China deal fails to cheer rice exporters

[webfact]

RICE
China deal fails to cheer rice exporters
Petchanet Pratruangkrai,
Khanittha Thepphajorn
The Nation

Million-tonne deal 'unrealistic'; Yanyong defends contract

BANGKOK: -- Dark clouds hang over the outlook for Thailand's rice exports, despite the government's much-heralded success in securing future sales to China.

Deputy Commerce Minister Yanyong Phuangrach yesterday reiterated the optimism that exports to China could exceed one million tonnes a year, but exporters remain doubtful, as China has never taken that much rice before.

"Ten years ago, imports hit two million tonnes, but that was when China suffered a serious drought," said an exporter who asked not to be named.

According to Board of Trade tallies, Thailand sold only 143,082 tonnes to China last year, almost half of the 328,238 tonnes it sent there in 2009. The first eight months of this year have seen 110,742 tonnes going to China.

Currently, China depends mainly on Vietnam and Pakistan to supply it with rice.

In the past two months, ministers and government officials have produced various reports on rice sales to China, amid criticism that the rice-pledging scheme inflates the quotes for Thai rice and cripples the export market.

Failure to find markets for the government's huge stockpiles, now over 10 million tonnes, means more losses for the scheme and greater risks to the country's fiscal position.

The reports were produced again when Chinese Premier Li Keqiang visited Thailand last week. He witnessed the signing of a memorandum of understanding between COFFCO Corp - a Chinese state enterprise - and the Thai Rice Exporters Association.

Charoen Laotamatas, vice president of the association, said the high price of Thai rice is attributable to low exports to China. But under the MoU, Thailand can deliver one million tonnes of rice to China over a five-year period under a 1-per-cent import duty, against 68 per cent normally.

"Currently, the price of Thai rice is higher than that of its competitors, particularly Vietnam, which is a major supplier to China. The Thai government needs to take huge losses of more than US$200-$300 a tonne, if it would like to encourage more exports to China.

"The current cost of 100-per-cent white rice under the pledging scheme is $700-$800 a tonne. China will buy more rice from Thailand if the price is competitive and quoted at about $400 a tonne, the same as Vietnamese or Myanmar rice," he said.

According to the Foreign Trade Department's senior officials, Thailand has two contracts with China to supply about four million tonnes of rice from 2012-17. Besides the COFFCO deal, the government will soon sign a contract with China's Harbin government to supply 1.2 million tonnes of rice a year.

Another deal emerged last week for the partial bartering of Thai farm goods - including rice - for a Chinese rail system. China is interested in supplying the system under Thailand's Bt2-trillion infrastructure investment plan.

Transport Minister Chadchart Sittipunt will today discuss with Commerce Minister Niwut-thumrong Boonsongpaisan the details of the barter trade, which has prompted speculation that Thailand will award the Bangkok-Nong Khai high-speed train contract to China in exchange for stepping up rice exports.

Chadchart yesterday noted that the barter trade agreement is open to all countries. He also insisted that details of the barter trade would be further studied. Details are expected next month.

Addressing doubts that rice deals with China could eventually be executed, Deputy Commerce Minister Yanyong insisted that China was highly capable of importing more rice as it had committed to the World Trade Organisation to import 5.6 million tonnes of rice a year under a 1-per-cent duty.

China may not only procure Thai rice to feed its domestic market, but also to give to countries that are its friends in Africa as humanitarian assistance, so Thailand has a good chance of distributing more than one million tonnes of rice to China, Yanyong said. The one-million-tonne figure excludes a barter trade contract for which an MoU has already been signed, he said.

China has high demand for rice, especially jasmine rice and 5-per-cent white rice.

Surasak Riangkrul, director-general of the Foreign Trade Department, said the department is collecting information about total rice exports and contracts with China.

Chief opposition whip Jurin Laksanawisit urged the government to disclose details of the rice contracts. He said Prime Minister Yingluck Shinawatra should make public the contract with China so that society could be assured that she was not simply disseminating propaganda.

In an interview on Blue Sky Channel satellite TV, Democrat Party leader Abhisit Vejjajiva said he was puzzled by Yingluck's announcement of the rice deal on Sunday, instead of on Friday when the Chinese premier visited her at Government House.

Abhisit said it was suspicious that the Thai prime minister, not the Chinese premier, made the announcement of the deal.

Abhisit said he had learned that China would buy rice from Thailand's private sector, not from the government. Similar deals involving higher volumes of rice, have been cut in the past, he said.


-- The Nation 2013-10-15

[soi41]

The good news: China is going to buy 1 million tons of rice a year!

We forgot to tell you: The deal is at a loss of 300-400 million $ a year!

Pure genius from a government of airheads, elected by mushrooms!!

[jaidam]

Oh dear, a day is certainly a long time in red politics. It was only yesterday that the Thaksin fanboys were scribally fellating the PTP masterminds over their heroic rice deals that appear to be, to put it politely, pure bull-pucky. If you go back to the past threads you will see that 95% of the posters knew exactly what was happening. Well done, you were all correct again.

