Something fishy seems to be going on in the way the Commerce Ministry is managing the huge rice stocks bought under the populist rice mortgage scheme and now kept at warehouses, mostly privately owned, throughout the country.
Of late, the rice trading community has been abuzz with unconfirmed reports that the ministry has secretly sold a substantial amount of rice from the stockpiles, said to be about 3 million tonnes of milled rice, to some exporters with close connections to the government. Nipon Wongtrangarn, honorary president of the Millers Association, was reported by Post Today as saying that an unspecified amount of rice has been released from the stockpiles and this has pushed down the price of the paddy which is not sold to registered millers.
However, Commerce Minister Boonsong Teriyapirom has categorically denied there have been any secret rice deals, maintaining that no rice in the stockpiles has been sold. He further said that an earlier bid to sell 250,000 tonnes of rice to exporters had been cancelled because the prices offered did not match the preferred level.
But the minister's denial has failed to quell the rumours making the rounds within rice trading circles. The traders themselves may be partly at fault for being too susceptible to rumours. But the ministry's lack of transparency and perceived penchant for secrecy are to blame for the suspicion and mistrust of the ministry. Commerce permanent secretary Yanyong Puangrach reportedly said that information about the amounts of rice or paddy that is stored in the warehouses is confidential and that it cannot be publicly disclosed because the government has to make sure that once the rice is released it will not impact its price.
It is amazing that the information on rice stockpiles is being treated as a trade secret. The entire world already knows that about 17 million tonnes of paddy or 10 million tonnes of milled rice would have been bought under the rice mortgage scheme. The only fact that they and we do not know is how much rice has already been sold under the table and how much money has changed hands that has lined the pockets of corrupt politicians and bureaucrats.
The bidding to sell 250,000 tonnes of rice for export which was eventually cancelled has also been a subject of much criticism and suspicion by many potential buyers because the bidders were given very short advance notice resulting in just a handful of them participating. After the cancellation of the bid, it was alleged that some big exporters were asked one by one to see a politician if they were interested in buying through under-the-table deals.
Since there is a huge gap in the prices of rice bought under the populist scheme (15,000 baht a tonne for ordinary paddy and 20,000 baht for Hom Mali) and the actual market price, any hope of selling the huge rice stockpiles at cost is pure fantasy. If the rice can fetch the market price or a bit lower the ministry will be lucky.
For the time being, there are about 12 million tonnes of rice in the stockpiles, including 2 million tonnes held over from last year. With the new harvests expected in the next few months, there won't be enough warehouse space to store the new purchases unless the existing stocks are sold off quickly.
What is puzzling and incomprehensible is why the ministry is still holding up the rice stocks and not steadily releasing them from the warehouses through open bidding in a transparent manner. In this way, the price would not be suppressed too much and the loss not so prohibitive.
Or as many sceptics suspect, there is something that is not right and not sensible about the way the huge rice stockpiles are being handled by the ministry.