VN rice sector concerned as Thailand mulls sell-off
TUOITRENEWS
Vietnamese rice exporters are put under concern as Thailand is likely to sell off its rice stockpile under the pledging scheme at market prices, which will affect Vietnam’s cheap-price competitiveness on the global market.
“[Thai] government will have to take a big loss on the sale, because pledging prices were set much higher than the market price,” English-language website Bangkok Post quoted PM's Office Minister Nawatthamrong Boonsongpaisan admitting on Thursday.
Thailand has been running the rice pledging scheme over the last two harvesting years, stockpiling some 17 million tons of stored rice, and incurring a 476.89 billion baht in debt to the Bank for Agriculture and Agricultural Cooperatives (BAAC).
Earlier the government insisted that it would not sell its stocked rice at a loss and that world prices would rise, partly because of demand for stockpiled Thai rice, according to the newspaper.
However, Commerce Minister Boonsong Teriyapirom was quoted by Bangkok Post as saying that “it now is the right time to release the government’s rice to the market, as rice output was lower because of drought in producing areas.”
Losses stemming from the scheme were estimated at 140 billion baht for the 2011 – 2012 harvesting season, and an expected 210 billion baht for the 2012 – 2013 season, according to former deputy prime minister Pridiyadhorn Devakula.
The country has thus considered selling 7 million tons of rice to other nations, including China. But the price was not revealed because it was “sensitive and secret,” permanent secretary for commerce Vatchari Vimooktayon told Bangkok Post.
Vietnam concerned
“With increasing stockpiles, Thailand will have to sell off its rice, but when and at how much the sale will be conducted remains to be seen,” commented the Vietnam Food Association in a statement.
The association said it is likely that Thailand will cut its rice prices, given the current development of the global market, where supply outgrows demand.
“Reduced Thai rice prices will affect many rice-exporting countries, including Vietnam,” the association said.
Meanwhile, it is unlikely that Thailand will reduce prices to a rate lower than what Vietnam is selling its rice at, said VFA chairman Truong Thanh Phong.
“The country will face state budget deficit and attacks from opposition parties doing so,” he explained.
Vietnamese 5 percent broken rice currently fetches US$410 a ton, while the Thai product is quoted at as much as $560 a ton.
“Hence, Thailand must sell at $750 - $800 a ton, otherwise they will suffer massive losses, which means the [Thai] government accepts that their pledging scheme is a failure,” commented Nguyen Dinh Bich, an expert with knowledge on the rice market.
Meanwhile, another expert expressed concerned that Vietnam may incur disadvantages if Thailand is to sell its rice through government channel at reasonable prices.
“Once Thai prices have been lowered, global customers will consider switching to buy from them rather than Vietnam,” he said.
Other market insiders urged local exporters to speed up negotiations to gain more exporting contracts before any move is conducted by the Thai side.
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