* Thai 5 pct broken grade offered at $415/T vs last week's $420
* Thai govt struggling to fund rice-buying scheme
* Rice sold on open market seen rising
* Vietnam prices ease ahead of harvesting of major crop (Adds details about unpaid farmers, Thai Farmers Association's quote)
By Apornrath Phoonphongphiphat
BANGKOK, Jan 16 Thai rice prices slipped this week as some farmers unloaded grain onto the market because of fears about the ability of the government to pay for grain bought under its intervention scheme, especially with protests disrupting the capital.
Thai 5 percent broken grade white rice was offered at $415 per tonne on Thursday, down from last week's $420, traders said.
"Farmers feared that they might not get the money on time so they sold rice on to the free market," said a Bangkok-based trader, adding that exporters were forcing prices down.
The government of Prime Minister Yingluck Shinawatra has been trying to help farmers by buying their rice at prices way above the market since 2011.
Some farmers in remote areas have occasionally sold rice on the open market at cheap prices because they needed money quickly and could not get to state buying centres.
However, such sales are likely to rise substantially this crop year, in part because the government has said it would only buy 16.5 million tonnes of paddy, around 40 percent of annual production of 38 million, due to a liquidity crunch.
"But what farmers are most concerned about is they are afraid they won't be paid, so they decided to sell even at lower prices because they can be sure they will get the money," said Prasit Boonchoey, head of the Thai Farmers Association.
The government is struggling to fund the rice purchases from farmers, who are paid 50 percent above market prices under the scheme. The government has failed to find buyers for the bulging stocks built up under the scheme and has had to take loans or sell bonds to ensure payments.
But with protesters in Thailand trying to paralyse ministries to force the government to resign, selling debt has not been easy.
In addition, Yingluck's government is only acting in a caretaker capacity after she dissolved parliament and called an election for February, so it lacks the authority to sign any government-to-government rice deals.
"The bulging stocks would hammer prices down further," said another trader.
In Vietnam, exporters lowered rice-export quotations this week, anticipating a rise in supply next month when Mekong Delta farmers begin harvesting a major crop, traders said.
The 5 percent broken rice was quoted at $395 a tonne, free-on-board basis, for loading from late February, when harvesting of the winter-spring crop starts in the Mekong Delta food basket.
The same variety in stock was quoted at $400-$405 a tonne, down from $410-$415 a week ago.
Another grade, 25 percent broken, also eased to $360-$365 a tonne, FOB basis, from last week's $385.
"Exporters are making preemptive offers as prices would ease when the next crop arrives," a trader in Ho Chi Minh City said.
But lower prices have yet to attract key buyers, such as China, African countries, Indonesia or the Philippines, which have been buying or may be keeping an eye on cheaper Thai rice, traders said.
"China has not started buying yet," a trader added.
China topped the list of Vietnamese rice importers in 2013, with purchases in the January-November period rising more than 6 percent from a year ago to around 2 million tonnes, based on Vietnam government data. (Additional reporting by Ho Binh Minh in Hanoi; Editing by Alan Raybould and Muralikumar Anantharaman)