Thai government sells off more of its massive rice stockpile

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Thai government sells off more of its massive rice stockpile

PUBLISHED : Friday, 03 October, 2014, 10:35pm
UPDATED : Friday, 03 October, 2014, 10:35pm

Reuters

The rice was sold below the market price because it was old. Photo: EPA

The Thai government has approved the sale of more than 50,000 tonnes of rice from its stockpiles to private firms, a Commerce Ministry official said yesterday, as the authorities try to cut back on the huge stocks built up under a failed intervention scheme.

The rice was sold below the market price because it was old, Duangporn Rodphaya, head of the foreign trade department at the ministry, said.

"The rice that is for sale is old, about two years old, so it has to be below the market price. But it's not way below the market.

"Private companies have additional costs to improve the quality. It's the same price we use for our tenders."

The sales account for a fraction of the 18 million tonnes that Thailand had built up by this year under the intervention scheme, which effectively priced the grain out of world markets.

An audit by the military government found that 20 per cent of the rice was either rotten or had gone missing.

Another official from the ministry said 59,600 tonnes of rice had been sold in the latest sale to four private companies for 570 million baht (HK$136 million).

That would give an average price per tonne of around US$295. It was unclear what grade of rice was sold. Benchmark 5 per cent broken rice is offered on the market for about US$425, free on board.

The government of Prime Minister Yingluck Shinawatra, which was ousted by the army in May, accumulated the stockpiles under a programme that paid farmers well above market rates for their produce.

The government wanted to offload the stocks to recover some of the cash spent, but the authorities wanted to carry out the sales gradually to avoid pushing prices much lower, Duangporn said earlier this week.

The military-backed government has held two rice auctions and sold about 70,000 tonnes in each.

Duangporn said a third would be held soon and that discussions for deals with the Chinese and Iranian governments were also in progress.