In an effort to tackle price distortions in the domestic rice market, the Commerce Ministry will ask Prime Minister Abhisit Vejjajiva to authorise the release of a portion of the government's rice stockpile, an official source said last week.
Skyrocketing prices have prompted some millers to stockpile huge amounts of rice and engage in price speculation, according to industry observers.
"The question is whether the price is rising due to the supply/demand situation, or as the result of speculation. In fact, there is only a limited supply of rice entering the market. The government should consider releasing some of its stockpile to balance the market," a source at the ministry said.
As of December 2, the domestic price of 100-per-cent white rice was quoted at Bt19,000-Bt19,100 a tonne, up from Bt16,250-Bt16,750 in November. Five-per-cent white rice is quoted at Bt18,100 a tonne, up from Bt17,000.
High prices hurt the Kingdom's rice exports, as traders shift to purchasing cheaper rice from Vietnam. In addition, the supply shortage directly hits consumers, as rice-packers adjust retail prices.
Commerce Minister Porntiva Nakasai is due to report to Abhisit on the rice-market situation soon. Abhisit, who chairs the National Rice Committee, is expected to be asked to consider releasing part of the government stockpile at this meeting, the source said.
"The government should release a small lot of 300,000 to 400,000 tonnes of rice to increase the supply in the domestic market. It should also consider releasing 1 million to 1.5 million tonnes of rice via the Agricultural Futures Exchange of Thailand," the source said.
A rice miller denied that stocks were being hoarded for speculation purposes. Rather, the miller blamed pressure from exporters to sell at low prices.
"Exporters have forced us to sell at a low price, so now we must delay selling rice to the market," said the miller.
Chutima Bunyapraphasara, director-general of the Internal Trade Department, said the department is closely monitoring rice speculation.
"Traders are engaging in price speculation. More than 80 per cent of rice production has been sold. Farmers have to sell their product, as they have no silos with which to keep the rice [stored] after the harvest season," Chutima said, adding that increasing the rice supply might alleviate the speculation problem.
More supply would also help consumers by lowering the retail price of a package of rice, Chutima said.
Meanwhile, Deputy Prime Minister Korbsak Sabhavasu has authorised the sale by the Commerce Ministry of 338,194 tonnes of maize from its stockpiles to two exporters. The sale is expected to generate Bt1.5 billion.
The government will incur a loss of Bt1.3 billion on this sale, as the maize stocks were purchased under the government's pledging scheme for Bt2.8 billion.
The average selling price is quoted at between Bt4,741 and Bt4,443 per tonne. The ministry will ask the Cabinet to authorise the sale of the stockpiles tomorrow.
Source: The Nation
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