Prime Minister Yingluck Shinawatra implemented the price-support policy to boost the incomes of farmers, whose support helped her Pheu Thai Party win elections last year. The government programme buys rice from farmers at above-market rates.
Thaksin said during an interview in Singapore yesterday that the policy reaps economic gains equal to three times the programme's cost.
"If we manipulate the mechanism for two years, three years, then things will be moving naturally," Thaksin said. "The price of rice in the world market is increasing."
Ms Yingluck's opponents have attacked the policy and alleged the rice pledging programme has cost the government hundreds of millions of baht.
Thailand's fiscal deficit may expand to more than 2% of gross domestic product next fiscal year, up from 1%, because of the rice programme, Thaksin said.
"We do not just throw away the money," Thaksin added.
The programme will eventually lead to higher government revenue through the sale of stockpiled grain and will help cushion Thailand from the effects of the European debt crisis, he said.
"The domestic economy in Thailand accounts for only 30% of GDP growth but now is increasing because people have more purchasing power."
Thaksin said the government has about 17 million tonnes of paddy on hand, and stockpiles of milled rice are estimated at about 4 million tonnes. Sales to Indonesia, Iraq and Ivory Coast, as well as other countries in the Middle East and Africa, will keep reserves down, he said.
"I don't think we have too much because we keep selling," he said, referring to the rice stockpile next year.
The October harvest accounts for about 70% of total output.
The United Nations' Food & Agriculture Organisation said in August that Thailand should be able to retain its position as the world's top exporter, shipping 7 million tonnes this year.
Shipments at that level would mean that Thailand "is still number one, but with a better price", Thaksin said.
"If we were to push to sell to compete with India when they started dumping the rice at that time we probably end up with US$400 [12,400 baht] per tonne. Now it's US$602. We will be doing OK."
The government is targeting exports of 8.5 million tonnes this year, boosted by sales to Bangladesh, China and Indonesia. Sales tumbled 45% to 4.75 million tonnes for the year through to Sept 18, according to the Thai Rice Exporters Association.
Thaksin said the previous government "spoiled" exporters by selling them cheap rice and called on them to become better at marketing.
About 40% of Thailand's 67 million people who depend on rice farming are satisfied with the policy, he said.
According to a July survey by the University of the Thai Chamber of Commerce, about 86.5% of 1,200 farmers polled said that the price-support measures were needed because of high production costs and low prices.
"Please sympathise with them," Thaksin said of the farmers. "They are poor. Let them have a chance to survive in this world, to live a better life."
Meanwhile, appointed senator Jet Sirathananon expressed scepticism yesterday over the government's claim that it had sold 7.32 million tonnes of rice under government-to-government contracts.
The senator said that as far as he knew only one deal claimed by Commerce Minister Boonsong Teriyapirom was secured _ a contract to sell 200,000 tonnes of rice to Guinea.
As for reports of a contract to sell 240,000 tonnes of rice to Ivory Coast, a letter of credit had not yet been opened, he said.
Regarding remaining transactions involving Indonesia, Bangladesh and the Philippines, which reportedly agreed to buy 1 million tonnes of rice each, memorandums of understanding (MoU) had been signed. Mr Jet added that China had yet to decide if it would buy 2 million tonnes.
On Sept 12, Mr Boonsong said that the government had signed contracts with countries including Indonesia and the Philippines to export over 7.3 million tonnes of rice a year. However, both countries have rebuffed the claims.
The chief of Indonesia's rice buying agency, the Bureau of Logistics (Bulog), has said that Jakarta prefers buying rice from Vietnam and India instead of Thailand. The Thai rice costs at least US$100 more per tonne, a report from Oryza News said on Sept 13.
A source in the rice industry yesterday disputed Mr Boonsong's claim that he had ordered authorities to speed up the delivery of at least 2 million tonnes of rice to foreign buyers by year's end.
"If delivery was being prepared, there should be a record of cargo ship booking. There must also be activity in rice sack trading. But the sale of rice sacks hasn't picked up," said the source.