Rice farmers want prompt help
Prices falling and export orders delayed
Published: 22/04/2010 at 12:00 AM
Newspaper section: Business
Rice farmers are calling for immediate help from the government, as domestic prices have fallen significantly on higher output, while foreign importers are delaying purchases on expectations prices will fall further.
Without new measures, rices of local paddy will definitely fall further, said Prasit Boonchuey, president of the Thai Farmers Association.
The association also wants the government to increase benchmark prices based on the current market prices.
The government currently sets the benchmark for its rice price insurance programme based on the prices of the previous week.
The benchmark for 15% moisture paddy is now 9,142 baht per tonne. Farmers are entitled to receive compensation at 858 baht a tonne, as the benchmark is below the insured price of 10,000 baht.
According to Mr Prasit, paddy with 20% moisture is now quoted in the market at only 5,000 to 5,500 baht per tonne, with 15% moisture paddy at 7,000 baht. Before the Songkran festival, 20% moisture paddy was quoted at 5,800 to 6,300 baht, and 15% moisture at 8,000 baht.
Mr Prasit said exporters had been cutting their prices to remain competitive with rival countries, causing local prices to fall.
The price of local milled rice has also fallen from 19,000 baht a tonne in December to 11,800 baht now.
Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said prices have been falling every day, as foreign buyers delay purchases. They believe prices have more room to fall because of high supplies and massive milled rice stocks now held by the Thai government.
The government is estimated to hold 5.6 million tonnes of milled rice bought from farmers to support prices in previous seasons.
Mr Chookiat said new purchase orders for parboiled rice from Africa were also inactive, as African countries have maintained sufficient rice stocks and also hold rice substitutes such as corn and wheat.
"Over the next few months, we expect the prices of rice are unlikely to see much change and we think right now the prices have fallen almost to the bottom or bottomed out," he said.
"The rice price outlook will be determined by positive factors like the impact of widespread drought and the outlook for other cereals."
Thai rice prices, the benchmark for Asia, have slumped 5.5% from two weeks ago on lower demand, according to the Thai Rice Exporters Association.
The association yesterday set the price of 100% grade-B white rice at $482 a tonne, down from $510 on April 7. The price of 25% broken rice was set at $394 a tonne, compared with $421 a tonne two weeks earlier.
Prasert Kosalwit director-general of the Rice Department, expects that Vietnam might not have enough supply to fill large export orders over the next two months, so buyers would turn to Thailand and help lift local prices.
Mr Prasert said the department believed Thai prices would move up in June and July, and he suggested farmers keep the grain to enjoy higher payments at that time.
As well, the Bank for Agriculture and Agricultural Co-operatives (BAAC) has said that its payments for farmers in the insurance programme were not being delayed as some farmers claimed.
Payments will be made within 15 days after receiving submissions, said BAAC president Luck Vajananawat. A slight delay was needed but only for clarifying documents, he said.
So far, the BAAC has paid out 37 billion baht under new programmes to support the prices of rice, maize, cassava in the 2009-10 season.
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