Prime Minister Samak Sundaravej said his cabinet on Tuesday approved the plan to gradually sell off the rice stockpile in five-kilogramme bags for 170 baht (S$6.80) each.

A bag of Jasmine rice currently costs more than 200 baht.

'This is aimed at relieving the current rice situation,' Mr Samak said. 'Money from the sales will be spent on purchasing new rice to replace the stockpiles.'

World rice prices have soared this year, a trend blamed on higher energy and fertiliser costs, greater global demand, droughts, the loss of rice farmland to biofuel plantations, and price speculation.

Thailand is the world's top exporter of rice, and international demand for its staple grain has soared after other top exporters Vietnam and India imposed limits on shipping rice overseas to ensure domestic supply.

The benchmark Thai variety, Pathumthani fragrant rice, was priced last Wednesday at 998 dollars per tonne for export, up from 512 dollars a tonne in January this year, the Thai Rice Exporters Association said in a price survey.

Domestic prices have followed a similar trend.

Thailand, which shipped an estimated 9.5 million tonnes of rice overseas last year, has been at pains to convince the world that it has no plans to curb supplies. -- AFP

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