Thai government sells 600,000 metric tons rice after special allocation

Reuters

By Apornrath Phoonphongphiphat

BANGKOK (Reuters) - The Thai government has sold 600,000 metric tons of rice from state stocks to 15 exporters, a higher than expected quantity after two exporters were allocated grain outside of last week's tender, a Commerce Ministry official said on Wednesday.

The government had offered 400,000 metric tons in the tender. The

way the additional volume was allocated raised complaints from some exporters about the transparency of a controversial rice-buying program that has angered Bangkok's middle class and helped fuel months of anti-government protests in the capital.

"There were two leading exporters who had overseas orders and needed rice to be delivered immediately so we agreed to award an additional 200,000 metric tons to help support them," Surasak Riengkul, director-general of the Commerce Ministry's Foreign Trade Department, told Reuters.

Surasak and other officials at the ministry declined to give the names of exporters involved or details about prices, saying only that they were in line with the market.

The government has amassed huge stockpiles because of a buying program that offered farmers a price way above the market, making the grain uncompetitive on world markets.

The scheme has run into funding problems, compounded by political unrest that has left a caretaker government with few options to raise money.

It is trying to accelerate sales from the stockpiles to help pay farmers, some of whom have been waiting for up to four months and are protesting in Bangkok.

The scheme has also been bedeviled by allegations of corruption and mismanagement, which the latest tender will have done nothing to dispel.

"It's not really a fair tender if you can take up to 200,000 metric tons just because you tell the government you have orders and you really need rice to be delivered," said a Thai trader who asked not to be named.

Traders and industry officials said the rice was believed to have been sold at 10,000-11,000 baht ($310-$340) per tonne.

That is some way below the market price of around 13,500 baht.

"No one is going to buy from the government at market prices. They can't compete in the world market if they buy from the government at market prices and then need to offer at even higher prices due to their costs and logistics," said Charoen Laothamatas, head of the Thai Rice Exporters Association.

The price suggested by traders is also far lower than what the government has been paying farmers under its rice-buying scheme, which has fuelled anti-government protests because of its cost to the taxpayer and alleged corruption.

Under the scheme, the government pays farmers up to 15,000 baht a tonne for paddy, which would equate to around 24,000 baht ($740) per tonne for exportable rice after taking into account milling and storage costs.

Thai 5 percent broken white rice was offered for export on Wednesday at $400-$420 a tonne, slightly higher than the same grade from Vietnam at $380-$395.

The government has said it would open a tender to sell another 500,000 metric tons of rice this week.

Despite what was described as healthy demand for the recent tender, traders said they expect fewer exporters to bid this time as global demand is not that strong and supply is plentiful. ($1 = 32.4550 Thai baht)

(Editing by Alan Raybould and Muralikumar Anantharaman)

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