BANGKOK: The Thai government on Tuesday approved an extension of its rice buying scheme that will slightly lower prices and quantities, but not by enough to prevent another mountain of the grain being delivered to state-run warehouses.
The intervention, which would have expired in September, has seen the government spend 600 billion baht ($18.71 billion) to buy rice since Prime Minister Yingluck Shinawatra ramped up the minimum price in 2011 to shore up support for farmers.
Most of the grain has ended up in government stores that now stand at around 17 million tonnes, and another 10 million tonnes looks headed that way as the government struggles to sell the overpriced grain.
With prices for benchmark Thai rice <RI-THWHB-P1> falling by nearly a fifth since April to a two-year low of $470 a tonne, the scheme threatens to become even more costly as bulging stockpiles force the government to sell at a loss.
Deputy Commerce Minister Yanyong Phuangrach said the government will continue to buy rice from farmers at 15,000 baht per tonne of paddy for the main 2013/14 crop due to start in October, but at 13,000 baht per tonne for the second crop from Feb. 28.
It would also lower the maximum amount it buys to 350,000 baht per household for the main crop and 300,000 baht for the second crop, from 500,000 baht in the current scheme.