Two contracts will be signed with the Chinese government and a third with France. The agreements will focus on exchanging Thai rice for locomotive engines, construction services and artillery.

A source at the Commerce Ministry said the agreements were completed and waiting for Cabinet approval.

The barter trade aimed at a healthier trade balance and a reduction in cash payments for government purchases.

China will sign a contract

with the Thailand Tobacco Monopoly to construct the

country's largest tobacco-processing plant in Chiang Mai. The project will cost Bt15 billion, and the Thai government will pay China in Thai rice of the same value.

"China has a high demand for Thai rice and imports a large

volume every year," said the source.

The second contract is by the State Railway of Thailand for seven diesel locomotives from China in exchange for Thai rice worth Bt700 million from government stockpiles.

China is a major importer of Thai jasmine rice, and the deal allows the government to reduce its jasmine-rice stockpile so as to ensure space for new crops under its price-intervention programme. The deals will gradually reduce the stock as each contract will involve shipments over two or three years.

The third contract will be inked between the Royal Thai Army and French government

for an exchange of Thai rice

for artillery worth Bt800 million.

The French may require white rice, which the European market prefers, the source said.

Meanwhile Nopadol Thongmee, commercial counsellor at the Thai Embassy in Tehran, said Thai rice-exporters and the Iran government would soon conclude negotiations for the export of 300,000 tonnes of Thai rice.

However, Thai exporters commented that Iran had offered US$305 (Bt11,629) a tonne, lower than their cost price of $320.

"The countries should reach a compromise price soon," Nopadol said.

If the deal is successful, Thailand will become the biggest rice-exporter to Iran again after losing the position to Vietnam last year.

Early this year, Iran imported 400,000 tonnes of white rice from Thailand.

Iran produces million tonnes of rice a year but needs 700,000 to a million tonnes extra a

year.

Petchanet Pratraungkrai

The Nation