CP praises price intervention

State subsidies are inevitable, as farm prices have fallen dramatically along with the sharp decline in oil prices. The Cabinet this week approved a budget of Bt106 billion to shore up the rice, cassava and maize markets, with rice taking Bt97 billion, cassava Bt4.75 billion and maize Bt4.25 billion.

The prices of major commercial crops including rice, maize, wheat and soybean have plunged by 50-80 per cent from early this year, with rice alone nose-diving by 70-80 per cent.

Montri Congtrakultien, president and CEO of CP's Crop Integration Business Group, said the price-pledging programme would boost liquidity in the crop markets.

A total of 25 million farmers, more than one-third of the country's population, would suffer without state intervention and the economy would be crippled by the lack of grass-roots spending.

Weak demand would then hurt sales of food and other consumer goods.

Sumeth Laomoraphorn, president of CP Intertrade, warned that the government must be careful in managing farm commodity levels, as quality will directly affect prices. "Farm goods are like petroleum products as they have relatively high liquidity, so it's necessary to manage stockpiles competently," he said.

The government's price for white rice at Bt12,000 per tonne is rather low, he said, adding that the guaranteed prices should be set at Bt18,000 for jasmine rice, Bt15,000 to Bt16,000 for sticky rice and Bt14,000 for white rice.

This year, the country's fifth-biggest rice exporter is expected to ship out 700,000-800,000 tonnes, up 50 per cent from last year, while Thailand's total rice exports are expected to reach 9 million to 10 million tonnes.

Agriculture Minister Somsak Prissanananthakul said his ministry would submit a comprehensive plan to the Cabinet to manage the country's agricultural output, in light of farmers' protests against the steep retreat in prices.

Agriculture remains the backbone of the economy, and despite softening prices, the trend is still bright, as consumption will continue growing, he said.

Farmers have launched protests against the collapse of commodity prices mainly for rice, corn and para rubber.