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Govt focuses on G2G deals to boost rice exports

Oct 17. 2013
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By Petchanet Pratruangkrai


The Commerce Ministry is confident it can increase Thai rice shipments to 8 million to 10 million tonnes next year, thanks in part to government-to-government (G2G) contracts, including a pact with China.

Deputy Prime Minister and Commerce Minister Niwatthumrong Boonsongpaisan said yesterday Thailand should be able to increase rice export volume next year as several contracts are waiting to be inked under the G2G. Also, the Thai government will continue to negotiate with potential customers such as Indonesia and Iraq, to supply them with more rice.

The Commerce Minister said Thailand should be able to export roughly 7-8 million tonnes of rice this year.

Following talks between Chinese and Thai leaders, Niwatthumrong said he would discuss with the Chinese government its reported plan to purchase 1 million tonnes of rice from Thailand.

The discussion will be made during his mission to Beijing in November, which is part of an Asean economic ministers’ road show. He cited that the agreement, which is not merely a memorandum of understanding, should be signed in December this year.

Niwatthumrong clarified that Thailand would have three contracts with China to supply more than 1 million tonnes of rice to it.

Under the G2G contract, the Thai government would supply 1 million tonnes of rice to China’s central government every year for the next five years. The pact should be in force in early 2014.

The minister said the rice-selling contract with the Chinese government would be based on market price, following discussions on detail and price for each shipment.

Asked if the government would face huge losses if it was agreed to export the rice at market prices, Niwatthumrong said such deals would be acceptable as the government has created a pledging scheme to help farmers. However, he is confident the losses would not be more than Bt100 billion a year.

Second is the pact between Thai Rice Exporters Association and the Chinese-owned enterprise COFFCO, in which Thai exporters will supply 1 million tonnes of rice to COFFCO within five years (200,000 tonnes each year).

Third is a pact between the Thai government and China’s Hei Long Jiang Province to supply 1.2 million tonnes of rice to the province.

Niwatthumrong added that Thailand would have the potential to supply more rice or other farm crops to China under the barter trade contract.

Meanwhile, PM’s Office Minister and Deputy Agriculture Minister Varathep Ratanakorn, who is known as "Mr Rice", said he would be drawing up short and long term plans to manage rice production and trading.

Primarily, the plans will focus on developing rice production efficiency as well as seed quality in order to promote sustainable development of the industry. He will soon discuss with the Commerce Ministry drawing up a plan to accelerate releasing rice from stockpiles.

Under his plan, the government would seek new markets, such as the United States and the Middle East, while it will increase more shipments to China as one of the largest rice-consuming markets in the world.

The government will also encourage more rice processing to reduce stockpiles. Although rice is not a fuel crop, it can produce many value-added products such as rice bran oil, and cosmetics.

Varathep said that rice is an agricultural crop and it is difficult to predict its price and output as it can be influenced by climate and global demand. He accepted that the rice-pledging scheme had distorted the market price, but it had not destroyed the production mechanism. Varathep said that following disbursements by the Bank for Agriculture and Agricultural Cooperatives, farmers have lowered their debt. This has been reflected in farmers receiving increased income from the pledging policy by Bt4,000 to Bt5,000 per tonne, he said.

He said he would integrate all work related to rice production and trading under one umbrella to increase efficiency in rice management.

Rice trading is highly competitive. While other countries have cheaper production costs, the government will seek a plan to reduce the cost of production so that Thai farmers will have a more competitive edge, he added.

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