* High intervention price meant huge losses for state
* Moody's had warned of the budgetary consequences
* Exporters say the new price is still too high
(Adds exporters' comment, market outlook)
By Pracha Hariraksapitak and Kittipong Thaicharoen
BANGKOK, June 19 Thailand's government approved
a 20 percent cut in the guaranteed price it pays rice farmers, a
move that will relieve pressure on the state budget but still
leave Thai grain significantly more expensive than that of
Exporters doubted the cut would help them regain their spot
as the world's top rice exporter, lost when the original
intervention price made Thai rice about 50 percent more
expensive than grain from rivals like India and Vietnam.
"Exports are unlikely to revive immediately. The lower
intervention price is unlikely to bring Thai offer prices closer
to India and Vietnam," said Chookiat Ophaswongse, an honorary
president of the Thai Rice Exporters Association.
Thai 5 percent white rice was offered at $530 per tonne on
Wednesday, well above the same grade from Vietnam at $370 and
India at $420 a tonne.
The buying price would be cut to 12,000 baht ($390) per
tonne from 15,000 baht from June 30 until Sept. 15, Varathep
Rattanakorn, a minister without portfolio, said. It was not
clear if the same price would apply to the new crop year
starting in October.
"The 12,000 baht intervention price could equate to around
$600 a tonne. Adding in rice that gets into the free market,
Thai offer prices won't change much from the current $530 a
tonne," said one Bangkok-based trader.
Uncompetitive prices cut Thai exports to 6.9 million tonnes
in 2012 from a record 10.6 million in 2011. Exporters forecast
just 6.0 million tonnes for this year.
The cut to the intervention price came after mounting losses
suffered by the state budget, officially estimated at 136
billion baht for the 2011/12 crop year, led to a warning from
Moody's rating agency about the threat to the country's budget.
The government bought 40 million tonnes of paddy rice in the
2011/12 crop year, at a cost of nearly 600 billion baht, a
quarter of its total spending.
"We have cut the price as we want to make sure we are on
track to have a balanced budget by 2017," Commerce Minister
Boonsong Teriyapirom told reporters.
($1 = 30.8100 Thai baht)
(Additional reporting by Apornrath Phoonphongphiphat and Naveen
Thukral; Editing by Alan Raybould)