The new government's decision to lower rice prices for its pledging programme could create more competitive opportunities for exporters, but may cause trouble for farmers, experts said yesterday.

The government yesterday announced rice prices for the 2006-07 harvest season from November to February, with decreases for all types of rice under the pledging programme. The programme will target a total of about 9 million tonnes of paddy rice.

The government's targeted price is Bt8,700 to Bt9,000 per tonne for jasmine rice and Bt6,100 to Bt6,500 per tonne for white rice. For the 2005-06 harvest season, the targeted prices were was Bt9,700 to Bt10,000 per tonne for jasmine rice and Bt6,700 to 7,100 per tonne for white rice.

Deputy Prime Minister and Finance Minister MR Pridiyathorn Devakula said the government of ousted Prime Minister Thaksin Shinawatra had set the pledging price 30 per cent above the market price, which caused the country's rice-export volume to decrease.

Thailand has been able to export only 5.3 million tonnes of rice from early this year to September, while export volume exceeded 10 million tonnes in 2004. The government retains about 3.7 million tonnes of rice in stockpiles, because of the higher price.

He said Thai rice was unable to compete with rice from elsewhere, because the price was too high. "The government believes farmers should accept the new price, because it's fair to both farmers and exporters," Pridiyathorn said.

But Thai Rice Growers' Association president Suwan Kathawuth said the government should not reduce the price for the new harvest season, because farmers would suffer.

"I do not agree with the decision to decrease the rice price at this stage, when the government has no plan for helping farmers yet," he said.

Suwan said the costs of rice farming had increased this year, but farmers would receive a lower price as a result of the government's rice-pledging.

He said the government should find a suitable method to help farmers and come up with a new programme to stabilise rice prices as soon as possible.

Rice Exporters' Association president Chookiat Ophaswongse said exporters were surprised the government had decreased the rice price in the pledging programme.

He said the price reduction would be good for Thai rice, because it could then compete with Vietnamese rice, since the price gap would be narrower. However, the government must find a method to help farmers soon, since they would lose income.

Meanwhile, the Foreign Trade Department yesterday launched a new campaign to promote Thai jasmine rice during the Loy Kratong Festival.

Department director-general Rachane Potjanasuntorn said the department would work with the country's leading hotels nationwide to promote jasmine rice to tourists during the festival, which begins on November 5. The hotels will set up special booths to promote Thai jasmine rice on their menus, in order to create awareness among foreign tourists.

Petchanet Pratruangkrai

The Nation