Guaranteed rice prices for the 2020-21 crop year will be unchanged from those of the previous season, the National Rice Policy Committee decided on Friday.
The guarantee programme, to run from Sept 1 to May 31, is expected to cost 85 billion baht, deputy government spokesperson Rachada Dhanadirek said after a meeting of the committee chaired by Prime Minister Prayut Chan-o-cha.
She said 23.5 billion baht would be set aside to cover price guarantees, 56 billion to support management and quality development costs for farmers, and 5.72 billion to subsidise interest rates on loans extended to stabilise domestic rice prices.
If 30.3 billion baht in loans to be extended by the state-owned Bank for the Agriculture and Agricultural Cooperative (BAAC) are included, the scheme will total 115 billion baht, she said.
The programme covers five main types of rice: white rice paddy with 15% moisture, hom mali rice paddy, fragrant Pathum Thani rice paddy with 15% moisture, glutinous rice paddy with 15% moisture, and provincial fragrant rice paddy.
The rguarantee programme offers compensation to farmers if market prices fall below the benchmark. They will be offered 10,000 baht per tonne for white rice paddy with 15% moisture, limited to 30 tonnes per family or 40 rai.
The guaranteed prices are set at 15,000 baht a tonne for Thai hom mali rice paddy, limited to 14 tonnes per family or 40 rai; 11,000 baht per tonne of fragrant Pathum Thani rice paddy with 15% moisture for a limit of 25 tonnes per family or 40 rai; 12,000 baht a tonne for glutinous rice paddy with 15% moisture, with a limit of 16 tonnes or 40 rai; and 14,000 baht a tonne for provincial fragrant rice paddy, with a limit of 16 tonnes per family or 40 rai.
Ms Rachada said the Commerce Ministry is expected to propose the scheme for cabinet approval soon.
Thailand, once the world’s largest rice exporter by a wide margin, is now ranked third with 3.15 million tonnes shipped between Jan 1 and July 8. That trails India (4.65 million tonnes) and Vietnam (4.17 million).
Pakistan and the US were the fourth and fifth largest exporters with 2.07 million and 1.61 million tonnes respectively for the same period.
Charoen Laothammatas, president of the Thai Rice Exporters Association, said earlier this week that rice export prospects looked murky in the second half amid sluggish global demand caused by the coronavirus crisis.
The association has set a full-year rice export target of 7.5 million tonnes but is scheduled to adjust the target on July 22.
Thailand in 2019 exported 7.58 million tonnes of rice, down 32% from the year before, with a value of 131 billion baht, down 25%.
Thai rice export prices dipped to a four-month low this week due to lack of buyers and weakening of the baht, while strong demand from Cuba and Malaysia pushed Vietnamese rates to a near one-month high.
Benchmark Thai 5% broken rice was quoted at $440 to $455 a tonne on Thursday, the lowest since late February, and down from from $455 to $485 quoted last week, Reuters reported.
Thai rates were also weighed down by expectations of a fresh supply of rice early next month.
“With no buyers now, the injection of new supply could push down the price further,” one trader said.
In Vietnam, rates for 5% broken rice rose to $435 to $457, the highest since June 18, from $425 to $457 a week earlier.
“Strong demand from Cuba and Malaysia have pushed prices up a bit,” a trader in Ho Chi Minh City said.
“However, trading activity has slowed down this week as some buyers are waiting for prices to go down in anticipation of increased supplies from the ongoing harvest that will end early next month.”
Traders expect an increase in rice shipments to Europe after a free trade agreement between Vietnam and the European Union takes effect from Aug 1, while the EU’s imposition of an annual quota will prevent a sharp rise in exports.