The government faces a potential crunch over where to stock excess rice after failing to release its huge stockpiles to the market because of high prices, according to exporters.

The problem is serious as the authorities have limited warehouse capacity to cope with the excess stock, the level of which is expected to increase during the year, said an exporter source.

The Commerce Ministry has reported that more than 9 million tonnes of paddy rice under the pledging scheme from the 2012-13 harvest season has entered the government's warehouses to date. The authorities already had stockpiles of about 3 million tonnes from previous harvests.

The source said another 5 million to 6 million tonnes of rice was expected to enter warehouses during the remainder of the pledging scheme this year. The government would then have little or no space to stock any further rice, as most warehouses - both the government's own and privately owned facilities - would be full.

Thailand is facing difficulty selling its output overseas, in particular white rice, as the price gap between Thai and Vietnamese rice is large. Thai white rice is quoted at US$590 a tonne, while the Vietnamese equivalent is trading at $405.

The source said the government urgently needed to manage its rice stocks and revise the plan to pledge a high volume at a high price; otherwise, the Kingdom will face huge losses.

In a related matter, the source said the government had secretly released rice from its stockpiles to clear some warehouses by selling at low prices to certain traders.

"Such secret rice-stock selling is unfair. The government has allowed some traders that have close ties with politicians to purchase rice from its warehouses at prices 20-30 per cent lower than market. The method has created huge losses for the country, as well as treating other rice traders unfairly," the source said.

Exporters have also called on the government to increase transparency in regard to the release of rice stocks under government-to-government contracts, as well as to other traders, by informing the public clearly about such matters.

Meanwhile, Commerce Minister Boonsong Teriyapirom said his ministry had returned Bt40 billion to the Finance Ministry from its G2G rice trading so far this year.

Source: The Nation