Thai rice buying slows as govt runs out of storage space

BANGKOK: Thailand's rice intervention programme has slowed because the government is running out of space to store the grain it buys, with stocks already at a record high as the harvest of the main crop gets into full swing, farmers and industry officials said on Tuesday.

Farmers in several provinces complained they were unable to sell paddy to the government as millers were refusing to take it. Millers generally take the rice from the farmers, giving them a certificate for money they can claim at a state bank.

"Millers and warehouse owners who have joined the government intervention programme are now refusing to take paddy from farmers as they say they don't have enough space to store it," Prasit Boonchuey, head of the Thai Farmers Association, told Reuters.

Farmers started harvesting the main crop this month and around 25 million tonnes of paddy is expected to come into the market. Production normally peaks in November.

The commerce minister said on Saturday that stocks of milled rice had risen to a record high of 14 million tonnes from 12 million.

 The government is struggling to offload its stocks because it is paying farmers a high price of 15,000 Thai baht ($490) a tonne and needs to recoup its costs, but buyers can find grain at far cheaper prices in Vietnam and India.

The transport minister said on Friday that the government planned to use empty warehouses at Bangkok's old Don Muang airport to store rice. Other airports may be asked for help, too, and army bases could also be used.

 But Commerce Minister Boonsong Teriyapirom has said the government is in no rush to use Don Muang airport, and that it is just a back-up plan.

However, a senior official at the Public Warehouse Organisation (PWO), which comes under the Commerce Ministry, said he had been assigned to look at the Don Muang facilities to see if they were suitable for storing rice.

"At this stage, we estimate we would need about 10 million baht to renovate the Don Muang warehouse so that it would be fit to hold rice," said the official, who declined to be named.

Commerce Minister Boonsong has insisted that he has sold 7.3 million tonnes of rice to foreign governments but shippers and other industry officials see no evidence of that.

Other ministers have suggested the government has signed memorandums of understanding and that shipments of the rice would be spread over many months.

It needs to offload rice quickly as another 9 million tonnes is expected to flow in after milling of the 15 million tonnes of paddy it aims to buy from the main crop.

That could result in stockpiles of 23 million tonnes, more than double the amount the country exports even in the best years.

Thailand exported a record 10.6 million tonnes in 2011. So far this year it has exported 5.06 million tonnes, down 44 percent from the same period in 2011.

It has been the world's top rice exporter for years but looks likely to lose that title to Vietnam or India in 2012.