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Rice pledging

Govt may tap budget again to pay farmers

Yanyong Phuangrach

Yanyong Phuangrach

The government says it will soon discuss borrowing more money from its central budget to pay farmers under the rice-pledging scheme.



Deputy Commerce Minister Yanyong Phuangrach said he would discuss with Niwattumrong Boonsongpaisarn, the deputy prime minister and commerce minister, a proposal from the Thai Farmers and Agriculturalists Association for the government to request the Election Committee to approval additional borrowings of Bt40 billion from the central budget.

"The association, together with rice farmer representatives from 30 provinces, has submitted a letter to me," Yanyong said.

"I have to discuss this issue with the commerce minister first and I may have to invite representatives from related parties to join the discussion to finalise the plan for more borrowings from the central budget.

"This could be done without the input of the National Rice Policy Committee. It could be forwarded to the Cabinet for consideration."

Under the proposal, Yanyong said the Bt40-billion borrowings may not be made in a lump sum, but could be made in two tranches of Bt20-billion each.

He believed the Ministry of Commerce would be able to make all of the repayments, as the government had the ability to sell stocked rice.

It is expected that the first Bt20-billion tranche, which the EC approved early last month, will be repaid before the May 31 deadline.

"Repayment to the central budget is anticipated beforehand," he said.

"Recently, about Bt10 billion in excess was paid. This shows the government will not miss its repayment obligation. It would likely use borrowings from the budget to pay farmers.

"The original plan was for government borrowings to be used to pay farmers, but it was suspended given the caretaker government's situation.

"The plan was changed to find money to pay farmers and sell rice at the same time."

The Ministry of Commerce said Vichian Phuanglamjiak, president of the Thai Farmers and Agriculturalists Association, had submitted the letter to Yanyong urging the government to continue with the rice-pledging scheme and consider requesting the extra Bt40 billion to help cover the Bt95 billion payment due to farmers.

Meanwhile, Thailand will seek new and less price-competitive markets to export rice after an opportunity to export 800,000 tonnes of rice to the Philippines was stymied by Vietnam offering a lower price.

According to the Department of Foreign Trade's director-general, Surasak Riangkrul, Vietnam offered the Philippines at an auction held on Tuesday a CIF (cost, insurance, freight) export price of US$440 per tonne for 15 per cent white rice, which is likely to kill Thailand's chance of exporting 800,000 tonnes to the Philippines at $475 per tonne CIF price. It is unlikely that Thailand can secure the bid as the price offered by Thailand is higher because 2-3 private Thai rice exporters proposed 5 per cent higher quality white rice. Vietnam will announce the auction result on April 23.

In any case, Thailand will have seek other markets to export better quality, higher-priced Thai rice to avoid a price war with Vietnamese rice and to preserve the quality of Thai rice. Meanwhile, Malaysia is currently negotiating to import several hundreds of tonnes of Thai rice.

As for the distribution of rice stocks from state warehouses, 520,000 tonnes of rice will be allocated for general auction and for direct export sales, in addition to another 60,000 tonnes from the Suphan Buri rice auction, which will have to be approved later by Niwatthamrong, Surasak said.

According to the Thai Rice Exporters Association, on FOB (free-on-board) terms, the export price of Thai rice is $380/tonne. Vietnam 's FOB export price is unknown as their rice production cost is not known. It is not unusual for Vietnam to offer a very low price, as they really want to win the Philippines export contract.

The Commerce Ministry reported that the FOB export price of 15 per cent Thai rice was $377/tonne compared to Vietnam's $365/tonne, a difference of $10-$12 per tonne.


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