The government has delayed announcing the winners of the rice auction to Tuesday from yesterday, pending the approval of Commerce Minister Boonsong Teriyapirom who will return from a trip abroad by then.

Thirty bidders, from rice traders, millers and exporters, submitted the tenders.

The scrutinising process has already been completed, with prices negotiated with bidders whose offers were higher than median levels, said Manat Soiploy, chairman of the selection committee and director-general of the Foreign Trade Department.

"The negotiations were done transparently and openly under the watch of all members," he said.

If bidders offered prices in a very tight range, they were allowed to change the prices, but only once.

Despite its dubious financial position, the committee agreed Siam Indica Co, an associated firm of President Agri Trading Co, is among the qualified bidders.

With close connection to politicians, President Agri Trading was the sole winner of several rice bids held by the Commerce Ministry.

In 2010, the Bank of Thailand revealed nine state-owned and private banks had lost a total of 6.23 billion baht from lending to this company.

Rattana sae Henk, managing director of Siam Indica, said the company offered a market price and is interested to buy only 5% white rice because it already has the markets in Africa.

Since the beginning of this year, it has shipped 400,000 tonnes, mostly 5% white rice.

If the company is approved to buy all 210,660 tonnes of white rice, it will follow the delivery requirements.

Sompong Kittireanglarp, the president of Ponglarp Co, offered to buy about 1,600 tonnes of Hom Mali rice currently kept in his warehouse for 30,000 baht a tonne and more than 10,000 tonnes of 5% white rice for 16,500 baht.

He believes that his offers are close to the market price of 17,000 baht per tonne for 5% white paddy rice.

The offer price was based on transportation and quality improvement costs.

An industry source said the discussion among traders indicated that the government is trying to act transparently in the auction.

The amount, however, is less than 10% of the government's stockpile.

A source suggested the government should not sell all white rice to a single bidder as spreading the amount among different buyers will help speed up delivery.

Meanwhile, the Asian Development Bank expected rice output among Asean countries to grow by 1.37% annually, from 110.5 million tonnes in 2010-11 to 128.3 million tonnes by 2021-22.

It projected the harvest to grow by 1.22% annually, while harvesting areas will increase by 0.15% to nearly 47 million hectares by 2022.

Vinod Thomas, the director general Asian Development Bank's Independent Evaluation, said Asian countries should concentrate their assistance on the poor as an income distribution measure, rather than subsidise farm goods and energy prices which distort the markets.

The subsidies will also favour the rich more than the poor, he said.

Asian governments should pay more attention to improving productivity of agricultural products.

Promoting productivity of the agricultural sector has been neglected over the past 10 years, as Asian countries have focused on industrialisation and urbanisation.

"Over the next 10 years, farm productivity will become more critical as there are constraints in energy prices and severe constraints in water. We must change the game by producing cereals with better resistance to droughts or floods," said Mr Thomas.

The constraints in the agricultural production facing Asia currently tend to cause prices of farm products to increase in the future.

Specifically, Thailand is both consumer and producer of rice, so it stands to benefit directly from higher productivity of farm goods production, said Mr Thomas.

He said a more efficient economic inclusion measure is to enable farmers to produce more and have access to more water rather than directly put cash in their hands.

Source: Bangkok Post