8.2 million tonnes, compared with 7.6 million estimated earlier and the 6.5 million harvested last year.

Prasit Bunchoei, chairman of the Thai Rice Farmers Association, yesterday said he wondered why the off-season output this year was so much higher than expected. The association had forecast production at only 7 million tonnes.

Mr Prasit suspected the production figures might have been inflated by rice smuggled in from neighbouring countries to exploit Thailand's generous guaranteed prices.

Given swelling state stocks following the additional purchases, Mrs Porntiva also expressed concern about the government's capacity to sell the grain. The government currently has about 4 million tonnes of milled rice in stock.

"Thailand's rice export prospects are worrying as India, which now holds about 27 million tonnes in its stocks, is going to resume exports," the minister said.

India suspended shipments of non-basmati rice last year to rein in prices after demand from government programmes doubled over five years. Since last September, the government has eased the curbs to allow exports to African countries, Nepal and Bangladesh.

Thailand's rice exports might fall by as much as 29% starting in August after India resumes shipments, said Chookiat Ophaswongse, president of the Thai Rice Exporters Association.

Monthly exports might fall by 200,000 tonnes to between 500,000 and 600,000 tonnes as India's stocks are enough for overseas sales, he said recently.

"This will affect our exports of parboiled rice because India is our direct competitor," he said. "Selling our rice will be more difficult as our product is more expensive than that of competitors."

Source: Bangkok Post