Exporters flay govt's flawed rice policy

As a result of the polices, Thailand is forecast to export only 8 million tonnes of rice next year, down from the 10 million tonnes projected for this year.

Rice price next year is also likely to drop following increased supply and the guaranteed price under the government intervention programme. The intervention will widen the price gap between Thai rice and Vietnamese rice to US$100 per tonne.

As of Wednesday, jasmine rice price dropped slightly from US$955 (Bt32,100) a tonne to $952 a tonne within a week. Regular white-rice price decreased from $814 to $811 a tonne during the same period. The price is expected to drop continuouly this year due to lower demand while supply will be higher next year. Export rice price used to peak to $1,000 a tonne before the market intervention by the government.

The association's president, Chookiat Ophaswongse, said the government should revise its rice policy to ensure price stability as well as not destroy the market mechanism.

"The government's pledging programme should set up a reasonable price, which now should be Bt10,000 a tonne instead of inflating the price above the market," Chookiat said, pointing out that it creates not only huge losses for the government but also destroys the growth of the industry.

The Samak government has set up a Bt14,000 price intervention programme. The high pledging price has caused difficulties for exports as Thai rice has quoted a higher price than Vietnamese rice.

In addition, rice orders dropped more than 25 per cent in the second half of this year. The lower orders come in line with high domestic rice price and importing countries delaying their orders.

Rice prices in the second half of the year are also predicted to fall following many negative factors and increasing world rice production from 428.02 million tonnes to 431.7 million tonnes next year. World stocks by the end of this year will also increase from 78.52 million tonnes to 81.97 million tonnes. However, global consumption is expected to increase from 425.24 million tonnes to 428.24 million tonnes. Global rice trading is forecast at 27.58 million tonnes next year, a fall from 28.39 million tonnes this year.

Thai exports next year are also likely to be affected by India's move to end its rice export ban. India will resume sales in November year after suspending exports in February. Vietnam would export 5.2 million tonnes next year, up from 4.75 million tonnes this year.

Chookiat called for the government to set up a reasonable price in the upcoming harvest season. Particularly, the government should export its stockpile of 2.1 million tonnes to Iran and North Korea, which Thai exporters cannot access.

Vichai Sriprasert, vice president of the association, said that politicians should stop using rice as a tool to win elections. It will give only shortterm benefits while creating longterm problems, he said.

Instead, the government should focus on setting up sustainable development measures such as irrigation system, hybrid seed and production cost reduction, to help farmers.

"The golden period of the rice industry is over. It will be very difficult for Thai rice to reach $1,000 a tonne next year based on a normal situation. The price should be in the range of $500600 next year, down from $600800 this year," he said.

Voraphong Pichpongsa, managing director of Capital Rice Co Ltd, the country's largest rice exporter, agreed with the Commerce Ministry's initiative to regain its right for rice operations as it would increase efficiency and flexibility in management.