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Published on April 3, 2008

Skyrocketing rice prices are creating havoc in the market as traders manipulate stocks for speculation, while politicians angle for a cut of a proposed Bt260-million rice-improvement project.

The Cabinet on Tuesday approved a Commerce Ministry proposal to release 650,000 tonnes of deteriorated-quality white rice from government stockpiles to repack and sell to consumers at a low price. The ministry also asked for about Bt4.60 per 5-kilogram bag to raise the quality.

But government officials and rice packers agree that only Bt2 per bag was needed.

The Bt2.60 difference would add up to a windfall of Bt260 million for the 650,000 tonnes of rice.

Deputy Commerce Minister Banyin Tangpaporn expressed surprise, saying that normally, quality upgrading would cost less than Bt2.

"The quality adjustment will lead to a government loss," he said.

A lower cost would let the ministry set a cheaper retail price of Bt70 to Bt75 a bag, he said.

At the higher cost, government rice would be only Bt5 to Bt6 cheaper than the market price of Bt76 to Bt80, which would not help consumers like they expected, he said.

A rice-packer source pointed out the government lacked rice-packing experience and said that would open the way to corruption.

"The Bt4.60 was very high. My firm won a Public Warehouse Organisation contract to improve rice quality, and that was only at Bt2," the source said.

The Nation found that some modern trade stores as well as wholesalers were out of stock of certain rice brands. They also cannot replenish their inventories.

Five-kilogram bags were sold out, especially for 5-per-cent white rice and jasmine rice. The stores have had to set a limit of six bags per family, in order to ensure adequate supply for consumers and prevent profiteering by small retailers.

Shoppers have increased their purchases to six to 10 bags, from two to four before.

Superstore staff say some rice packers have delayed deliveries, citing development of new production processes and packaging.

Darmp Sukontasap, senior vice president of Ek-Chai Distribution System, the operator of Tesco Lotus, said panic buying had cleared rice from shelves in the past few days.

"The company tries to provide enough for the rising demand for rice, but I'm afraid shortages may crop up soon, because packers just cannot keep up," he said.

The government should calm consumer jitters by reconfirming that rice reserves are adequate for domestic consumption, he said.

Thai Rice Packers Association president Somroek Tangpiroonthum said members had tried to supply the same quantity of rice as last year. Some superstores have also increased orders 10-20 per cent.

He also insisted that most packers had tried to sell rice at the same price, in order to reassure consumers.

Petchanet Pratruangkrai

The Nation