August 18, 2013
Thailand plans to again cut its rice intervention price to reduce the burden on the country’s budget, while it desperately sells rice stocks to fund the scheme in the face of thin global demand, traders and officials said on Wednesday. The government said it would cut intervention prices from 15,000 baht ($480) per tonne of paddy to 12,000 baht per tonne and could limit the amount it pays each family to about 500,000 baht, said a senior official at the Ministry of Commerce.
Farmers were not happy about the cut and said they would demand other compensation. “We are thinking about giving them some compensation to offset falls in earnings they would get if we cut the intervention prices. We will finalise this issue within a few weeks,” said Commerce Minister Niwatthamrong Bunsongphaisan. The current intervention scheme is due to expire on September 30 and the government plans to renew the scheme immediately on October 1 to help absorb rising supply as farmers are due to start harvesting a major crop, with around 25 million tonnes of paddy expected to come onto the market.
In July, the government said it would cut intervention prices, but reversed the cut after one day because farmers threatened to stage a major protest. Traders said the Thai government needed to minimise its intervention on rice as it has struggled to sell stock to fund the new scheme due to thin demand. The government opened tenders to sell a total 550,000 tonnes of rice in July, but only 210,000 tonnes of rice were sold. With the small amount of rice the government offloaded on the market, the prices of Thai 5 percent broken grade white rice was little changed, being quoted at $505 per tonne on Wednesday, compared to last week’s $460.
Niwatthamrong admitted that the government had spent up to 650 billion baht in buying rice from farmers since the intervention started in October 2011. However, he declined to give further details on how much money the government got from selling rice stocks as the wanted to avoided talking about the losses. The government admitted an initial losses of 136 billion baht from the first 2011/12 scheme. Traders and industry officials estimated the losses could be much higher.
In Vietnam, rice export prices slipped this week, as an industry purchase was nearing an end, with importing demand absent, traders said. “The purchase ends tomorrow, while there is no large order to back up prices,” a trader in Ho Chi Minh City said. The 5-percent broken rice fell to $385-$395 a tonne, free-on-board basis, from $400-$405 a tonne last week.
The 25-percent broken rice also dropped to $360-$365 a tonne, FOB basis, from $370-$375 last Wednesday. The rice purchase under a stockpiling scheme is due to end on August 15, the extended deadline to allow companies to complete their committed buying volume. Courtesy Reuters
Published in ZaraiMedia.com