The cabinet yesterday approved a Commerce Ministry plan for rice sales both on a government-to-government basis and through deals with private companies.

But ministers turned down a proposal to set specific amounts of rice to sell in a bid to curb the impact on local rice prices.

They also said that all deals would need prior approval from the national rice policy committee.

Earlier, the committee authorised the ministry to sell rice in amounts of 300,000 tonnes per lot on a government-to-government basis and 100,000 tonnes to private companies.Deputy government spokesman Vachara Kannikar said the cabinet also urged the ministry to sell rice to new markets that are not existing clients of Thai rice exporters for government-to-government deals in order to prevent too much impact on exporters.

The government is struggling to dispose its rice stocks which are estimated at 5.6 million tonnes.

The cabinet also approved a budget of 436.8 million baht to compensate farmers who had lost an opportunities to earn more income after authorities changed the method for calculating the benchmark price for rice under its insurance programme for the 2009-10 second crop.

The compensation would be offered to about 200,000 farmers who sold 1.92 million tonnes of paddy ahead of the setting of the new benchmark prices between March 15 and April 25.

The new benchmark prices are now based on local market prices of the previous week. This replaces the existing structure based on average prices of the past three years, current market prices and three-month futures prices on the Agricultural Futures Exchange of Thailand.

Source: Bangkok Post