Iran oil for rice deal sought
Written by Writer on Tuesday, October 28th, 2008
AGRICULTURE
Iran oil-for-rice deal sought
PHUSADEE ARUNMAS
Thailand is preparing to barter rice for oil from Iran as part of its attempt to empty the government’s huge stockpiles more quickly.
Apiradi Tantraporn, the director-general of the Commerce Ministry’s Foreign Trade Department, is scheduled to visit Iran by mid-November to discuss the specifications of oil and rice that would be exchanged, according Commerce Minister Chaiya Sasomsab.
He said that talks would also continue with authorities in Teheran for a straight government-to-government deal for selling rice.
Iran is one of Thailand’s major rice customers, purchasing around 600,000 tonnes of its one million tonnes in annual imports.
However, it has bought only 60,000 tonnes of Thai rice so far this year, staying on the sidelines during the first half of 2008 when Thai rice prices surged to a record high of $1,080 per tonne.
Iran has high demand for rice but no commercial banks accept letters of credit from Iran because of United Nations sanctions related to Teheran’s nuclear programme.
Mr Chaiya also said yesterday that the government might delay its plan to release 2.1 million tonnes of old rice from its stockpile, because prices have fallen and sales would be made at a loss.
The government has accumulated 4.3 million tonnes of milled rice in intervention schemes since 2006. Around 2.1 million tonnes of that are old rice that officials had intended to release quickly to prepare space for a new buying scheme starting on Nov 1.
“We could hold back the plan for some time until Vietnam sells out its rice at cheaper prices, otherwise we would suffer losses,” Mr Chaiya said.
Vietnamese traders currently quote rice export prices at around $400 per tonne, compared with $630 for Thailand’s benchmark white rice.
According to Mr Chaiya, Vietnam is likely to speed up selling 400,000 tonnes of surplus rice before the harvesting of the new crop early next year.
Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said a temporary halt was a good idea because accelerated sales would place further pressure on rice prices and discourage exporters from bidding.
“If the government sells now, prices will fall further,” said Mr Chookiat. “The government needs instead to fine-tune its rice marketing strategy, as Vietnam itself is expected to speed up selling its grain, as its exporters own no large warehouses, and more importantly they need cash to repay loans that carry interest rates as high as 22%.”
However, Mr Chaiya said the government may sell rice from its stocks at a loss because it must empty warehouses before the next crop arrives.
“Given the rice price slump, the government is suffering a loss of 2,000 baht per tonne (from the existing stockpile),” said Mr Chaiya. “The market mechanism alone is to blame for this loss.”
Officials have pledged to buy more rice from farmers at assured prices even as the export price of white rice has dropped 36% since May.
Between January and October, Thailand exported 8.7 million tonnes of rice, up 31% from the same period of last year when it sold 6.6 million tonnes.
Bangkok Post
Tuesday October 28, 2008
