Futures to cover all crops under buying schemes
Written by Writer on Monday, October 27th, 2008
Futures to cover all crops under buying schemes
Cassava and maize soon to join list
CHATRUDEE THEPARAT
The government is preparing to offer new trading options for all crops covered by its buying schemes after recently announcing a plan to introduce rice futures contracts for paddy from the main 2008-09 crop.
According to Deputy Prime Minister Olarn Chaipravat, futures trading will also become applicable to products including cassava and maize.
Under the latest rice-buying scheme for the main crop, due to run from Nov 1 until Feb 28, farmers will be eligible to opt to sell their grains for the first time in the form of rice futures. Registered farmers could sell their rice in the market if prices later rose above the pledging price.
The sub-committee in charge of the rice-pledging scheme also recently approved extending the settlement period for farmers’ depository receipts from 90 to 120 days, so that farmers can redeem their products to sell in the market if market prices during the period are higher than the pledging prices.
In this case, the government pledges to award premiums if it sells rice at prices higher than the pledging prices.
However, those who participate in the rice futures programme need to own warehouses or silos.
To prop up rice prices, the government aims to buy eight million tonnes of paddy from the main 2008-09 crop to be harvested from November _ five million tonnes of white rice paddy, 1.5 million tonnes of Hom Mali and 1.5 million tones of glutinous rice.
The government is expected to spend about 100 billion baht in the scheme.
Dr Olarn said the futures trading plan was aimed at reducing the financial burden on the taxpayers of the government’s yearly pledging scheme to help farmers. Under the new scheme, the private sector could play a greater role in agricultural product trading.
He added that the deals would also be more transparent, as farmers could deal directly with private buyers.
The government also aims to encourage farmers to unite as agricultural co-operatives to establish their own silos and learn how increase their bargaining power.
In a related development, Dr Olarn said the government was preparing to set pledging prices for corn, estimated at between 8.20 and 8.50 baht per kilogramme. The scheme would run between Oct 29 and Feb 28 with a buying target of 500,000 tonnes.
Mortgage prices for cassava are also expected to be finalised soon, he said.
Bangkok Post
Monday October 27, 2008
