Farmers and millers will likely deal directly in paddy purchases to avoid the complicated document requirements of the government's rice pledging scheme, says the Thai Rice Mills Association.

President Chanchai Rakthananon predicts 10 million tonnes of paddy will be in the market by mid-November, but farmers will opt to sell their yields to millers due partly to inconvenient transport in some areas.

"Both farmers and millers view the mortgage scheme as complicated, so they'll tend to conduct transactions directly. Even though farmers will get a lower price, they'll get the money in their hands more quickly," Mr Chanchai said.

The government pays 15,000 baht a tonne for unmilled white rice and 20,000 baht for Hom Mali, but farmers receive less than that when selling directly to millers.

Mr Chanchai also expressed concern there may not be enough millers participating in the government's scheme due to what is seen as the complicated nature of the process.

Some have also been affected by the floods, while others do not want to open themselves to possible accusations of corruption.

About 400 millers have signed on with the project, which will run until the end of next February.

Mr Chanchai urged the government to relax paddy pledging regulations in light of flooding, although the government has already appointed a working group to consider allowing paddy to be pledged with millers in different provinces.

The association wants the government to accept rice kept in farmers' barns instead of allowing only newly harvested paddy to be pledged.

The requirement to mortgage only newly harvested paddy will see farmers rush to harvest their crop, lured by the attractive price, said Mr Chanchai. Finally, the farmers will end up having no rice of their own to eat due to high prices.

He said the floods are affecting some rice exports, as the main transport route of the Chao Phraya River cannot be used now.

There are also many rice warehouses in provinces in the central region that also depend on the river for delivery, he added.

Mr Chanchai anticipates that the problems will be exacerbated if the water does not recede in the next two months.

Five rice warehouses, one with a 4,000-tonne capacity, remain inundated.

One positive factor is that the new crop of rice entering the market in another four or five months will compensate for present damage, said Mr Chanchai.

However, he urged the government to manage its stockpile efficiently by selling it at the appropriate time instead of rushing to release it when prices are not right.

Source: Bangkok Post