Thai rice prices tumble on rising supply; farmer protests continue

BANGKOK, March 28 Fri Mar 28, 2014 3:46am EDT

BANGKOK, March 28 (Reuters) - Thai rice prices have been tumbling and are expected to keep dropping over the next few weeks as more supply comes to market and after the government was forced to shelve a controversial scheme to support farmers.

Falling prices, with the country's second harvest of the crop year being gathered and the government selling rice from its stockpiles, could prolong protests on the streets of Bangkok by farmers demanding outstanding payments from the canned subsidy programme.

That would pile further pressure on the caretaker government of Prime Minister Yingluck Shinawatra, already reeling after months of unrest in the capital.

The price of common grade 5-percent broken Thai white rice had fallen 12 percent from early this year to $390 per tonne on Friday, traders said. It stood at around $410 last week.

"Rising supply during the harvesting season and government rice stock sales have dragged prices down," said a Bangkok-based trader.

Harvesting of the second crop began last month, with around 10 million tonnes of paddy expected to be reaped.

The government has also offloaded 730,000 tonnes of rice from its stocks, saying it plans to sell more to raise funds.

"The government has no plan to help us," said Prasit Boonchoey, head of the Thai Farmers Association.

"It's like we are set adrift as prices keep falling and the government does nothing."

Yingluck dissolved parliament in early December, and has said her current caretaker government does not have the power to renew the rice-buying scheme, which expired on Feb. 28.

She had swept to power in 2011 on the back of rural votes generated in part by the subsidies.

Since the demise of the programme, domestic paddy prices have fallen sharply to 5,500 Thai baht ($170) per tonne. That is way below the 15,000 baht the government paid under the intervention scheme.

Looking for outstanding payments and financial support from the government, farmers have been protesting in Bangkok since mid-February, blocking traffic in front of the Ministry of Commerce.

"We have nothing to do but protest to show that we have demands, otherwise we won't get any help," said Kittisak Waraha, a protest leader. ($1 = 32.5700 Thai Baht) (Editing by Joseph Radford)

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