* Govt to buy paddy at unchanged 15,000 baht for main crop
* Will pay 13,000 baht a tonne for second crop
* Govt cuts limit that it will buy per household
(Adds details, background, comments)
By Pracha Hariraksapitak
BANGKOK, Sept 3 The Thai government on Tuesday
approved an extension of its rice buying scheme that will
slightly lower prices and quantities, but not by enough to
prevent another mountain of the grain being delivered to
The intervention, which would have expired in September, has
seen the government spend 600 billion baht ($18.71 billion) to
buy rice since Prime Minister Yingluck Shinawatra ramped up the
minimum price in 2011 to shore up support for farmers.
Most of the grain has ended up in government stores that now
stand at around 17 million tonnes, and another 10 million tonnes
looks headed that way as the government struggles to sell the
With prices for benchmark Thai rice RI-THWHB-P1 falling by
nearly a fifth since April to a two-year low of $470 a tonne,
the scheme threatens to become even more costly as bulging
stockpiles force the government to sell at a loss.
Deputy Commerce Minister Yanyong Phuangrach said the
government will continue to buy rice from farmers at 15,000 baht
per tonne of paddy for the main 2013/14 crop due to start in
October, but at 13,000 baht per tonne for the second crop from
It would also lower the maximum amount it buys to 350,000
baht per household for the main crop and 300,000 baht for the
second crop, from 500,000 baht in the current scheme.
"This time we limited the amount we would buy at 16.5
million tonnes of paddy," Yanyong said, or around 50 percent of
33-35 million tonnes of paddy Thailand produces annually. This
would mean the equivalent of another 10 million tonnes of milled
rice the government either has to sell or store.
Traders said the minor tweaks to the scheme could leave more
available for the free market, but are unlikely to lower the
costs to the government by much, or make Thai rice competitive
on world markets.
"It would help cut costs in the new intervention scheme, but
the costs it have been facing such as storage, depreciation and
losses keep rising," said a Bangkok-based trader.
Even 13,000 baht per tonne would mean an export price for 5
percent white rice of around $620 per tonne, including milling,
packaging and logistic costs. Top exporters Vietnam and India
offer the same grade at $375 and $420 per tonne respectively,
"It's not easy to sell rice no matter how cheap your prices
are. It is because India and Vietnam have good crops too and
they can offer even lower than us," another Thai trader said.
Thailand lost its spot as the world's biggest rice exporter
for the first time in three decades in 2012, when its exports
fell to 6.9 million tonnes, from the record 10.6 million tonnes
($1 = 32.0700 Thai baht)
(Additional reporting by Apornrath Phoonphongphiphat; Editing
by Michael Urquhart)