Project is aimed at reducing govt losses from subsidy programme. The Bank for Agriculture and Agricultural Cooperatives (BAAC) has taken its first steps into the rice-export business as it prepares to manage the government's guaranteed-price scheme.

In cooperation with Siripinyo Rice Mill, the bank recently exported its first lot of 900 tonnes of rice, worth Bt12 million, to Shenzhen, China. The bank is now negotiating through its export arm, Thai Agri-Business, to export another lot of 800 tonnes.

The export business is expected to help reduce the bank's risk as it manages the government's initiative to launch a pilot guaranteed-price scheme. If successful, BAAC will help manage marketing to reduce government losses from the subsidy programme. The exports are also expected to promote the bank's long-term strategy to become a rice processor and marketer.

The bank is involved in many government price-intervention projects, so it needs to develop marketing strategies focusing on both the domestic and export markets, said BAAC executive vice president and acting president Ennoo Suesuwan.

"The bank will have to handle larger amounts of both rice and paddy rice, so we should focus on the export market," Ennoo said.

The bank's white-rice export price was quoted at US$350 (Bt11,900) per tonne, while broken rice fetched $320 per tonne.

BAAC is the government's arm for managing packing credit for farmers and millers who face financial problems. The most recent rice export lot, for example, was funded partly by packing credit provided to Siripinyo Rice Mill. Siripinyo Rice Mill put up 2,000 tonnes of rice as a guarantee to borrow Bt13 million.

"We 'piggy-backed' the export plan and the loan, introducing Chinese traders [to BAAC] and offering advice," said Pichech Tonitiwong, managing director of the rice mill.

However, Pichech, who is also managing director of Manas Rice Trading, does not agree with the government's price-bidding policy for its rice stocks, believing it allows exporters to dump product on the market. In addition, he said, it downgrades the reputation of Thailand's high-quality rice, as importers will bargain for lower-than-market prices.

Manas recently launched an innovative brown sticky rice variety, which can be prepared in a rice-cooking pot instead of using the traditional steam method.

Brown sticky rice has been certified by some health organisations as having higher fibre content than white rice.

Pichech said sales of the new variety would shore up the price of sticky rice, whose domestic price is falling. Exports of Thai sticky rice usually reach 200,000 tonnes a year. The addition of the new variety to the export volume would help solve the domestic price problem, he said.

Source: The Nation