govt in a dilemma

The government's guaranteed price for rice could be revised downwards from Bt14,000 a tonne to Bt12,000, in line with the world market price.

The National Rice Policy Committee yesterday disagreed on a final subsidy price, because relevant government agencies, including the Finance, Commerce and Agriculture ministries, representatives from Government House and rice experts, have different ideas about the price-intervention programme.

Chaired by Prime Minister Somchai Wongsawat, the meeting was told the government wanted to finalise the rice-intervention price in preparation for the main crop, which will enter the market next month. The government plans to ensure that the rice-pledging programme is started early next month, to serve main-crop production.

The main rice crop should reach 8 million tonnes of paddy rice.

A source attending the meeting said the government was looking to gain more votes through this populist policy and so wanted the intervention price to remain at Bt14,000 a tonne.

However, if the government dissolves Parliament, the guaranteed price will drop to Bt12,000 a tonne, reflecting the global market price.

The source said only the Commerce Ministry insisted on maintaining the subsidy price for the main crop at Bt14,000 a tonne, equal to the government's previous intervention price for second-crop production.

"The government should set a high price for the main crop, because it is both high quality and high volume. If the government reduces the intervention price, it will immediately suffer a loss from the rice-pledging programme and also pull down the market price in the future," the source said.

The price for white rice has dropped from between Bt18,000 and Bt19,000 a tonne mid-year to Bt15,000 now.

Thai Rice Farmers' Association president Prasit Boonchuey has sent a letter to the Commerce Ministry urging it to maintain the guaranteed price at Bt14,000 a tonne. Without that guarantee, farmers will receive less than that, because the price relies mainly on moisture.

Rice-production costs have increased from Bt6,500 a tonne to Bt7,070.

"It will be mostly small farmers who are hit if the government lowers the intervention price, because they have limited growing areas and low yields," he said.

Commerce permanent secretary Siripol Yodmuangcharoen said the National Rice Policy Committee had set up a subcommittee to consider the rice-pledging price. It must propose a final pledging price by next Monday and then forward it for Cabinet approval the next day.

The committee also set up another four subcommittees, focusing on trade, production, finance and management in the main rice-growing provinces.

The government also plans to release its 460,000 tonnes of rice via the Agricultural Futures Exchange of Thailand.