The government is preparing to buy as much as 900,000 tonnes of paddy from farmers in a move to raise prices in the Thai rice market. The measures will also include buying milled rice from millers.

After meeting with rice exporters and millers, Commerce Minister Porntiva Nakasai said price pressure was expected to increase for rice, as an estimated 1.8 million tonnes of rice from the second-crop season are being released to the market.

To shore up paddy prices, the government has set up more than 40 units to buy new output from farmers. But the move has been called ineffectual as only a dozen mills out of 1,700 nationwide have participated in the buying scheme.

Millers claim their income, particularly from rice polishing, has tumbled since the government replaced the long-established paddy-pledging programme with a price insurance scheme this year.

They also complain of higher expenses from interest on loans for the funds they must place as collateral to the government to participate in the rice-buying programme. Traders and rice millers mostly prefer the pledging scheme, which provided revenue from rice polishing and renting out warehouses to store government rice.

Mrs Porntiva said the ministry was also drafting incentives for millers and exporters to buy more paddy from farmers to bolster domestic rice prices, which have fallen steadily in line with softening foreign demand.Rice exporters and millers who participate in the buying programme may be allowed to exchange new paddy bought from farmers with milled rice from government stocks.

Millers and exporters might also be permitted to sell the government milled rice processed from paddy they bought from farmers.

But the government will oblige rice millers and exporters to pay farmers more than the current market price for paddy. The rate should match the government's benchmark price, said the minister.

The government's benchmark price was set yesterday at 9,087 baht a tonne, while market prices for paddy are from 8,500 to 8,600 baht per tonne.

Mrs Porntiva said the incentives would last for about a month and are likely to raise domestic rice prices. But approval for the measures is required first from the national rice policy committee.

Source: Bangkok Post