The Nation
By The deputy
Published on November 14, 2008
The deputy prime minister is always a hurdle for many of the ministry's projects.
It is simply a conflict between Deputy Prime Minister Olarn Chaipravat and Commerce Minister Chaiya Sasomsap, which may not appeal to the public. But there is also a hidden agenda - to turn a blind eye to a big lot of the ministry's latest rice bidding going to a company that was once an illegal bidder, writes Petchanet Pratruangkrai.
On Wednesday, Chaiya lamented over his conflict with Olarn, saying the deputy premier is always a hurdle for many of the ministry's projects drawn up to assist farmers in dealing with the problem of dropping prices.
Is the reason valid? Or is Chaiya deflecting public interest from the conflict instead of focusing on suspected illegal bidding for rice, the price of which is now being negotiated.
The ministry announced the cancellation of bidding for 1 million tonnes of white rice, claiming that firms had offered very low prices. The ministry last week opened a bid for a total of 3.1 million tonnes of rice aimed at releasing its huge stockpile.
Questions are being raised about the cancellation, and whether it would pave the way for one company to reap the whole benefit.
The price for the remaining lot of 2.1 million tonnes is being negotiated in order to force higher bids.
Higher prices will give Chaiya and the coalition government a chance to launch a propaganda campaign among farmers. The ministry is likely to increase the pledging price for the main rice crop from the Bt12,000 approved by the Cabinet, to Bt14,000.
The farmers are also threatening to put pressure on the government to increase the pledging price to Bt14,000 soon. However, nobody knows whether funds are available for such a move.
The government has never revised the pledging price once the Cabinet has given its final approval.
It is irrational to quote a high pledging price amid a downward trend in the global market. In fact, the ministry should be guided by market supply and demand as key factors in determining the guaranteed price.
All bidders have kept their eyes closed to a new bidder, Siam Indiga, known in rice export circles as the alleged nominee of the country's former biggest rice exporter President Agri Trading.
Banks have graded the company (President Agri) for its non-performing loans, while the ministry has seen the company default on rice contracts totalling more than 1 million tonnes.
Sources said Siam Indiga staff, who submitted the bidding document, belonged to President Agri Trading. Although it offered a high bidding price, the company's offer was not the highest.
Siam Indiga will offer an additional price of Bt1,000 per tonne to the ministry during the bargaining period in order to win the big-lot auction. This will enable the company to control huge volumes of rice.
Other rice exporters have to compete with each other to purchase from millers, for which they will have higher costs than Siam Indiga.
Exporters who handle a big supply at a low price can offer an attractive export price.
The modus operandi seems similar to one tried a few years ago by a company that was exposed and later blacklisted by the ministry.
If the ministry agrees to increase the pledging price, it means it is undertaking market distortion. Some rice-growing countries such as India and China will return to the export market after lifting their export bans this year.
China has signalled that it will return to the market by bringing down tariffs. The country exports an average of 1.2 million tonnes per year.
Cambodia has struck a deal with Senegal to export 120,000 tonnes of white rice.
Rice export prices are also declining. For instance, jasmine rice is quoted at US$ 796 (Bt27,908) per tonne, down from $800.
The prices of other varieties have also dropped - 100-per-cent white rice is at $591 per tonne compared with the previous price of $595, while 5-per-cent white rice has fallen from $580 to $576.
It is forecast that global rice prices will gradually drop in line with predicted increase in output. In these circumstances, is the government doing the right thing by increasing the pledging price?
By The deputy
Published on November 14, 2008
The deputy prime minister is always a hurdle for many of the ministry's projects.
It is simply a conflict between Deputy Prime Minister Olarn Chaipravat and Commerce Minister Chaiya Sasomsap, which may not appeal to the public. But there is also a hidden agenda - to turn a blind eye to a big lot of the ministry's latest rice bidding going to a company that was once an illegal bidder, writes Petchanet Pratruangkrai.
On Wednesday, Chaiya lamented over his conflict with Olarn, saying the deputy premier is always a hurdle for many of the ministry's projects drawn up to assist farmers in dealing with the problem of dropping prices.
Is the reason valid? Or is Chaiya deflecting public interest from the conflict instead of focusing on suspected illegal bidding for rice, the price of which is now being negotiated.
The ministry announced the cancellation of bidding for 1 million tonnes of white rice, claiming that firms had offered very low prices. The ministry last week opened a bid for a total of 3.1 million tonnes of rice aimed at releasing its huge stockpile.
Questions are being raised about the cancellation, and whether it would pave the way for one company to reap the whole benefit.
The price for the remaining lot of 2.1 million tonnes is being negotiated in order to force higher bids.
Higher prices will give Chaiya and the coalition government a chance to launch a propaganda campaign among farmers. The ministry is likely to increase the pledging price for the main rice crop from the Bt12,000 approved by the Cabinet, to Bt14,000.
The farmers are also threatening to put pressure on the government to increase the pledging price to Bt14,000 soon. However, nobody knows whether funds are available for such a move.
The government has never revised the pledging price once the Cabinet has given its final approval.
It is irrational to quote a high pledging price amid a downward trend in the global market. In fact, the ministry should be guided by market supply and demand as key factors in determining the guaranteed price.
All bidders have kept their eyes closed to a new bidder, Siam Indiga, known in rice export circles as the alleged nominee of the country's former biggest rice exporter President Agri Trading.
Banks have graded the company (President Agri) for its non-performing loans, while the ministry has seen the company default on rice contracts totalling more than 1 million tonnes.
Sources said Siam Indiga staff, who submitted the bidding document, belonged to President Agri Trading. Although it offered a high bidding price, the company's offer was not the highest.
Siam Indiga will offer an additional price of Bt1,000 per tonne to the ministry during the bargaining period in order to win the big-lot auction. This will enable the company to control huge volumes of rice.
Other rice exporters have to compete with each other to purchase from millers, for which they will have higher costs than Siam Indiga.
Exporters who handle a big supply at a low price can offer an attractive export price.
The modus operandi seems similar to one tried a few years ago by a company that was exposed and later blacklisted by the ministry.
If the ministry agrees to increase the pledging price, it means it is undertaking market distortion. Some rice-growing countries such as India and China will return to the export market after lifting their export bans this year.
China has signalled that it will return to the market by bringing down tariffs. The country exports an average of 1.2 million tonnes per year.
Cambodia has struck a deal with Senegal to export 120,000 tonnes of white rice.
Rice export prices are also declining. For instance, jasmine rice is quoted at US$ 796 (Bt27,908) per tonne, down from $800.
The prices of other varieties have also dropped - 100-per-cent white rice is at $591 per tonne compared with the previous price of $595, while 5-per-cent white rice has fallen from $580 to $576.
It is forecast that global rice prices will gradually drop in line with predicted increase in output. In these circumstances, is the government doing the right thing by increasing the pledging price?
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