Bangkok, Sept 8 - Thailand said on Monday it planned to extend an existing rice support scheme to February next year, at a floor price for exporters of around $700 per tonne, to prop up domestic prices after their fall from record highs earlier this year.
The move could cut 2009 rice exports as high intervention prices would push up exporting costs and Thailand would not be able to compete with cheaper rice from India and Vietnam, exporters said.
Thailand's commerce minister said the authorities planned to maintain a rice support scheme by offering farmers an unchanged 14,000 baht ($406) per tonne for paddy from the main 2008/09 crop harvested in November.
The price of 14,000 baht per tonne is the same level the government is paying to farmers for the second crop in an existing scheme that is due to end on Sept. 30.
"We will send our proposal to be approved by the prime minister very soon," Commerce Minister Chaiya Sasomsab told reporters.
The government usually sets up an intervention scheme in October-November each year to shore up domestic prices as the country's main crop is harvested.
The new buying scheme was expected to start on Oct. 15 and would run until the end of February 2009, he said.
The present intervention scheme has effectively set a floor price for exporters at around $700 per tonne for milled rice.
Benchmark Thai 100 percent B grade white rice THWHB-was quoted at $720 per tonne on Monday, having edged up from $700 in the second half of August, supported by export demand and the current buying scheme.
"We think that we could buy up to 8 million tonnes of paddy this year," Chaiya said.
Thailand is expecting 23.8 million tonnes of paddy from its main crop, little changed from 23.3 million tonnes in 2007/08, according to the Agriculture Ministry.
EXPORTS TO FALL
Thai rice exports were likely to fall next year as the intervention scheme would be an obstacle to Thai exporters trying to compete with India and Vietnam, Chookiat Ophaswongse, president of the Thai Rice Exporters Association, told Reuters.
Last week, Chookiat had said Thailand could export 8.0-8.5 million tonnes of rice in 2009, down from an expected 10 million this year, but he said on Monday that even this lower target was now probably out of reach.
He declined to give a new forecast for 2009 exports, saying only that it would be significantly lower.
"It won't be that easy if the government insists on buying rice at 14,000 baht per tonne, which doesn't reflect world market prices," he said.
Another exporter said: "Definitely, we could sell less rice next year as we can't compete with Vietnam and India, whose rice prices are cheaper than Thai prices."
Rice from Vietnam and India was currently quoted at $500-$550 per tonne, exporters said.
On Thursday, India relaxed curbs on rice exports to allow shipments of an estimated 1 million tonnes of the staple, becoming one of the last countries to relax trade restrictions that lifted world prices to record highs earlier this year.
The world's second-largest producer will allow exports of the aromatic, long-grained Pusa-1121 grade from Oct. 15, a move expected to soothe supply concerns in the market but hit sales from Thailand.