Central market plan on track, says ministry

Central market plan on track, says ministry

Thailand angling to regain top export spot

People buy rice at Or Tor Kor Market in Bangkok, a venue where farmers can sell their rice directly to customers. WICHAN CHAROENKIATPAKUL
People buy rice at Or Tor Kor Market in Bangkok, a venue where farmers can sell their rice directly to customers. WICHAN CHAROENKIATPAKUL

Thailand is on schedule to have its first central market for milled rice by the end of this year, bringing consumers and importers to meet farmers and traders. The new market channel comes at a time when prices are on the rise, says a senior Commerce Ministry official.

Nuntawan Sakuntanaga, director-general of the Commerce Ministry's Internal Trade Department, said the ministry is due to finalise the terms of reference (ToR) for the project by next month, after which bidding for construction and operations will get under way.

Construction is expected to be completed by the end of this year, when operations are forecast to begin.

"This market will not only be open to traders or middlemen to sell their rice, but also to exporters, millers and even farmers wanting to display their stocks. The project is intended to show the diversity of Thai rice strains, with buyers and importers being able to select them by themselves," said Mrs Nuntawan.

She said the central market would cost 100 million baht to set up and will potentially be located in Talad Thai, Thailand's largest market for food products, or the planned AEC Trade Center close to Thammasat University's Rangsit campus.

Other potential locations are Patum Rice Mill and Granary Plc's processing plant, and the Public Warehouse Organisation's storage facility in Ratburana district, said Mrs Nuntawan.

Although Thailand is one of the world's leading rice exporters, producing 20 million tonnes of milled rice a year, of which 8-10 million tonnes is exported, the country has no central market for trading milled rice.

Late last year the government pitched the idea of setting up a central market as another distribution channel for traders and farmers that would allow importers, wholesalers and retailers to shop for different grains.

For more than three decades, Thailand was the world's biggest rice exporter before an aggressive subsidy scheme to buy the grain at higher-than-market value distorted prices and left millions of tonnes of milled rice in state stocks.

With prices of Thai rice rising, India became the world's largest rice exporter with 10.4 million tonnes last year. Thailand ranked number two with 9.88 tonnes, according to the Thai Rice Exporters Association.

The central milled rice market is thus expected to help attract buyers and importers as well as to boost Thai exports during the second half of the year, when prices are expected to be on the rise due to greater demand abroad at a time when supply is tightening.

The Thai government now holds 2.9 million tonnes of rice, 2.7 million of which is poor-quality and decaying grain only good for industrial use and animal feed.

The figure has dropped sharply from 18.9 million tonnes pre-2014.

Meanwhile, output for Thailand's off-season rice crop, which is normally harvested during March-August, has dropped substantially from the previous year, tightening supply for the second and third quarters.

"Tight supply during a time when demand is strong has pushed prices higher," one trader said, adding that rising prices also encourage millers to keep rice in their stocks, waiting to sell when prices will rise higher.

That has pushed the price of the benchmark 100% Thai rice to US$450 (15,300 baht) a tonne, up from $380 earlier this month, traders said.

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