SINGAPORE/BANGKOK, July 21 - Thailand's commerce minister said on Tuesday the government would release 600,000 tonnes from its paddy rice stocks, instead of milled rice, for exporters to sell as parboiled rice."We have about 600,000 tonnes of paddy rice in government stocks and we will sell them to exporters ... because we cannot compete in the white rice market," Pornthiva Nakasai told Reuters in an interview in Singapore. Government officials have put total stocks at the equivalent of 6 million tonnes of milled rice, the amount that would be produced from 10 million tonnes of paddy.

Each season, it buys paddy from farmers in a bid to prop up prices. It generally processes the paddy gradually while holding it in stockpiles and then releases milled rice from its stocks.

In the latest intervention scheme the government paid farmers 11,800 baht ($347) per tonne for paddy. That equates to around $550-$580 per tonne for exportable white rice, which exporters say makes Thai rice uncompetitive compared to Vietnamese prices, which are around $100-$150 per tonne cheaper.

Traders and exporters welcomed the idea of releasing paddy rice, especially parboiled rice exporters who were having trouble finding supply.

"We have no chance to sell white rice this year and parboiled rice is the only way for Thailand to release stocks that big as demand for it remains strong," Chookiat Ophaswongse, president of the Thai Rice Exporters Association, told Reuters.

Thailand is the world's largest exporter of rice.

Demand for parboiled rice has helped support overall prices in Thailand as parboiled rice is made from the benchmark grade of white rice paddy.

The benchmark 100 percent B grade white rice <RI-THWHB-P1> was quoted at $590 per tonne on Tuesday, up from last week's $580, in line with rising domestic prices as most supply has been drained into the government stocks.

Exporters said demand for Thai parboiled rice remained strong, especially in Africa, since India, which vies with Vietnam as the world's second-largest exporter, still had a ban on rice exports.

"I believed that Thailand could sell around 200,000 tonnes of parboiled rice to Africa a month," one exporter said. ($1=33.99 Baht)