| BANGKOK, April 1
BANGKOK, April 1 The Thai government will limit
the amount of rice it buys from farmers during the forthcoming
off-season crop, a move that traders and industry officials said
was forced on it because it is running out of warehouse space
and costs are rising.
The cabinet on Sunday agreed to guarantee a 105 billion baht
($3.59 billion) loan to the state-owned Bank of Agriculture and
Agricultural Cooperatives (BAAC) to enable it to carry on paying
farmers 15,000 baht per tonne for paddy, around 50 percent above
the market price.
"The government has had to make some changes on the policy
otherwise it wouldn't be able to go on any more with the costly
scheme," said Vichai Sriprasert, honorary president of the Thai
Rice Exporters Association.
The buying program, based on campaign promises from the July
2011 election, has raised rice stocks in Thailand to record
levels and made export prices for the grain uncompetitive. The
scheme has also cost Thailand its post as the world's top rice
exporter, a spot it had held for three decades until last year.
The government has said it does not have funding problems
and says it had to put some limit on the scheme because it is
concerned about quality. Drought in some areas might also help
by cutting back on output.
"This time we might not have to spend all of the loan as we
expect we could buy less rice this crop," BAAC Vice-President
Supat Eauchai told Reuters.
For the current phase of the scheme running until Sept. 15,
before the start of the next main crop, the government will buy
a maximum 7 million tonnes of paddy, or unmilled rice, a
government official said on Sunday.
In addition, it will exclude 18 varieties of rice classified
as low-quality. These varieties take less than 110 days to grow
and farmers have increasingly used them to squeeze in extra
crops to take advantage of the government buying programme.
Farm leaders seem resigned to the limits.
"We don't like it but we can accept it as we want the scheme
to run on," said Vichien Phuanlamjiak, vice-president of the
Thai Rice Farmers Association.
The government, honouring a commitment it made in the 2011
election, put up a budget of 400 billion baht to buy rice from
October 2011. Total net government spending on the intervention
scheme is unclear, partly because it has not announced how much
rice it has sold or at what price.
Stockpiles now stand at an estimated 17 million tonnes, a
STILL TRYING TO SELL
The government has said it is confident it can sell rice on
the market this year to clear warehouse space for the main crop
in November, when around 25 million tonnes of paddy is expected
to be harvested.
But it has sold hardly any of the rice bought since October
2011, because its high buying price has made Thai exports about
a third higher than grain from rivals, notably India and
Thailand offered around 1.5 million tonnes of rice from
stocks in tenders in the second half of 2012, but it rejected
all the offers because bid prices were too low.
The government then said it had sold 7.3 million tonnes of
rice to foreign governments, but buyers denied any deals had
been done and shipping activities at Thai ports did not suggest
such huge volumes.
The government has said it would open a tender to sell up to
500,000 tonnes of rice in April, but no further details have
($1 = 29.2850 Thai baht)
(Editing by Alan Raybould and Tom Hogue)