Exporters have called on the government to start selling rice from its stockpile as local supply tightens. Some exporters, including CP Intertrade, said their stocks will last only two months.

Exporters claim the government has held a large volume of over 10 million tonnes of rice with no immediate plans to sell it either to exporters or traders for domestic sales, a source said.

The exporters and traders could not buy rice from local sources because farmers have sold all paddy to the state to take advantage of the government's pledging programme which pays 15,000 baht a tonne for paddy, the source added. They urged the Commerce Ministry to call bids in a transparent manner.

"Any delay could worsen the rice trade industry, which has already been hit by falling exports,"the source said.

But Commerce Minister Boonsong Teriyapirom said yesterday the government will start releasing rice from its stockpile in July.

He added the government was in talks with Indonesia and the Philippines, which earlier agreed to buy Thai rice.

He noted that Thailand recently sold 260,000 tonnes of rice to Co{aci}te d'Ivoire and 250,000 tonnes to Bangladesh.

Commerce permanent secretary Yanyong Phuangrach said the ministry will consider selling the grain to exporters.

He estimated the government would have 6-7 million tonnes of milled rice in its stockpile this year.

But Chookiat Ophaswongse, honourary president of the Thai Rice Exporters Association, believes the government has more than 10 million tonnes of milled rice in stock.

He reckoned that the state has accepted 6.9 million tonnes of paddy from the main crop that ended in February this year and 8 million tonnes from the second crop. The pledged volume from the second crop will be even higher since the programme will continue until the end of this month.

That amount of paddy is equivalent to about 9.9 million tonnes of milled rice. Also, 2 million tonnes were carried over from the previous government, said Mr Chookiat.

Such a huge stockpile reflects the inefficiency of the rice-pledging programme, which has undermined Thailand's rice export competitiveness.

Rice exports in the first five months shrank by 44% to 3 million tonnes, compared to 5.3 million tonnes shipped in the same period last year.

He said that Hong Kong and Macau, Thailand's long-time rice importers, have expressed concerns over the declining sales of Thai rice in their markets.

Members of The Rice Merchants Association of Hong Kong Limited told Thai exporters that Thai premium grade rice used to command a market share of as high as 90% in the Hong Kong market. It now drops to only 30% and the downward trend continues.

Thai rice, which normally targets institutional clients such as hotels and restaurants, has been replaced by rice from Vietnam. Vietnamese fragrant rice costs US$650 a tonne, far lower than $1,100 a tonne of Thai rice.

Traders in Hong Kong, who used to buy about 350,000 tonnes of premium-grade rice, noted that Thai rice has disappeared from shelves for months and if consumers get used to the taste of rice from other countries, it could be a serious problem for the Thai grain.

"They said they would accept it if the higher rice prices stemmed from supply and demand. But they are quite upset to learn it was manipulated for political aims," Mr Chookiat added.

Source: Bangkok Post