Thai rice imports surged 2,600 percent in the first quarter of 2009 as high domestic prices encouraged traders to bring in cheap rice from neighbouring countries, officials and traders said on Friday.

From January to March, Thailand imported 40,000 tonnes of rice, said a Commerce Ministry official who oversees the issuing of import licenses.

That was up from just 1,494 tonnes imported in the same period of last year, according to Agriculture Ministry data. In the full year of 2008, Thailand imported 13,738 tonnes of rice.

"Most of this is from Myanmar," said an official who asked not to be named. "It's because of high domestic prices that encourage local traders to import cheaper rice to be sold domestically."

Thailand allows the import of 249,757 tonnes of rice a year under an obligation to the World Trade Oganisation since 1995.

However, in practice, Thailand imports only very small amounts of rice. It is the world's biggest rice exporter, producing up to 30 million tonnes each year and exporting 8-10 million.

In 2007 it imported juat 3,400 tonnes of rice and in 2006 it brought in 1,700 tonnes, mostly low-quality grain to be used as an ingredient for feedstuff.

Thai rice prices are pegged at a high level due to a government intervention scheme, under which farmers are paid 11,800 baht ($334) per tonne, higher than market prices of around 9,000 per tonne.

"But imported rice from neighbouring countries was only around 7,000 baht per tonne. That's worth the effort of importing," one trader said.

Thai exporters said they were concerned that some of the imported grain could be re-exported as Thai rice, and they were worried this could harm the country's reputation if there was no quality control and buyers were no longer confident they would be buying good-quality grades from Thailand.

"Importers as well as surveyors have complained that Thai rice grains are getting shorter and smaller. That's what we fear, that our reputation as the biggest exporter is in danger," said Chookiat Ophaswongse, head of the Thai Rice Exporters Association. ($1=35.30 Baht)

Source: Reuters