Rice exports to rise as Thailand cuts subsidy
RICE shipments from Thailand, the second-biggest exporter, are set to increase after the government said it will pay farmers 20 per cent less for rice to stem losses from a much-criticised subsidy programme, a government minister said yesterday.
Cabinet minister Warathep Rattanakorn said the government will pay 12,000 baht (S$491) per tonne of rice, compared to the current price of 15,000 baht, to reduce the losses from the 2011-2012 subsidy programme.
The government also set limits on the amount of rice the government will purchase, at 500,000 tonnes per farmer.
The amendments, proposed by the National Rice Policy Committee, were approved at yesterday's special Cabinet meeting.
Mr Warathep said the changes were in response to public criticism of the US$4.4-billion (S$5.5-billion) loss incurred by the subsidy programme, a a flagship policy of Prime Minister Yingluck Shinawatra's government to woo support from Thai farmers.
Thailand has paid farmers as much as 50 per cent more than domestic market rates since October 2011 to boost incomes.
Sales, however, fell short due to the inability to resell much of the grain on international markets. That allowed India and Vietnam to surpass Thailand in the value of rice exports.
The price of Thailand's 5 per cent white rice dropped 8.9 per cent this year to US$532 a tonne last week, the lowest since January last year.
AP, BLOOMBERG, REUTERS