The government should not be in a hurry to sell its stocks of unmilled rice at the current cheap global market price, as doing so will be certain to cause further price drops, says Finance Minister Kittiratt Na-Ranong.

Mr Kittiratt, who is also the deputy prime minister overseeing economic policy, was defending the government's rice pledging scheme, which critics say has led to a record stockpile of 12 million tonnes.

"Instead of selling now, we should wait until the market price improves in line with demand, which should soon rise once the other large rice-exporting countries have sold all their output," he said.

"It would not at all be smart to rush out and unload the stockpiles under present conditions, as that would only put pressure on the government and cost it some of its bargaining power."

The country suffered a 45% plunge in rice exports to 2.1 million tonnes in the first four months of this year, down from 3.82 million tonnes in the same period last year due to rival countries undercutting Thai prices.

The government's unmilled rice stocks has gradually piled up since the early harvest season.

Prime Minister Yingluck Shinawatra's Pheu Thai Party promised 15,000 baht a tonne under a new pledging scheme during the election campaign last year.

Academics and rice exporters have slammed the government for resuming rice pledging, saying it will adversely affect Thailand's global competitiveness.

The government's mountainous stockpile must enter the market somehow, but such a large amount will cause prices to drop even further.

"Our rice is of premium quality. So why should we rush to let it go at such a cheap price? Good quality should command a high price," Mr Kittiratt stressed.

"I would not be proud to say that Thailand is the world's largest rice exporter if we had to compete by selling at cheap prices."

The Thai Rice Exporters Association said the export price for Thai 5% white rice was US$577 a tonne late last month, while India offered the same grade for $440 and Vietnam's went for $435.

Mr Kittiratt is confident the global price will not decline further, saying supply and demand will eventually balance out to push prices back up.

The government will sell its stocks at the best price, and there is no reason to settle for a price that is below cost, said Mr Kittiratt.

The government may take bids for its stocks or sign government-to-government deals to unload the rice at the right time, he added.

Source: Bangkok Post