The government signed a contract yesterday to sell 1.2 million tonnes of 5% white rice and 90,000 tonnes of tapioca on a government-to-government (G2G) basis to a state enterprise in Harbin, in northeastern China's Heilongjiang province, but the value of the deals were not disclosed.
Thailand agrees to sell 1.2 million tonnes of rice to China. The agreement was signed by Foreign Trade Department director-general Surasak Riangkrul and a representative of China's Great Northern Wilderness rice industry group on Wednesday. (Photo by Tawatchai Khemgumnerd)
Deputy Prime Minister and Commerce Minister Niwatthamrong Bunsongphaisan revealed only that the prices the government fetched from the deals with Beijing Great Northern Wilderness Rice Industry, a subsidiary of the state-owned Beidahuang Group, are based on global prices.
The rice deal would be on an ex-warehouse basis, with the Chinese firm responsible for rice-quality adjustment and shipping charges before shipment.
Delivery will be made in one or two years, with the first shipment of 150,000 tonnes committed for delivery within the next three months.
Rice bought from Thailand will be used mainly for local consumption and donated to poverty-stricken nations, said Mr Niwatthamrong.
"China has emerged as a world leader in crop imports, buying over 2 million tonnes of rice a year, as China's rice production has been hit by drought and higher prices. Chinese consumers are more concerned with food safety and higher quality products," he said.
The government is committed to accelerating sales of its rice stock, mainly via G2G deals, and is in discussions with several potential buyers including African countries, he said.
Surasak Riangkrul, director-general of the Foreign Trade Department, said the government has sold 7-8 million tonnes of its rice stocks over the last two years through G2G contracts.
The government remains adamant that its rice stock is 10 million tonnes, although industry sources estimate the amount is closer to 16-17 million tonnes.
"Next year, rice exports will improve, as the department has been negotiating to sell its rice stocks on a continual basis," said Mr Surasak. "Talks are underway with Malaysia, Indonesia and the Philippines as well as countries in the Middle East and Africa."
He said the department expected to fetch about 130 billion baht from selling rice stocks via G2G contracts.
The government's latest report put Thailand's rice shipments at 5.63 million tonnes, down by 3% from this time last year.
Rice exports for the full year are estimated at 6.5 million tonnes, with the figure forecast to increase to 8-10 million tonnes next year.
The government has spent as much as 680 billion baht in four harvest seasons over the last two years but has sold only 135 billion worth of rice so far.
The Yingluck government allocated a further 270 billion baht to finance the 2013-14 main crop.
Buying started on Oct 1, with more than 2 million tonnes of paddy already obtained from rice farmers, who have complained about late payments by the scheme since the government lacks funds.
The liquidity crunch has prompted the government to come up with the latest plan to issue 75 billion baht worth of bonds to finance the rice-pledging scheme.
The government has not been able to pay farmers for two months because the Bank for Agriculture and Agricultural Cooperatives lacks the mandate to borrow more until next January.
The bonds will be sold to the public on Nov 29.