Despite rice traders' opposition, newly appointed Commerce Minister Boonsong Teriyaphirom has vowed to continue with the government's rice-pledging scheme as a top priority.

The scheme is aimed at driving up the price of the crop to boost farmers' incomes.

On his first day in office yesterday, Boonsong said his priority would be to continue rice and farm-goods subsidies under the pledging policy, as well as to tackle the cost of living for consumers.

"I will continue the rice-pledging scheme until the end of February and will also consider starting pledging of the new crop of rice in March to ensure a good return for farmers," Boonsong said.

To prolong the rice-pledging policy, he said, the ministry will consider a plan to release rice stocks and work closely with rice traders and exporters to drive rice export growth this year.

The ministry projects Thailand will export 8.5 million tonnes of rice this year. Private exporters' projection, however, stands at 6.5 million to 7 million tonnes. They believe the inflated pledging price has ruined their competitiveness.

Boonsong also expressed concern over the rising cost of living, as well as the need to boost export growth amid tougher global conditions this year. Boonsong said he would seek measures to lower the cost of production for farmers and manufacturers under the government's policies to drive up farm-goods prices and to increase labourers' wages in April.

The ministry will next week call a meeting with consumer-goods manufacturers to discuss how to restructure production to reduce manufacturing costs. Despite the expected higher cost of labour and some goods, the Commerce Ministry projects the annualised inflation rate will be 3.3-3.8 per cent this year.

Moreover, Boonsong has instructed the ministry's officials to work more closely with other government agencies such as the ministries of Agriculture, Industry and Energy to draw up a plan to manage agricultural goods and production costs amid unpredictable economic and natural climates.

He said the ministry would continue to promote export expansion to achieve the target of 15 per cent this year, as exports are still a key engine for the Thai economy.

To drive export growth, the ministry will focus on preparing for the Asean Economic Community, supporting free-trade negotiations and driving exports in new potential markets.

Of six rice exporters invited to meet with the commerce minister yesterday, only CP Intertrade and Chia Meng have fully supported the government's pledging project, saying it encourages high prices for Thai rice. The others have kept silent.

Boonsong met with the exporters to discuss the pledging policy. Their combined trading volume represents almost half of the country's rice exports. In addition, they are key trading partners of the government.

He insisted that the government would drive total rice exports to Bt200 billion this year from Bt190 billion last year. Although expecting lower export volume, the government is confident that total value will increase.

"The export price of Thai white rice is expected to reach US$700 per tonne this year, after the government's high pledging," said Boonsong.

The export price of Thai white rice is currently quoted at $546 per tonne.

He added that the government would drive export growth by creating various grades of rice, helping exporters penetrate new markets, and asking banks to reduce expenses for exporters.

Sumeth Laomoraphorn, chief executive officer of CP Intertrade, supported the pledging scheme, saying it helped assure high prices and increased traders' bargaining power.

However, other rice exporters are still highly concerned about the government's insistence that it will proceed with the pledging project. They said too high a pledging price would hurt Thai rice exports' competitiveness. Export volumes and value will shrink a lot this year, they say.

Thai rice export volume dropped by 58 per cent year on year to 290,625 tonnes during the January 1-24 period.

Source: The Nation