[Shurup]

Give it up PTP, no country wants to buy your rotten over inflated rice.

If there is a deal with China, it would be at a loss.

Bet they won't release the details of their deal.

[waza]

Another Imaginary Yingluck victory for the Red history books.

[Thait Spot]

My understanding is that the deal was for a million tonnes of rice over 5 years - so around 200,000 per year

But it's really not very much of the 20 million tonnes being stored

[nami]

Haha, of course it will be at lost, and for me that's fine and normal. That's what most countries do, although in a different way; in the so called first world they give economic help to encourage growing certain crops that are not really profitable, they do so with taxpayers money and I am fine with that. The problem is here they are storing the rice waiting for a price hike that won't happen, thus spending a lot more money is transportation and mills (and tea money). They should buy at a fair price from the farmers and then sell it right away at market prices without incurring on those additional derived losses.

[Baerboxer]

The good news: China is going to buy 1 million tons of rice a year!

We forgot to tell you: The deal is at a loss of 300-400 million $ a year!

Pure genius from a government of airheads, elected by mushrooms!!

No, no ! RichTeacher posted on another thread that YL is an excellent expert negotiator.

Hey, that probably explains why the Chinese leader hasn't even mentioned it, let alone announced it. YL obviously got such a good deal the Chinese are embarrassed to talk about it.

I mean its clearly a sellers market, doh !

[Shurup]

Someone got their pockets stuffed for building those rice silos or wherever the store it...

[rubl]

"China may not only procure Thai rice to feed its domestic market, but also to give to countries that are its friends in Africa as humanitarian assistance, so Thailand has a good chance of distributing more than one million tonnes of rice to China, Dept Commerce Minister Yanyong said."

Makes perfect sense as everybody knows that Thai rice is of superior quality with that special Thainess thrown in for good measure. When you give to good friends of course you don't care that the price might be a wee bit higher. China can affort to pay US$700/tonne instead of buying the cheap halfprice stuff from other countries.

BTW in all news it seems both volume and price of rice (probably) sold varies enormously and information on how much profit (like expenditure - sales) this wonderful scheme will bring Thailand and it's taxpayers.

Edited October 15, 2013 by rubl

[bigbamboo]

"China may not only procure Thai rice to feed its domestic market, but also to give to countries that are its friends in Africa as humanitarian assistance, so Thailand has a good chance of distributing more than one million tonnes of rice to China, Dept Commerce Minister Yanyong said."

Makes perfect sense as everybody knows that Thai rice is of superior quality with that special Thainess thrown in for good measure. When you give to good friends of course you don't care that the price might be a wee bit higher. China can affort to pay US$700/tonne instead of buying the cheap halfprice stuff from other countries.

BTW in all news it seems both volume and price of rice (probably) sold varies enormously and information on how much profit (like expenditure - sales) this wonderful scheme will bring Thailand and it's taxpayers.

I don't doubt the Yanyong is right here. China could probably take endless amounts of rice off Thailand's hands provided the price was right.

Just depends how much Thailand is prepared to pay.......

[Thai at Heart]

"China may not only procure Thai rice to feed its domestic market, but also to give to countries that are its friends in Africa as humanitarian assistance, so Thailand has a good chance of distributing more than one million tonnes of rice to China, Dept Commerce Minister Yanyong said."

Makes perfect sense as everybody knows that Thai rice is of superior quality with that special Thainess thrown in for good measure. When you give to good friends of course you don't care that the price might be a wee bit higher. China can affort to pay US$700/tonne instead of buying the cheap halfprice stuff from other countries.

BTW in all news it seems both volume and price of rice (probably) sold varies enormously and information on how much profit (like expenditure - sales) this wonderful scheme will bring Thailand and it's taxpayers.

I don't doubt the Yanyong is right here. China could probably take endless amounts of rice off Thailand's hands provided the price was right.

Just depends how much Thailand is prepared to pay.......

Problem is, in China government entities importing and smuggling stuff is pretty risky. They like to make their money quick and easy, not by smuggling/overpaying egazzilions of kgs of rice with state money.

People get shot for that in China.

[Shurup]

"China may not only procure Thai rice to feed its domestic market, but also to give to countries that are its friends in Africa as humanitarian assistance, so Thailand has a good chance of distributing more than one million tonnes of rice to China, Dept Commerce Minister Yanyong said."

Makes perfect sense as everybody knows that Thai rice is of superior quality with that special Thainess thrown in for good measure. When you give to good friends of course you don't care that the price might be a wee bit higher. China can affort to pay US$700/tonne instead of buying the cheap halfprice stuff from other countries.

BTW in all news it seems both volume and price of rice (probably) sold varies enormously and information on how much profit (like expenditure - sales) this wonderful scheme will bring Thailand and it's taxpayers.

There can't be anymore profits, all has already been eaten by the handouts storage fees and bank interests. Amazing Thailand!