Academics and the private sector remain bearish on rice prices due to massive global stocks and new supplies despite a state bank executive claiming market prices have improved.
Boonthai Kaewkhuntee, a senior executive vice-president of the Bank for Agriculture and Agricultural Cooperatives (BAAC), yesterday said several National Rice Policy Committee members agreed prices in the global market will rise by 500 to 1,100 baht per tonne based on the type of rice.
For example, fragrant rice is expected to rise by 775 baht, with 5% white rice up by 500 baht and Pathum Thani fragrant rice by 1,150 baht.
The expected price increases are attributed mainly to natural disasters that may hit key rice producers and exporters.
However, Prof Somporn Isvilanonda of the Knowledge Network Institute of Thailand said it is unlikely global rice prices will rise, as India, the world's top exporter, has maintained its stockpiles of more than 30 million tonnes, double its minimum requirement of 12-15 million tonnes.
"Although there is a report that India may export less than last year due to rising prices in the country, I don't believe that. Rice by nature has a short lifetime, so if you have such a high stock, you have to try to sell it as much as possible," said Prof Somporn.
Another big exporter, Vietnam, is expected to see higher exports in line with its healthy rice production, as the country remains safe from any natural disasters.
A worker carries a bag of milled rice at a mill in Suphan Buri province, about 65.2 miles (105 km) north of Bangkok February 6, 2013. Reuters Photo
In a related development, the government has given the green light for the BAAC, the chief financier of the state-sponsored rice pledging scheme, to secure more loans for the programme.
The cabinet yesterday endorsed the bank's proposal to borrow another 74.2 billion baht to be used as a revolving fund to finance pledging schemes for rice and other farm products.
The BAAC admitted the existing revolving fund was not sufficient to implement the government's agricultural projects.
The Finance Ministry estimates government debts incurred by agricultural pledging schemes will amount to 410 billion baht this year.
The BAAC's revolving fund will increase to 224 billion baht for the 2012-13 harvest from the previously approved 150 billion in loans guaranteed by the ministry.
However, a Government House source said the government will opt to cut the borrowing plans of other state agencies to prevent a rise in public debt.
In each fiscal budget, the ministry is required to provide loan guarantees worth not more than 20% of the fiscal budget or 480 billion baht of 2.4 trillion.
In fiscal 2013, the ministry's loan guarantees will amount to 479.99 billion baht including the latest borrowing approved for the BAAC.
The ministry also reported to the cabinet that public debt to gross domestic product will be an estimated 46.6% at the end of fiscal 2013 before rising to 46.7% next year and falling to 46.1% in 2015, 44.9% in 2016 and 43.4% in 2017.
The ministry reported public debt also takes into account the government's borrowing plans to finance water management and natural disaster funds.
Prime Minister Yingluck Shinawatra yesterday said the government remains committed to continuing the rice mortgage scheme.