Government's populist policies to hit consumers, exports. The retail price of a five-kilogramme bag of rice could go up 5-10 per cent this year because of the government's crop mortgage scheme, with rice exports also expected to plummet as a consequence.

CP Intertrade president Sumeth Laomoraphorn said on Wednesday that the price of paddy, which accounted about 80 per cent of the cost, would soar above 2011 because of the higher price guaranteed by the government.

The new rice mortgage programme was 15,000 baht per tonne for unhusked ordinary white rice and 20,000 baht per tonne for unhusked jasmine rice.

About eight million rai of rice fields were also inundated during the big flood last year, which would result in a shortfall of five million tonnes of rice in the market, he said.

"Raising the price of rice by five to 10 per cent would be appropriate but I don't expect the price to increase any more than this because of market competition.

"If the rice price goes up above this, the government would launch a Blue Flag market to sell rice at cheaper prices," Mr Sumeth said.

Thai Rice Exporters Association president Chukiat Opasawong also said prices for exported rice for 2012 would likely increase by five per cent.

The export price of white rice should stand at US$600 a tonne and jasmine rice at $1,100 a tonne, Mr Chukiat said.

However, the country would likely export no more than seven million tonnes of rice this year, a drop of 30 per cent from last year's 11 million tonnes.

Internal Trade Department director-general Watchari Wimuktayon agreed the retail price of a bag of rice will rise in line with increasing paddy prices.

"If rice prices soar, the government will use the Blue Flag scheme to intervene," Mrs Watchari said.

Energy Regulatory Commission chairman Direk Lavansiri said electricity charges for this year are also expected to rise due to the rising cost of natural gas.

Mr Direk said the fuel tariff (FT) adjustment charge would likely increase as the natural gas price is rising in line with other fuel prices.

However, the FT rate from this month to April will remain unchanged as the government wanted to help flood-affected households.

The FT rate for the first four months of this year should be raised by 0.18 baht per unit, worth about 11.6 billion baht, but it cannot be adjusted, he said.

"It would be difficult if the government wants the ERC to fix the FT rate further because it already has a burden.

"The government will have to allocate a new budget if it wants to keep the FT rate unchanged after April," he said.

Source: Bangkok Post