BANGKOK: Thailand has extended a scheme to help farmers through intervention in rice markets to the end of September due to the lingering impact of severe flooding i
n the country last year.
Under the scheme, which had temporarily ended as timetabled on June 30, the country pays farmers 15,000 baht ($470) per tonne for paddy, compared with around 9,000 baht in the open market.
"The National Rice Committee agreed to extend the scheme as there were some farmers who were hit by flooding who needed to delay their crop," Commerce Minister Boonsong Teriyapirom told reporters on Friday.
Thailand suffered devastating floods in the second half of last year. Some farmers lost grain from the major crop, usually harvested from October, and then needed time to plant the next crop, which was only harvested this month.
Boonsong said these farmers had complained they had missed out on the opportunity to sell rice to the government at higher prices due to the late harvest.
After the extension, the government is expected to have an additional 2 million tonnes of rice in its stockpiles, taking them to a record high of 17 million tonnes of paddy, or around 10 million tonnes of milled rice. That compares with exports of 10.5 million tonnes of rice in 2011, a record high.
Despite the enormous cost, the government is expected to renew the intervention scheme in October, when harvesting of the new crop is due to start.
The Agriculture Ministry has forecast that Thailand could produce 25.9 million tonnes of paddy in the main crop, slightly higher than the previous forecast of 24.0 million tonnes as the high intervention price has encouraged farmers to grow more.
The Commerce Ministry, which oversees the rice sector, remains confident Thailand can export 9.5 million tonnes of rice in 2012 despite uncompetitive prices that have cut exports in the first six months by almost half compared to a year ago to just 3.45 million tonnes.
The Thai Rice Exporters Association forecasts full-year exports will reach no more than 6.5 million tonnes.
Traders and exporters say demand is generally thin and other major rice suppliers such as India and Vietnam are offering grain at far cheaper prices.
India is getting $420 per tonne and Vietnam around $405 per tonne for 5 percent broken grade white rice. The same grade from Thailand costs about $570-$580 a tonne.
Many analysts predict India will take the title of top rice exporter this year, with Vietnam retaining second place ahead of Thailand.
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