March 23, 2009

Thailand has tightened its border trade to stop smugglers from bringing in grain to capitalise on the government's subsidised prices that were meant to help local farmers, officials said Friday (Mar 20).

It will be a coordinated effort by the navy, the army and the administrative officials to prevent profiteering as the government is spending a lot of money on intervention programmes, said Governor Khanpet Chuangrungsi of Trat province, neighbouring Cambodia.

Tonnes of grains have been intercepted, as profiteers attempted to pass them as Thai farm products to benefit from relatively high intervention prices, traders said.

In February, 35 tonnes of corn were seized in Tak province as smugglers tried to bring it in from Myanmar, a customs official said.

Since January, the government has set up or renewed several farm intervention programmes to support commodity prices by buying grains at above-market prices to pacify farmers and prevent protest movements.

That has caused a widening gap between prices in Thailand and neighbouring countries, tempting middlemen to smuggle in more grain to be sold on the Thai market, adding to large government stockpiles, traders said.

Thailand held no corn stocks at the end of 2007 and had no need for an intervention programme at first in 2008, as prices surged on biofuel demand from the US.

After prices fell in mid-2008, Thailand started a corn subsidy programme from August to December 2008, and it currently has about 900,000 tonnes of corn in stock.

The government now plans to extend the programme to buy up to 1.5 million tonnes this year, rather than the 500,000 tonnes announced earlier as farmers have staged protests about low prices and demanded the government to buy more.