The government intends to apply new criteria for calculating the reference prices in state rice tenders, particularly for deteriorated rice.

The new pricing plan for deteriorated rice in the state stockpiles would be similar to the method the private sector currently uses, said Yanyong Phuangrach, permanent secretary for the Commerce Ministry.

Private-sector bidders seeking deteriorated rice currently use pricing approaches based mainly on market mechanisms.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said that the private sector offered only small discounts even for old rice if the overall rice demand is strong and the supply is tight.

"Deteriorated rice could be priced by the relevant ministers at US$10 or $20 per tonne less than the market price," said Mr Chookiat.

"And in the past, the private sector used to mark down the price by up to $30 per tonne."

Mr Yanyong said the ministry would also consider a new procedure at the state rice tenders at the national rice policy committee meeting chaired by Deputy Prime Minister Trairong Suwannakhiri next week.

At the meeting, the ministry is also likely to propose a new guideline for the state benchmark price for the rice price guarantee scheme. For example, the benchmark price for southern paddy would rise by 200 to 300 baht per tonne given the region's relatively higher production costs, especially for transport.

The transport costs for the farmers in the South are 500 to 1,200 baht per tonne while the average cost of other regions stands at about 350 baht.

Rice output in the South is therefore focused mainly on local consumption, and mills and drying facilities are limited, forcing farmers to transport their produce to rice mills far from home.

Source: Bangkok Post