ASEAN KEY DESTINATIONS
New price scheme threatens Thai rice exports
The Thai Rice Exporters Association (TREA) has been crying foul for a while now regarding Pheu Thai's announced policy to allow farmers to mortgage their entire harvest at 15,000 baht a tonne for white rice and 20,000 baht for fragrant or Hom Mali rice.
Even though the party has said purchases would not start until November, rice prices have been rising each week since before the July 3 general election.
Thai rice prices, the benchmark for Asia, rose by 0.7 percent yesterday from a week earlier on optimism the new government will buy the grain at above-market rates, said the TREA after its weekly price-setting meeting.
It said the price of 100 percent grade-B white rice reached $567 a ton, while 25 percent broken rice rose to $506 a ton from $502 last week.
Vice-president Charoen Laothamatas said that if the mortgage program returns, the free-on-board price of Hom Mali would reach US$1,400 a ton, making it difficult to market.
"If Thai exporters cannot buy such expensive rice for export, they may opt for much cheaper rice from Vietnam, Cambodia or Burma, as they must maintain their market bases and customers. With the Asean Free Trade Agreement, such an alternative would be possible," he said.
Some rice exporters and millers have already established trading firms or representative offices in Cambodia and Vietnam to purchase rice for export to foreign customers.
Chookiat Ophaswongse, the TREA honorary president, predicts exports could be cut in half if the government has no measures to assist exporters.
TREA president Korbsook Iamsuri said that while exports should be able to meet this year's target of 10 million ton, three areas of concern remain.
They are the government's rice mortgage policy jacking up prices; the baht appreciating further, also making Thai rice more expensive; and India's plan to export at least 1 million tons of rice from next month, as its price beats Thailand's by $100 a ton.
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