Bangkok, July 28 - Thailand, the world's biggest rice exporter, could set a benchmark price of 10,000 baht ($294) per tonne for white rice paddy under a new subsidy scheme it will introduce for the main 2009/10 crop, a senior official said on Tuesday.
That price would be equivalent to an export price for milled rice of around $550 per tonne, below the current level for benchmark 100 percent B grade white rice, which was quoted at $590 per tonne on Tuesday, exporters said.
Some exporters say Thai rice is uncompetitive, especially compared to that of Vietnam, the second-biggest exporter, and have blamed high government intervention prices in part.
"This buying price covers all costs of production and allows farmers to have around 30 percent profit," said Apichart Jongsakul, secretary general of the Office of Agricultural Economy, part of the Agriculture Ministry.
He said the price would be submitted for cabinet approval next week and the new programme could start in November, when harvesting of the main crop begins.
The government will guarantee farmers this price. If they sell rice to millers or exporters at lower than the official price, the government will pay them the difference.
This scheme replaces a decade-old intervention programme under which the government bought rice directly from farmers to support their livelihoods and held it in stockpiles.
The proposed new guaranteed price is 15 percent lower than the intervention price that the government is paying farmers of 11,800 baht for paddy. That scheme is due to expire on July 31.
The government is estimated to hold the equivalent of 6 million tonnes of milled rice, a record high. That is hanging over the market and adding to the downward pressure on prices, one of the reasons why the government is bringing in a new plan.
Traders said they expected the government to hold tenders to sell 500,000 tonnes of milled rice and around 600,000 tonnes of paddy rice to exporters in August.
Thailand is expected to produce 23.5 million tonnes of paddy in the 2009/10 crop, according to Agriculture Ministry data.
Traders and exporters are sceptical about the new scheme, saying many farmers would probably prefer the old, simpler system, with its shorter procedures and less paperwork.
Apichart also said there might be teething problems as farmers have to register before the programme starts in November.
"That's a major problem that could discourage farmers from accepting the new scheme and might mean they demand the old one back," he said. ($1=33.97 Baht)