The National Rice Policy Committee turned down a Commerce Ministry request to spend 30 billion baht to purchase 2 million tonnes of white rice for fear of heavy financial burdens for the government.

The burden could come from stockpiling and transporting expenses, especially heavy losses from probable programme mismanagement, said Tharadol Piempongsan, deputy secretary-general to the Prime Minister, adding Premier Abhisit Vejjajiva disagreed with the programme.

"The premier blasted the scheme in the meeting, noting it's not necessary to stockpile more white rice when we lost 5 million tonnes in the past from spoilage in our inventories during the mortgage schemes," said Mr Tharadol.

The proposal was to borrow the 30 billion from commercial banks for a revolving fund that would stabilise rice prices for the 2010-11 crop.

Deputy Prime Minister Trairong Suwannakhiri reported the government disbursed 9 billion baht of its allotted budget to keep rice in the stockpiles under the mortgage policy of the previous government. Some 4 million of the 5 million tonnes in the stockpile have been sold. He predicted world rice prices are expected to rise given demand surpassing production.

World rice production is estimated at 452.36 million tonnes, while demand is forecast at 452.76 million tonnes.
Thai rice production of the first crop was projected at 22.177 million tonnes this year, down from 23.25 million last year.

Apichart Jongsakul, head of the Office of Agriculture Economy, said the Agriculture Ministry expects 9.5 million tonnes of paddy from the 2010/11 second crop to be harvested from late February to June, up from 8.8 million last year.

"It would be the highest ever since Thailand started growing off-season a few decades ago and it's due to the fact that firm prices encouraged farmers to grow more rice," he said.

Indonesia surprised the market last week with the purchase of 820,000 tonnes of rice from Thailand for prompt shipment.

Thailand's benchmark 100% B-grade white rice was listed at $540 per tonne on Monday. It has barely changed this year after falling 13% last year.

By comparison, US wheat and corn futures have risen by more than half since the start of last year.

Mr Apichart said farmers whose crops were destroyed by flooding in late October had rushed to plant extra rice to offset their losses. Farmers in many parts of the country often harvest three crops a year.

With a bumper second crop Thailand could have 31.8 million tonnes of paddy this year, above the 30 million it produces in a normal year.

That equates to around 19 million tonnes of milled rice for domestic consumption and export in 2011, Mr Apichart said.

Source: Bangkok Post