Bangkok - The victory of the opposition party at the weekend polls could mean a 50 per cent jump in Thailand's rice prices in coming months on the back of promised handouts, the country's rice exporters warned Monday.

The Pheu Thai Party, which won a clear majority in Sunday's general election, promised farmers a minimum price of 15,000 baht (500 dollars) per tonne for regular white rice and 20,000 baht for jasmine, the country's distinctive fragrant export.

Currently, farmers sell their plain Thai white rice for about 9,000 baht per ton.

"That means the export price will rise from today's level of 510 dollars to at least 800 dollars," said Chookiat Ophaswongse, honorary advisor to the Thai Rice Exporters Association.

Under the outgoing Democrat-led government, Thai rice farmers were also offered higher-than-market prices for their crop, but the government pegged the domestic price to the international market price, and paid farmers a direct subsidy to assure them a profit on their crops

Called the income-guarantee scheme, the programme benefited an estimated 4 million farmers and cost the government 80 billion baht (2.6 billion dollars) over a two-year period, which went directly into the farmers' pockets.

The scheme replaced the so-called pledging scheme devised by the former Thai Rak Thai Party of fugitive former Prime Minister Thaksin Shinawatra during his premiership between 2001 and 2006.

Thaksin is also the de facto leader of the Pheu Thai Party, which has vowed to bring back the rice pledging scheme, in which the government essentially buys up huge stocks of rice from farmers at inflated prices and then stockpiles it for the export market.

The scheme was prone to corruption, with about 30 per cent of the subsidy going to rice millers and politicians instead of farmers, according to research done by the Thailand Developemnt Research Institute (TDRI), a Thai think tank.

"This is what I hate about Thai politics," Chookiat said. "Whenever a new government comes in it changes all the previous government's policies, even the good ones."

The Pheu Thia plan to raise the domestic price paid for rice comes at a time when there are no great shortages of the commodity on the world market, where the annual demand for rice has stabilised at about 30 million tons, according to the Food and Agriculture Organization.

Asia's most populous countries, China and India, have huge stockpiles of rice, while Thailand, Vietnam, Cambodia and even Burma have growing surpluses.

"If I were the Thai government I would think carefully about raising rice prices because the surest way to encourage other countries to increase their production is to keep international prices heigh," said Sumitr Broca, a rice industry expert at the Bangkok headquarters of the FAO.

Thailand has been the world's leading rice exporter for the past five decades. In 2010, it exported 9.05 million tons, earning the country 5.3 billion dollars.

Source: The Nation