February 06, 2014 00:00 By PETCHANET PRATRUANGKRAI
RICE EXPORTERS have urged the caretaker government to end its flagship rice-pledging scheme immediately, pointing to the mounting state stockpile of rice that an industry body claims would take five years to sell off.
The rice programme, which has run for two years, has racked up huge losses, driven down the price of Thai rice in the world market, and lowered export volumes, according to the Thai Rice Exporters Association (TREA).
“It would need five years to empty the rice inventory because of limited trading volumes in the world market and tough competition,” said TREA honorary president Korbsook Iamsuri.
He suggested the government reduce its rice stockpile to cut warehousing costs. Some of rice could be used as feed meal, donated to those in need, or even destroyed.
Meanwhile, TREA president Charoen Laothamatas said the government should not focus only on encouraging more exports to earn money to fund the pledging scheme. Selling rice needs a long time. It should consider other choices such as loans and reducing supplies. However, the Finance Ministry, which is in a caretaker role until a new government can be formed, has hit a snag in its attempt to secure a loan to pay off farmers participating in the scheme, as it is unclear if such borrowing would be legal. Yesterday, suffering farmers who have not been paid threatened to escalate their protests by rallying to the Commerce Ministry today.
An auction for a bridge loan to deal with their plight, which was to be held today, has also been cancelled by the Finance Ministry because no bank will cooperate until the legality of such a move is clarified.
Charoen said the government should encourage farmers to suspend or reduce their second crops. Otherwise, it must resell rice at lower than market price in an attempt to earn money to pay farmers.
All parties needed
“The pledging project should be ended soonest,” he said, adding that the government would have to allow all involved parties including farmers, millers, traders and exporters to help find ways to sustain the growth of the rice industry.
The TREA estimates that the government has handled between 14 million and 15 million tonnes of milled rice in its stockpiles from previous harvest seasons during the programme’s two years, while receiving another 11 million tonnes of paddy or 5 million tonnes of milled rice from the current harvest season (2013-14).
However, US Department of Agriculture estimated Thai rice export this year to reach 14.73 million tonnes.
Since 2011, the government has reported total sales of 12.75 million tonnes of milled rice from the stockpiles, earning up to Bt139 billion.
The association projects that Thailand will be able to export 7.5 million tonnes of rice this year, up 13.6 per cent from 6.61 million in 2013. From that amount, it would earn up to US$4.5 billion (Bt147 billion) this year, a slight increase from $4.42 billion in 2013.
Meanwhile, the US Department of Agriculture forecasts that Thailand will export 8 million tonnes of rice this year, ranking as the world’s second-largest exporter after India.
Charoen said the government must ensure transparency when it opens bidding for its rice.
The Commerce Ministry will open an auction for 400,000 tonnes of rice on February 12 and the successful bidders will be announced on February 14.
Chookiat Ophaswongse, honorary president of the TREA, said the weakness of the baht had lowered the price of Thai rice to Bt11,000 a tonne from Bt13,000, resulting in a loss of competitiveness in the world market.
At present, the price of 5 per cent Thai white rice is quoted at $430 a tonne, while Vietnamese rice is traded at $395 a tonne. Thai rice is likely to fall to $360 a tonne, said Chookiat Ophaswongse, honorary president of the TREA.