Thailand readies airport warehouse to store record stocks of rice

The Thai government plans to use an old airport warehouse and is desperately hunting for more storage space for a mountain of rice that has resulted from a subsidy scheme that won it votes but which is now sapping the treasury.

Traders estimate the government has a record 12 million tonnes of milled rice in stockpiles, bought in a controversial intervention scheme under which it pays farmers way above the market price for their grain.

"We have prepared a 30,000 square metre warehouse at Don Muang Airport for the government to store rice and we are asking around whether other government organisations have any space left for keeping rice," Transport Minister Jarupong Ruangsuwan said on Friday.

The old Bangkok airport recently reopened after extensive refurbishment made necessary by flooding a year ago.

The government could buy another 15 million tonnes of unmilled rice from the new main crop now being harvested.

Jarupong said the government had asked other airports if they had warehouse space available. Military facilities could also be used.

Critics of the intervention policy say these storage facilities are not suitable for rice, which can deteriorate if moisture and insects are not kept out.

The policy was a major factor in bringing the government to power last year, winning it huge support from rural communities.

Commerce Minister Boonsong Teriyapirom again insisted that he had sold 7.3 million tonnes of rice to foreign governments, including China, Indonesia and the Philippines.

"Around 1.4 million tonnes of rice has already been shipped to those countries," he told reporters. He has declined to go into detail.

Exporters and industry officials have seen no evidence of such sales at the ports or in statistics. Both Indonesia and the Philippines have denied any such deal and there has been no word from China.

Export data from the Ministry of Commerce shows rice shipments of around 5 million tonnes so far this year, down 44 percent from the same period last year.

Thailand exported a record 10.6 million tonnes in 2011. It has been the world's top exporter for years but looks likely to lose that crown to India or Vietnam this year because the intervention scheme has made Thai rice too expensive.

The minister met with exporters on Friday to discuss the situation.

"We were urged by the government to help boost exports, especially of premium-grade fragrant rice," Charoen Laothammatas, president of Uthai Produce, said after the meeting.

The long-grain fragrant rice, which is only grown once a year in a specific region, is currently sold at around $1,100 per tonne.

Thailand normally produces 25 million tonnes of paddy from the main crop, of which around 6 million tonnes is fragrant rice.

The market for the premium rice may hold up better than for ordinary white rice.

Thailand's benchmark 100 percent B grade white rice currently commands an export price of around $565 per tonne, while its 5 percent broken grade is quoted at $555 a tonne. The latter grade from Vietnam is around $100 a tonne cheaper.-The West Business (October 12, 2012 5:35PM)