The Commerce Ministry has yet to approve price increases for packaged rice but has pledged to come up with measures to compensate packaging firms if the prices are to remain capped.

"If the prices need to be capped, we are ready to have measures to help reduce the packers' costs such as subsidising the entry fee they have to pay modern-trade stores," said Vatcharee Vimooktayon, director-general of the ministry's Internal Trade Department, after meeting with rice millers yesterday.

She also said a shortage was unlikely since new output from the second crop of two million tonnes will be released to the market over the next couple of weeks. Another 20 million tonnes of new paddy from the main crop would also be available in October and November.

Charnchai Rakthananon, the president of the Thai Rice Millers Association, said the retail rice prices were expected to immediately jump by 25-50 baht per 5kg pack once the new government led by the Pheu Thai party has put in place its campaign promise of bringing back rice pledging with a commitment to pay 15,000 baht a tonne for white rice paddy, and 20,000 baht for Hom Mali fragrant paddy.

Five-percent white rice is now quoted at 120-130 baht per 5kg pack, while Hom Mali rice is about 180-200 baht.

Mr Chanchai also brushed aside speculation that millers have been stocking paddy in the hopes of earning windfall profits later this year.

He said the millers were now reluctant to mill rice for traders, given the narrower gap between paddy and milled rice prices

Sumeth Laomoraporn, chief executive of CP Intertrade Co, a rice business of Charoen Pokphand Group, also warned retail price increases are inevitable once the pledging scheme is reinstated.

Source: Bangkok Post