Retail rice prices could jump by 25% or more from next month once the government launches the crop mortgage programme.
Somkiat Makcayathorn, president of the Thai Rice Packers Association, said Hom Mali rice prices could rise by 25% or 40-50 baht per five-kilogramme bag.
Prices for white rice, meanwhile, are expected to rise by 15% to 20%, or 20 to 30 baht per bag.
Hom Mali rice sells for 180 to 200 baht per 5kg bag, while white rice sells for 120 to 130 baht.
The government is likely to offer high prices under the scheme which will encourage retailers to hoard stocks, at least until the government starts paying out.
Exporters, meanwhile, are bracing for harder times with the rise in prices.
Korbsook Iamsuri, chairwoman of the Thai Rice Exporters’ Association, warned that export prices for Thai rice could jump up to $850 per tonne due to higher crop prices. The association on Wednesday set a price of $596 baht per tonne for 100% grade-B white rice.
“It will be more difficult for exporters to compete [with higher costs],” she said. “It’s hard to be confident that Thailand can remain the world’s top rice exporter. But the government says this policy is necessary to help bring greater [social and economic] balance to the country.
“We just have to do the best we can to minimise the impact.”
Banjong Tangjitwattanakul, vice-president of the Thai Rice Millers Association, said white rice export prices could rise to $750 per tonne and to $1,200 to $1,300 for Hom Mali rice under the mortgage scheme.
The Thai Rice Exporters’ Association had estimated Thai rice exports this year could reach 10 million-11 million tonnes, with 8 million tonnes shipped in the first eight months of the year.
The crop mortgage programme will start on Oct 7, with a target price of 15,000 baht per tonne of rice paddy and 20,000 baht for Hom Mali rice grown in northern provinces like Chiangrai.
The scheme, adopted in the past to offer subsidies to farmers, was scrapped by the Abhisit Vejjajiva government in favour of a crop insurance programme.
Commerce Minister Kittiratt Na-Ranong said yesterday the mortgage programme would be ready to cover “every single grain” of rice from the second crop.
Authorities say the programme is a crucial element of broader plans to raise rural household incomes and boost the farm sector.
But critics say the mortgage programme is fraught with loopholes, open to manipulation and corruption and a waste of public resources.
Mr Kittiratt met rice farmers, millers and exporters yesterday to discuss the government’s farm policies.
The government will set no limits for rice pledges and will also allow farmers to pledge rice beyond their own province to surrounding provinces as well.
Under the rice mortgage scheme, the Bank for Agriculture and Agricultural Co-operatives (BAAC) offers loans to farmers against rice pledged as collateral. As pledging prices are almost always set higher than market prices, the state bank typically receives rice as payment for the loans.
A BAAC executive said the bank would have to arrange loans from other financial institutions to help raise the estimated 190 billion baht needed to pay for the mortgage scheme.
The bank has just 50 billion baht available for the crop mortgage scheme. Based on current prices, the bank expects up to 8 million to 10 million tonnes of rice to be pledged under the scheme during next year’s main crop harvest. If so, it would be nearly double the all-time record of 5 million tonnes pledged from the main crop to the mortgage scheme in a single year.
Commerce Ministry staff has asked packers to work with the Public Warehouse Organisation to sell low-cost rice under the government’s “Blue Flag” brand to help low-income consumers.