Commerce Ministry to trade 150,000 tonnes of rice on futures exchange

Economy August 09, 2013 00:00

By Petchanet Pratruangkrai

The

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The Commerce Ministry plans to trade 150,000 tonnes of rice on the Agriculture Futures Exchange of Thailand (AFET) in the next couple of weeks as it works to reduce its stockpiles.



Also, the ministry will open bidding to general traders for another 200,000 tonnes of rice, after the first round of bidding was launched last month.

Commerce Minister Niwatthumrong Boonsongpaisan said the government would continue to clear out its stockpiles via many methods, including open bidding, trading on the AFET, and government-to-government contracts.

The first round of general bidding might have sold more than 220,000 tonnes, but the minister refused to give a total value or bidding price.

Under the plan to sell rice on the AFET, about 150,000 tonnes will be traded in the first lot. The ministry plans to release about 500,000 tonnes via the exchange in the remaining months of the year.

The ministry is projected to spend about Bt250 million as a guarantee and entry fee to the futures market for the total of 500,000 tonnes. The sale of 150,000 tonnes would need a budget of Bt80 million. These amounts included entry fees, commission, tax and other expenses.

Niwatthumrong said the ministry would continue to negotiate with trading partners to sell more rice under G2G contracts. Potential countries include Iraq and Iran. The Foreign Trade Department will next week send a team to Iraq as the country is highly interested in purchasing Thai rice, he said.

Niwatthumrong said the government would very likely maintain the pledging price for the upcoming year at Bt15,000 per tonne of white paddy rice. He said farmers would also be limited to pledge their rice only once a year. The final pledging price will be announced in the next two weeks. He said the government would ensure that costs are acceptable and will not lead to huge losses.

The government has capped the pledging budget at Bt300 billion a year. As a result, the programme should not lose more than Bt80 billion a year.

To increase transparency on the pledging programme, the ministry will use more information technology. Bt100 million is expected to be spent on software development.