The government will delay the release of its farm stockpiles to allow farmers to sell their product first, a decision that will likely prove expensive given the government's Bt342-million monthly stockpiling bill.
The government currently has on its hands 6 million tonnes of stockpiled rice; 1.76 million tonnes of tapioca chips; 407,426 tonnes of tapioca flour; and 348,000 tonnes of maize.
Under Prime Minister Abhisit Vejjajiva's administration, the government has held farm stockpiles for six months. The government has said it will take steps to ensure that farmers are not adversely affected by release of its stockpiles.
Earlier, Deputy Prime Minister Korbsak Sabhavasu said the government would select appropriate periods in which to release farm stockpiles, and that selling prices should be in accordance with the market price.
"Whenever the government releases a stockpile in a big lot, traders stop purchasing from farmers. It lowers prices," Korbsak said.
The Commerce Ministry recently negotiated the sale of some maize and tapioca stockpiles, but Korbsak refused to approve the deals, saying the selling price should have been higher given the high demand for the goods.
According to the Commerce Ministry, it is costing the government Bt342 million a month to stockpile rice, tapioca and maize.
It costs Bt216 million a month to stockpile rice, most of this going towards renting warehouses at a price of Bt36 per tonne.
Stockpiling maize costs Bt26 million a month (Bt60/tonne for warehousing and Bt15/tonne for fumigation).
It costs Bt90 million monthly to stockpile tapioca: Bt80 million for tapioca chips and Bt10 million for tapioca flour.
A source at the ministry said the government must consider carefully whether its policy to stock farm goods is worth the cost.
"[The stockpiled] farm goods are deteriorating in quality daily. If the government holds its stockpiles too long, it must shoulder high storage expenses each month even as the goods deteriorate to the point where they cannot be sold," said the source.
However, Korbsak said the government may have no choice but to continue shouldering the costs, as the government's aim is to ensure high prices for farmers.
Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said the system had caused a slowdown in the country's rice-trading system.
"The rice price would increase dramatically if the government released its stockpiles, as importers have delayed placing rice orders in expectation that the government will have to release its stockpiles someday," said Chookiat.
He called on the government to release some of its stockpiles via the futures market, government-to-government projects, and direct sales to exporters.
However, stock releases should be done in small lots to minimise any impact on the market, Chookiat cautioned.
Source: The Nation
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