'The current prices are quite good for farmers so we should let the free market mechanism play its role. No need to intervene,' Commerce Minster Mingkwan Sangsuwan told reporters.

Thailand, the world's biggest rice exporter, was forecast to produce around 6.5 million tonnes of paddy in the second 2007/08 crop, according to Agriculture Ministry data.

The Thai government buys rice from farmers every year to help keep prices up during the harvesting season, when a flood of grain hits the market.

In November last year, when 23.6 million tonnes of paddy was harvested in the first crop, the government paid 6,700 baht (S$294) per tonne for 100 per cent white paddy, up from 6,500 baht in the previous year.

It paid 9,300 baht per tonne for premium grade fragrant paddy, up from 8,700 baht.

But global rice prices have jumped since then, partly because India banned the export of non-basmati rice to make sure it had enough for its massive population after bad weather hit crops.

Vietnam, the number two rice exporter, halted exports during March and April 2008 in order to fulfill Philippine contracts.

Thai domestic rice prices have risen in line with world prices, with 5 per cent white rice surging more than 20 per cent since early this year to 13,000 baht per tonne.

The government would release some of the rice it has in stock for sale on the domestic market in a bid to soften prices as it fights rising inflation, Mingkwan told reporters.

'It would be around 10 per cent of the total rice being traded across the country,' Mingkwan said without being more specific.

The government is estimated to have up to 2 million tonnes of rice in its stocks, mostly white rice.

Thailand produces around 16 million tonnes of milled rice annually, of which 50 per cent is traded domestically and the rest goes for export, according to the Commerce Ministry data. -- REUTERS