The government believes its new price-guarantee scheme and the lower supply of rice in the market can boost paddy rice price to Bt8,000-Bt8,500 a tonne next month.

Yanyong Phuangrach, permanent secretary to the Commerce Ministry, said the National Rice Policy Committee's measures will help farmers obtain better returns. Rice price has dropped sharply to below Bt7,000 a tonne.

The government's guarantee price has been set at Bt10,000 per tonne while the reference price for this week is at Bt7,210 a tonne. As a result, farmers will get the difference of Bt2,790.

Moreover, rice millers will purchase paddy rice directly from farmers at Bt7,510 a tonne, Bt300 more than the government's guaranteed price.

The measure will start tomorrow. The ministry is confident that at least 126 rice millers will participate in the project.

The market price for paddy white rice is currently quoted at Bt7,500-Bt7,800 a tonne.

The ministry expects that about 1.1 million to 1.2 million tonnes of paddy white rice from the second crop harvest season will enter the market next month. The government had earlier estimated that about 1.8 million tonnes of white paddy rice remain in the market.

Yanyong said the government foresees lower production of rice due to the drought and the brown plant hopper, leading to lower production in the second crop.

Rice demand in the world markets should increase soon, ending the long suspension of imports. Rice consuming countries will have lower stockpiles and that will lead to a price rise soon, he added.

Yanyong also emphasised that the government will suspend its plan to release rice from the stockpiles to ensure a sustainable price rise.

He said the government does not need to urgently release its stocks as it will allow millers to exchange new rice from the government's stocks.

The exchange of stockpiles will enable the government to hold its stocks longer as it would be getting new rice.

Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said that rice price is expected to increase in the next few months as rice import nations will have lower stockpiles of rice.

"Africa, which is one of the world's major rice importing regions, will soon open bidding for import of parboiled rice," said Chookiat. However, he added that some rice importers are worried the domestic political mess would affect Thai exports due to delay in orders.

To ensure the rice price increases in the long run, Chookiat said the government should clearly announce suspension of its plan to release rice stocks by 6-12 months.

Source: Bangkok Post