Govt accused of fake G2G contracts to reap gains from rice stockpile

Traders have questioned the official explanation provided for selling rice under government-to-government contracts by releasing stocks to private exporters.
They share the view that it is unusual to sell rice to other countries’ governments at the warehouse door, as shipments would normally be completed on-board to create confidence in rice-trading partner nations.
The traders have challenged the Commerce Ministry to demonstrate public transparency by making available invoices from purchasing countries.
A rice-trader source yesterday said the government had not had genuine G2G contracts because no shipments by the government had shown up in rice-export statistics since the turn of the year.

CALL FOR EVIDENCE
“If the government really had G2G contracts, evidence of the export volume would be seen at the Customs Department. It is impossible for the government to pass on contracts to private rice traders as G2G contracts are quite sensitive, with purchasing countries requiring the government’s guarantee,” said the source, who spoke on condition of anonymity.
Normally, rice sales under G2G deals should satisfy one of two trading conditions: the use of either CIF (cost plus insurance and freight) or FOB (free on board). The government should not be able to sell rice at the warehouse door, as partner countries need an official guarantee under such contracts, the source added.
Another rice-exporter source said the government had favoured some traders to reap benefits from the stockpiles by creating unreal G2G contracts.
“The government claims it has many G2G contracts so that it can say is has sold rice at ‘friendship’ prices. Such prices would generate losses from G2G trading, while involved politicians, government officials and unscrupulous traders would benefit from the huge stockpiles,” the source said.
The source explained that the method used was a circumvention of normal rice trading. Unscrupulous traders get rice from the government at a low price, and they then earn more than usual after selling it to other traders.
 The government then gets a return, while each corrupt trader and official benefits from the gap between the real trading price and the G2G selling price.
Meanwhile, Commerce Minister Boonsong Teriyaphirom yesterday insisted that the government genuinely had G2G contracts with many countries.
The ministry will gradually pay money back to the government after generating income from these G2G deals, he said, adding that about Bt20 billion would be repaid this week.
According to the Board of Trade, Thailand exported 5.04 million tonnes of rice in the first nine months of the year, all by private exporters.
Last year, the country exported 10.39 million tonnes, of which 267,870 tonnes was government sales.