Govt plans to set the market price for rice

The government is planning to set a market price for rice to shield farmers from price dumping by middlemen.

The move follows a meeting of the National Rice Policy Committee yesterday.

However, the Rice Exporters Association immediately objected to the idea. It believes it will totally destroy the market mechanism, while the government will face a higher financial burden in guaranteeing a price for farmers.

It was the first meeting of the committee, chaired by Prime Minister Samak Sundaravej, after the government set up four special panels to regulate the country's rice trading system instead of the Commerce Ministry's team.

Samak has ordered his team to draft a plan to manipulate the price of the staple. He said the government should be the one to establish the median price in order to protect farmers' interests, rather than allowing traders to set prices with farmers.

The government announced it would not open any bidding for millers or exporters of the 1.1 million tonnes of rice in its stockpile. It will release stocks only for government-to-government contracts.

Rice Exporters Association president Chookiat Ophaswongse said the government should not intervene in the trading system by setting the median price.

"It will be very dangerous for the rice trading system of the Kingdom if the government jumps in to play in the market.

"Thailand is not the only one country that exports rice.

If the government sets up the median price, it will not only be traders that are affected, but also the government for extending huge financial support to farmers," he said.

Instead of intervening in the market mechanism, the association called upon the government to create sustainable development measures to ensure the stability of the entire rice system.

Among the measures called for are reduced production costs for farmers, such as cheaper fertiliser; an increase in the yield per rai from the current average of 420 kilograms; development of the irrigation system, which now services only 22 per cent of rice farmers; and allowing the market mechanism to do its work rather than set up a pledging programme.

The domestic rice price has gradually fallen by US$20-$40 (Bt673-Bt1,346) per tonne following bearish demand.

As of yesterday, the price of jasmine rice had fallen from $1,057 per tonne to $1,013 in only a week. Regular white rice, meanwhile, fell from $849 to $824 a tonne.