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Published on April 1, 2008

"Rice trading is facing a crisis due to the absence of supply, while prices are unbelievable," said Chookiat Ophaswongse, president of the Rice Exporters Association.

His remarks followed Commerce Minister Mingkwan Saengsuwan's statement last week that the price of jasmine rice would break the $1,000 barrier. The FOB export price for jasmine was at $980 yesterday, while white rice rose to $630 per tonne from about $430.

Chookiat and other people in the industry believe the remark may have hurt domestic and export markets.

Over the weekend, 100-per-cent white rice as quoted by rice millers for exporters,

 for instance, jumped from Bt1,900-Bt1,950 to Bt2,500 per 100-kilo-sack.

In addition, the Commerce Ministry's plan to invite bids for its 300,000-tonne rice stockpile will further fuel speculation as the industry is aware that the government's cost is just a meagre Bt6,000-Bt7,000 per tonne.

Altogether, the ministry is distorting market mechanism while all the supply has disappeared from the market, disrupting exports, with April shipments forecast to drop to 700,000-800,000 tonnes from an average of 1 million tonnes since early this year.

Chookiat said many exporters will default on orders due to sharp price differences.

Besides exporters, local traders and farmers have also been affected.

"We should let the price rise according to [free] market mechanism but not from speculation," he said, noting some exporting countries had introduced export controls to protect export losses and food security.

Egypt is the latest rice exporting country to suspend rice exports for six months, from April until October.

Previously, India and Vietnam also imposed export bans.

Prasit Boonchuey, president of the Thai Farmers Associa-tion, said farmers have not benefited as they have to sell after harvest because they lack storage facilities.

Achara Pongvutitham,

Petchanet Pratruangkrai

The Nation