The government yesterday scrapped its second attempt in less than a month to sell rice from its stocks, as exporters' bids were deemed unacceptably low.

"The government will not sell any rice stocks over the next three or four months as we don't want to see prices fall," said Deputy Prime Minister Trairong Suwankhiri.

The government also failed to sell 375,000 tonnes of rice in January.

The latest tender on Monday involved 500,000 tonnes of rice - 350,000 tonnes of 5% broken white rice and 150,000 tonnes of Pathum Thani fragrant rice - as part of its accelerated plan to sell its massive stockpile of 5.6 million tonnes of milled rice bought from farmers to support prices in the previous season.

Monday's tender drew bids from 11 companies to buy a total of 815,529 tonnes: 659,454 tonnes of white rice and 156,074 tonnes of Pathum Thani worth a combined 12.44 billion baht.

The bidding prices for white rice ranged from 11,765 to 15,550 baht per tonne, with Pathum Thani at 15,500 to 18,500 baht a tonne.

The prices offered for white rice were much lower than in the previous bid last month, when they quoted 14,000 to 16,000 baht a tonne.

Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, urged the government to suspend tender plans and focus on selling stock through the Agricultural Futures Exchange of Thailand (AFET) and via government-to-government deals.

"The plan to release rice stocks during this period is poorly timed, as world rice trading is relatively sluggish after Vietnam recently devalued its dong for second time in three months, making its white rice much cheaper than Thai rice," said Mr Chookiat. "But cancelling tenders two times in two months may psychologically affect the confidence of future buyers in the market."

Sompong Kitireanglarp, president of Ponglarp Co, one of the bidders in the latest tender, said the government lost an opportunity to release its massive stocks when prices rose to about 17,000 baht per tonne in mid-January.

"The prime minister should call a meeting with rice exporters to discuss how best to drain its stocks," he said.

"The government deceives exporters by offering tenders and scrapping them later on, as exporters incur costs from giving deposits worth several tens of million baht for bids as well as bidding fees."

A source from the rice trading industry said the cancellation would confuse exporters and disrupt their marketing.
"We believe this cancellation stems largely from management problems within the coalition parties," he said.

In a related development, the government plans to buy about 290,000 tonnes of paddy from the second-crop harvest directly from farmers in five provinces: Sukhothai, Suphan Buri, Ayutthaya, Chai Nat and Phitsanulok.

Mr Trairong said the government would start buying paddy today. The scheme runs until the end of the second crop harvest, around the end of April.

Under the new buying scheme, the government will pay 10,000 baht per tonne for paddy with 15% moisture, 8,403 baht for paddy with 25% moisture and 7,900 baht per tonne of paddy with 28%. Paddy will be kept in millers' silos at a cost of 55 baht per tonne, he said.

The government will later sell the rice through the futures market.

Luck Wajanananwat, president of the Bank for Agriculture and Agricultural Co-operatives (BAAC), said it set aside lending facilities worth 20 billion baht for the Marketing Organisation for Farmers and the Public Warehouse Organisation to buy about 2 million tonnes of paddy, at about 10,000 baht per tonne from farmers during price volatility.

The BAAC recently initiated a programme to provide loans for farmers with their paddy as collateral to delay paddy release to the market during times of low prices.

An estimated 2.9 billion baht has been extended to farmers with 800,000 tonnes of paddy placed with the bank under the scheme, which will run until the end of this month.

Source: Bangkok Post