The Thai Rice Millers Association opposes the Commerce Ministry's plan to open its warehouses to rice bidding, saying the release of huge rice stockpiles would affect the market price.
Domestic rice prices have recently risen for the first time since continuously dropping last year. White paddy rice is up Bt1,500 a tonne to Bt11,000, while jasmine rice has increased Bt2,000 a tonne to between Bt14,000 and Bt15,000.
As of Wednesday, the export price for 100-per-cent white rice had increased to US$590 per tonne (Bt20,600), from $585 last year, while jasmine rice had risen from $837 per tonne to $854 during the same period.
An association source said the new government must delay releasing its stockpiles, because this was not a suitable time.
"Rice prices are increasing. The government should allow market mechanisms to work on their own. If the government opens bidding for 1.5 million tonnes of rice from its stockpiles, the resulting oversupply in the market will cause prices to fall again," said the source, asking not to be named.
The government must also not release its new rice stockpiles from the latest harvest season, which involves 3 million to 4 million tonnes of paddy rice. Instead, it should use the Agriculture Future Exchange of Thailand (Afet) to move the rice into the market. That would be a more efficient way to manage its stockpiles.
The source said the futures market would not only ensure Thai rice prices would increase and not fluctuate as in the past, but also increase transparency in rice trading.
Trading on Afet would protect the rice-trading system from unscrupulous traders and government officials who try to reap benefits from the traditional government auction, the source said.
The source explained that in the past certain traders and government officials had connived to influence the bidding and win the auction.
"Bidding has always raised doubts among rice traders and society in general about its transparency. The futures market can ensure that the process of trading is free from corruption, because government official and traders would be unable to collude with each other to gain benefit," said the source.
The source also opposes government plans to spend Bt2 billion on silos to stock government farm products from the price-intervention programme.
The source said while silos could maintain the long-term integrity of farm products, today's trading system could not promote competence in proper storage techniques.
Instead of spending such a huge amount to build silos, the source suggested the government help farmers construct their own small warehouses to store their products themselves.
If farmers had their own warehouses, they could keep their own products instead of asking for government help via price-intervention programmes, said the source.
Source: The Nation
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