In an interview with The Nation, Chookiat Ophaswongse said the government had pegged prices at levels much higher than those fixed by the country's competitors.

"The policy has eroded the country's export competitiveness because the intervention price has pulled the local price up higher than exporters' valuations," he said.

Currently, the Thai export price is US$310 (Bt11,670) a tonne, $60 costlier than that of Vietnam, the Kingdom's main competitor in the white-rice category. Thai rice is also more expensive than that exported by other major rivals, Chookiat said.

Little wonder, then, that this has eaten into foreign market share.

The price gap has to be narrowed to make Thai exports more competitive. The association is also emphasising quality and service to overseas customers, rather than just focusing on price.

The Thai export price should be only $20 higher than that of competitors, said Chookiat. According to him, the government subsidy should be between Bt7,000 and Bt7,200 a tonne, creating a win-win situation for both farmers and exporters.

According to the export association's report, Thai rice exports dropped by 4 per cent between January and April 20, totalling 2.15 million tonnes, compared with 2.23 million tonnes in the same period last year.

This was down to high export prices and the baht appreciation against the US dollar.

The association, however, insists exports will reach 7.5 million tonnes this year, thanks to Iranian demand for Thai rice. Some 3.4 million tonnes will be white rice, 2.2 million tonnes jasmine rice, and 1.9 million tonnes parboiled rice.

Earlier this year, Iran imported about 400,000 tonnes of Thai white rice. It is now looking to import more to build up stocks, given uncertainty the international uncertainty over its nuclear programme.

Chookiat said the government should realistically modify its rice-pledging policy for Thai farmers, instead of continuing with the current unsustainable level of support.

"It should help rice farming in sustainable ways, with training in increasing and improving production and the supply of low-cost fertiliser or diesel oil," he said.

As there are more than 200 rice exporters, the government will not have to worry about collusive pricing practices, he added.

Chookiat also said the baht's strengthening this year to below Bt38 against the dollar had hurt rice exporters.

The government should set up a warning system to inform exporters of exchange-rate trends, so that they have time to prepare themselves properly before entering into contracts, he said.

Petchanet Pratruangkrai

The Nation