Government under fire for not disclosing value

Government under fire for not disclosing value

Rice exporters and academics have again slammed the government for not disclosing the value of the latest rice deal, saying the agreement with the Chinese state enterprise cannot be considered a government-to-government (G2G) contract.

"The way the deal was made on an ex-warehouse basis _ under which the Chinese firm must hire a local private company to improve the rice quality and take care of all shipping charges before export _ has never been done before under a G2G deal. Moreover, it's complicated for foreign rice importers who mostly favour buying on a free-on-board basis," said Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, adding that there was something "wrong" with the deal.

He also questioned the real purpose of the purchase by the state enterprise based in Harbin, Heilongjiang, as the northeastern province consumes short-grain rice while Thai rice is long grain.

Nipon Poapongsakorn, a former president of the Thailand Development Research Institute and now a fellow at the TDRI, also questioned the validity and viability of the contract, noting that China's state enterprises are allowed to import only half the yearly total, with the balance to be handled by private Chinese firms.

For 2013-14, China plans to import 4 million tonnes, 900,000 tonnes more than the 3.1 million tonnes imported the previous season.

Chinese state enterprises should import only 2 million tonnes in the 2013-14 season.

"Let's try to think about the viability of Chinese state enterprises buying only Thai rice over the next two years," said Mr Nipon. "We guess the prices the government offered to the Chinese firm would be very low."

In a separate development, former finance minister MR Pridiyathorn Devakula has condemned the rice pledging scheme as the worst populist policy of the Yingluck government.

The pledging scheme itself is not completely bad, but its objective in buying paddy at very high prices has allowed several parties to make a profit and resulted in severe losses to the state, he told a recent seminar.

Since the pledging scheme started in October 2011, some 44.5 million tonnes of paddy rice, equal to 27 million tonnes of milled rice, have been pledged at the cost of 683 billion baht excluding 89.5 billion in management costs.

The scheme pays 15,000 baht a tonne to farmers, and the value is equal to 28,500 baht a tonne of milled rice.

MR Pridiyathorn said the government has sold 12 million tonnes of rice for 141 billion baht or only 11,700 baht.

Based on the cost, losses from the transactions stand at 201 billion baht.

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