Falling rice prices are the consequence of the government releasing 4 million tonnes of rice from its stockpile and traders using it to swell domestic supply, according to a ricetrading source.

As well, the latest devaluation of the Vietnamese dong has enabled Thailand's biggest competitor to ask cheaper prices for its rice exports.

A group of farmers in Ayutthaya province yesterday rallied alongside roads, calling on the government to increase the guaranteed price for white rice to Bt14,000 a tonne from the current price of Bt10,000 a tonne.

The Commerce Ministry's Internal Trade Department reports that the market price of white rice has dropped from Bt8,800 to Bt9,300 per tonne last month to Bt8,400 to Bt8,500 as of yesterday. The price of jasmine rice has fallen from Bt13,400 to Bt15,500 per tonne to Bt12,650 to Bt14,000.

A ricetrading source said the price slide was due mainly to the release of rice from the government's stockpiles. This has been distributed in the domestic market instead of being exported.

"Only 500,000 tonnes from 4 million tonnes of rice has been exported. Rice traders, therefore, have better bargaining power to force lower prices for rice from farmers because there is high supply in the market," the source said.

However, the Ayutthaya farmers should be protesting about political issues rather than rice trading as rice prices have fallen only slightly. The current rice price is not as low as has been in the past. Farmers still benefit from the guaranteed price and their demand for an increase in the guaranteed price - to Bt14, 000 - is too high when the current trading situation is considered, the source said.

Thai Rice Exporters' Association president Korbsook Iamsuri said the lower price was due to the devaluation of the dong, which had widened the price gap between Thai and Vietnamese rice.

Some rice importers have turned to purchase rice from Vietnam as its prices are cheaper than Thai rice by $60 to $80 a tonne, Korbsook said.

The Indonesian government has decreased its orders for Thai rice from 800,000 tonnes to less than 400,000 after some exporters declared an inability to ship rice before the end of next month. The problem has led Indonesia to purchase rice from Vietnam, where prices are also cheaper, she said.

Greater supplies of rice in the domestic market because of the government's release from its stockpiles have caused a slight drop in domestic prices, she said.

The chairman of a Phichitprovince millers group, Banjong Tangjitwattanakul, said the Ayutthaya protest could be attributed to the inefficient policy of the government in allowing importers to influence the market.

Rice prices have dropped because importers have pressed to buy from farmers at cheaper prices. The price has dropped gradually from Bt10,000 to between Bt7,800 and Bt8,000 per tonne, the lowest level in six months despite it being the end of the harvest season, he said.

Source: The Nation