Thai rice prices in free fall

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thai-rice-farmThe Thai government’s delay in paying farmers for rice as per the disputed pledging scheme has resulted in declining domestic paddy prices, traders say. The average local paddy price is now only 6,500 to 8,000 baht ($ 206 to $254) a tonne, far lower than the 15,000 baht ($476) offered by the government.

Farmers haven’t been paid since October 1 and have been given vouchers instead. Many are waiting to cash them in at the Bank for Agriculture and Agricultural Cooperatives (BAAC), the creditor of the rice-pledging scheme, but the bank has run out of cash and is waiting for government funding.

The government is now also forced to sell surplus rice much cheaper on the market to get rid of the huge stockpiles. It is currently selling at about $400 a tonne, only $15 more than the same type of rice from Vietnam. Normally, Thai rice sells at about $100 higher.

To pay farmers immediately, the Thai government will now issue a $2.38 billion bond to help fund the subsidy scheme to avoid alienating key supporters of Prime Minister Yingluck Shinawatra. Angry farmers have already joined a recent mass rally against the government in Bangkok.

Bangkok has spent 680 billion baht ($21.6 billion) on rice since October 2011, but has only sold enough to get 156 billion baht ($5 billion) to pay the BAAC for the loans that fund the scheme. It now has set aside 82 billion baht ($2.6 billion) from the 2013/14 fiscal budget to offset losses from the subsidy schemes, of which 50 billion baht ($1.6 billion) could be used to meet outstanding payments.

The Commerce Ministry has said it will spend 270 billion baht ($8.6 billion) to buy 16.5 million tonnes of rice in the harvest year that started in October. But since then it has taken 2 million tonnes of rice without paying for it, according to the BAAC.

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Reading Time: 2 minutes

The Thai government’s delay in paying farmers for rice as per the disputed pledging scheme has resulted in declining domestic paddy prices, traders say. The average local paddy price is now only 6,500 to 8,000 baht ($ 206 to $254) a tonne, far lower than the 15,000 baht ($476) offered by the government.

Reading Time: 2 minutes

thai-rice-farmThe Thai government’s delay in paying farmers for rice as per the disputed pledging scheme has resulted in declining domestic paddy prices, traders say. The average local paddy price is now only 6,500 to 8,000 baht ($ 206 to $254) a tonne, far lower than the 15,000 baht ($476) offered by the government.

Farmers haven’t been paid since October 1 and have been given vouchers instead. Many are waiting to cash them in at the Bank for Agriculture and Agricultural Cooperatives (BAAC), the creditor of the rice-pledging scheme, but the bank has run out of cash and is waiting for government funding.

The government is now also forced to sell surplus rice much cheaper on the market to get rid of the huge stockpiles. It is currently selling at about $400 a tonne, only $15 more than the same type of rice from Vietnam. Normally, Thai rice sells at about $100 higher.

To pay farmers immediately, the Thai government will now issue a $2.38 billion bond to help fund the subsidy scheme to avoid alienating key supporters of Prime Minister Yingluck Shinawatra. Angry farmers have already joined a recent mass rally against the government in Bangkok.

Bangkok has spent 680 billion baht ($21.6 billion) on rice since October 2011, but has only sold enough to get 156 billion baht ($5 billion) to pay the BAAC for the loans that fund the scheme. It now has set aside 82 billion baht ($2.6 billion) from the 2013/14 fiscal budget to offset losses from the subsidy schemes, of which 50 billion baht ($1.6 billion) could be used to meet outstanding payments.

The Commerce Ministry has said it will spend 270 billion baht ($8.6 billion) to buy 16.5 million tonnes of rice in the harvest year that started in October. But since then it has taken 2 million tonnes of rice without paying for it, according to the BAAC.

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