The Bank for Agriculture and Agricultural Cooperatives budgets up to 100 billion baht to buy paddy rice under the mortgage scheme of the new government.

However, the state bank said the government could save a huge amount of money by buying only as much rice as needed to raise market prices.

Under crop mortgaging, the government plays the role of main buyer in the rice market. When market prices are low, the government will purchase rice directly to build up official stockpiles and remove supply from the market, thereby influencing prices.

Boonchuay Chiadamrongchai, executive vice-president of the BAAC, said that if the government pursued unlimited purchases at 15,000 baht a tonne, it could translate to 345 billion baht for 23 million tonnes in the main crop this year.

Rice mortgaging in the past was riddled with corruption from inflated stockpiles and the government often made huge losses when it unloaded its stocks.

The government still needs to repay 160 billion baht to the BAAC for losses from the previous mortgage scheme.

"The government should find a secondary agricultural market and new export markets," said Mr Boonchuay.

Source: Bangkok Post