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AGRIBUSINESS
Exporters warn of possible defaults
CHAROEN KITTIKANYA
The government is being urged to amend rules for the new rice contracts it is selling to exporters to curb possible payment defaults in the future. ''The authorities should require higher bank guarantees and actual purchase orders from foreign buyers to make sure winning exporters can fully honour the buying contracts,'' said Chookiat Ophaswongse, president of the Thai Rice Exporters Association.
Under the current regulations, the government asks the bidding exporters to place bank guarantees worth 5% of the contract values.
Commerce Minister Chaiya Sasomsab said the government was preparing default-proof measures, but not by way of enlarging the bank guarantees.
''We're thinking of a new approach which requires that the winners place bank guarantees in full for all the rice they have taken away from the government's warehouses,'' said Mr Chaiya. ''Rice withdrawals may be made in lots to ease the financial burden of the exporters.''
The government had recently put 3.1 million tonnes of rice up for sale. The tender was held on Nov 5.
Siam Indiga, which is believed to have a close relationship with President Agri Trading, once the country's biggest rice exporter, has surprised traders by proposing to buy all three million tonnes of milled rice offered for sale by the government at an average price of 15,200 baht per tonne.
President Agri was alleged to have defaulted on bank loans and failed to honour rice contracts agreed to with the Public Warehouse Organisation.
Mr Chaiya said exporters had bid 16,000 to 17,000 baht per tonne for fragrant rice and around 10,000 baht per tonne for 5% white rice. He winners would be announced in a few days.
''We're quite satisfied with the prices and I think we would agree to sell 2.5 million tonnes this week,'' he said.
The grain to be sold is fragrant rice and 5% white rice bought unmilled under various intervention programmes at prices ranging from 6,000 to 9,000 baht per tonne. The rice sold in the tender will be milled.
Mr Chaiya said the government might not sell the rice purchased under the latest scheme this year at 14,000 baht per tonne because it did not want to incur more losses stemming from falling world rice prices.
Last week, exporters quoted $550 per tonne for the benchmark 100% grade-B white rice, about half the record high of $1,080 in April.
According to Mr Chookiat, Thai rice prices may fall further over the next few weeks since demand remains thin. It is also the start of Thailand's main harvest, and around 23.8 million tonnes of paddy will hit the market this month.''Demand is very weak,'' said Mr Chookiat. ''In fact, I begin to doubt whether we could achieve 10 million tonnes by year-end.''
Thai exports in October totalled 620,000 tonnes, or half the figure in the same month last year.
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