BANGKOK – Thailand’s government has sold a higher than targeted 730,000 tonnes of rice from state warehouses to exporters, likely incurring huge losses given the high price it paid under a controversial intervention scheme.
The sales will put more downward pressure on market prices and add to the anger of farmers, many of whom have not been paid by the state for their grain for months.
“The rice is worth about 9 billion baht ($277 million)and we aim to sell more to get money to pay farmers,” Commerce Minister Niwatthamrong Boonsongphaisan told reporters on Thursday.
The government had aimed to sell 517,000 tonnes in a tender held this week. Niwatthamrong said 180,000 tonnes was sold to exporters in the tender itself and another 550,000 tonnes was sold outside the tender to exporters who had overseas orders and were seeking rice for delivery.
Some farmers have been protesting for their money for weeks in front of the Commerce Ministry. Some cut power to the ministry on Wednesday, disrupting a separate tender to sell rice via the Agriculture Futures Exchange of Thailand, forcing the government to postpone it until March 26.
The government has said it aimed to sell rice each month to get money to pay farmers, but that does not seem enough to pay arrears, traders said.
According to the Bank of Agriculture and Agricultural Cooperatives, which manages the scheme, the arrears stood at 119 billion baht. That is higher than the 112 billion baht it estimated as of March 5 and takes into account late selling into the scheme.
PRICES AND LOSSES
Niwatthamrong declined to give further details about the price the government got for the grain, saying only that it was sold at market prices.
According to Reuters calculations, based on the 9 billion baht the government received, the rice was sold at an average 12,300 baht ($380) per tonne.
That was well below the cost of the milled rice stored in its stockpiles, estimated at around 24,000 baht per tonne.
Some exporters said the sales could have been made at an even lower price.
“I would say I believed the rice would be sold at around 10,000 baht a tonne, or lower than market prices. No one would buy rice from the government at market prices to resell it at market prices. They would get nothing,” said Charoen Laothammatas, president of the Thai Rice Exporters Association.
The common 5 percent white rice was offered in the market at $410 per tonne this week, down from last week’s $420 per tonne, exporters said.
Prices were expected to fall further as supply was rising due to the government’s stock release.
The government has played down losses incurred from the rice-buying scheme, which helped bring Prime Minister Yingluck Shinawatra to power in 2011.
It has also helped undermine her, as she has faced months of street protests in Bangkok from opponents who have seized on alleged corruption and wastefulness in the rice scheme. She was forced to call a snap election but that was disrupted in February and she now heads a caretaker administration. ($1 = 32.4350 Thai Baht)