Rice exporters are doubtful of the government's ability to sell up to 2 million tonnes of rice as vowed by the Commerce Ministry, barring an unexpected food crisis or a drastic swing in prices.

Chookiat Ophaswongse, honourary president of Thai Rice Exporters Association, said it would be difficult for the ministry to sell such a huge amount of rice under government-to-government deals as the Thai price is still much higher than competitors'.

The government earlier signed a memorandum of understanding to sell 1 million tonnes of rice to Bangladesh, but Commerce Minister Boonsong Teriyapirom failed to seal the deal last week due to the high price of Thai parboiled rice of US$600 a tonne. The same product from India costs $440-450 a tonne.

Although Thailand also signed memorandums to sell 1 million tonnes of rice each to Indonesia and the Philippines, these markets are already covered by Thai exporters and Vietnam is a prominent competitor selling 5% white rice in both markets.

Vietnam rice sits at $430 a tonne, while Thai rice costs $620 a tonne.

Mr Chookiat said the only possibility for Thailand to sell the rice was to reduce the price to match competitors.

"If the government will sell at lower than $400 a tonne, it would face a huge loss and compete with the private sector's market share. Time will tell whether the government can achieve its goal, but it will be hard for it to speed up exports in the second half because of the high price," he said.

Based on the association's statistics, it expects India will continue to aggressively export its rice after shipping 2.1 million tonnes as of May 8.

Thai exports in the second half will be similar to the first half, with an average of around half a million tonnes a month, while Vietnam will export more in the third quarter due to higher production.

He said the price of Thai rice in the world market rose the past two weeks because the private sector could not buy rice in the market and some sold rice to Iraq, meaning they needed to buy rice domestically for delivery.

"It's wrong for the government to become a large rice exporter because with the administration transparency is lower than the private sector. The only companies that would remain are those with good connections and a willingness to pay under the table. This is a dangerous precedent for the rice industry and would end free trade for the sector," he said.

Source: Bangkok Post