Rice benchmark to rise with market

The government has pledged to increase benchmark prices for rice under its insurance programme so that they are closer to prevailing market rates in order to raise farmers' incomes and shore up local paddy prices. The new benchmark prices would be based on the average market prices of rice sold in different provinces, said Yanyong Phuangrach, the permanent secretary for the Commerce Ministry. Rice prices, particularly for paddy, vary in each province depending largely on moisture content, transport costs and the prices of milled rice. Farmers currently earn 6,500 to 7,200 baht per tonne for paddy with 15% moisture content. Authorities have to pay compensation of 2,800 baht a tonne to farmers, as the benchmark is below the insured price of 10,000 baht. As another option, Mr Yanyong said the ministry would propose to set new benchmark prices using a calculation based on average prices of rice in the past three years, current market prices and futures prices in the three months ahead from the Agricultural Futures Exchange of Thailand (Afet). Under this method, the current benchmark would be 8,918 baht per tonne. The National Rice Policy Committee is scheduled to consider the proposals on Monday. Rice farmers are now pressing their calls for immediate help from the government, as domestic prices have fallen significantly on higher output, while foreign importers are delaying purchases on expectations prices will fall further. Local paddy with 20% moisture is now quoted in the market at only 5,000 to 5,500 baht per tonne, with 15% moisture paddy at 7,000 baht. Before the Songkran festival, 20% moisture paddy was quoted at 5,800 to 6,300 baht, and 15% moisture at 8,000. The price of local milled rice has also fallen from 19,000 baht a tonne in December to 11,800 baht now. Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, agreed that the benchmark prices needed to be raised, especially those based on the market prices, saying the new calculation would better reflect real market prices. Thai rice prices, the benchmark for Asia, have slumped by 5.5% from two weeks ago on lower demand, according to the Thai Rice Exporters Association. The association on Wednesday set the price of 100% grade-B white rice at $482 a tonne, down from $510 on April 7. The price of 25% broken rice was set at $394 a tonne, compared with $421 a tonne two weeks earlier.