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5 February 2014
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China cancels rice deal

Govt’s troubled pledge scheme takes fresh hit

The caretaker government has been dealt another blow as China has pulled out of a deal to buy 1.2 million tonnes of Thai rice amid a corruption probe.

The deal cancellation has added to the financial woes of the trouble-plagued rice-pledging scheme.

“China lacks the confidence to do business with us after the National Anti-Corruption Commission started investigations into the transparency of rice deals between Thailand and China,”caretaker Deputy Prime Minister and Commerce Minister Niwatthamrong Bunsongphaisan admitted yesterday.

The Yingluck Shinawatra-led government signed a contract in November last year to sell 1.2 million tonnes of 5% white rice on a government-togovernment basis to a state enterprise in Harbin, in northeastern China’s Heilongjiang province, but the value of the deal was not disclosed.

Mr Niwatthamrong said earlier only that the prices the government fetched from the deal with Beijing Great Northern Wilderness Rice Industry, a subsidiary of the state-owned Beidahuang Group, were based on global prices.

However, in a bid to accelerate its rice sales, Mr Niwatthamrong said the government would open a tender offer to sell 400,000 tonnes of rice from state stocks next week.

Interested bidders would be required to submit their bids by Feb 12. The bids would be opened on Feb 13 while the ministry would announce the successful bidders on Feb 14.

“The government has been trying to address the financial problems of the rice scheme as fast as possible both through accelerated rice selling and borrowing to pay farmers,” he said.

The government is desperate to get funds for the scheme because some farmers who have sold grain to the state have been waiting months to be paid.

Meanwhile, rice farmers protesting in Ratchaburi have stopped obstructing Phetkasem Road but were still blocking Rama II Road in the province.

They started out at Wang Manao intersection on Rama II Road in Pak Tho district on Saturday and spread their road blockade to cover Phetkasem Road on Monday.

The protests have resulted in severe traffic congestion on both the south- and northbound lanes of the two main routes to southern Thailand.

Rawee Rungrueang, a protest leader,said the decision to stop blocking Phetkasem Road was reached at yesterday’s meeting of farmer leaders.

The protesters agreed to stop blocking Phetkasem Road because they knew they would not receive their ricepledging cash soon, if ever, he said.

The protesters did have sympathy for motorists affected by their blockades but they said they had to maintain symbolic protests to show that they really were suffering from not being paid for their rice pledged under the government’s scheme.

Rice farmers in the western provinces would hold talks with their counterparts in other regions about a proposal to step up their protests by relocating to the capital, Mr Rawee said.

However, he stressed that the farmers would separate their demonstrations from any other political protests being carried out in Bangkok.

President of the Thai Agriculturist Association Wichian Phuanglamjiak said the association was considering requesting the caretaker government and the Bank for Agriculture and Agricultural Co-operatives to consider extending their debt suspension programme for farmers.

After all, he said, debt suspension should be regarded only as a measure aimed at mitigating the impact of the financial problems facing the rice-pledging scheme during the period when the government was finding money to pay the affected farmers.

Somkiat Tangkitvanich, president of the Thailand Development Research Institute (TDRI), said the rice-pledging scheme was seen as having the potential to go bankrupt right from the start as the government wanted to buy rice from the farmers at a high price but then planned to resell it at a lower price.

It is estimated that the government will this year be able to resell the pledged rice for at most between 10 billion and 15 billion baht while the total amount of money to be paid to the farmers was 124 billion baht, Mr Somkiat said.

Ammar Siamwalla, a TDRI academic, described the rice scheme as being a “corrupt project with receipts”.

Nipon Poapongsakorn, another TDRI academic, meanwhile suggested the government encourage other financial institutions to recognise rice-pledging certificates as loan collateral and grant loans to farmers waiting to receive their money from the government’s scheme.


First published: Bangkok Post,  February 5, 2014