High hopes for rice contract with Iraq

Economy April 26, 2014 00:00

By Petchanet Pratruangkrai

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Exporters upbeat following lifting of ban on Thai imports

Rice exporters are strongly expected to win bidding contracts to sell to Iraq for the first time this month since the lifting of a ban imposed last August by Baghdad out of concern over the quality of Thai rice.
“Thai exporters should be able to win some contracts from this week’s bidding for several thousand tonnes of rice opened by the Iraqi government,” Surasak Riangkrul, director-general of the Foreign Trade Department, said yesterday.
The Iraqi government is scheduled to announce the bidding results soon. 
If Thai rice exporters win at least some of the contracts, it will be a good sign for Thailand to export more rice to the Middle Eastern country, which has traditionally been one of the major import markets for the Kingdom, he said.
Before last year’s import ban, Iraq normally imported about one million tonnes of Thai rice each year.
According to the Commerce Ministry, the export value of Thai rice to Iraq dropped by 99 per cent to US$200,000 (Bt6.46 million) in the first two months of this year. Export value last year decreased by around 19 per cent to $348.1 million, while export value in 2012 was worth $432.1 million.
Iraq had not allowed Thai rice traders to participate in the bidding for imported rice since August, due to the low quality of rice from previous Thai shipments. 
A rice-industry source said the problem had been caused by the Thai government having only allowed one rice exporter to ship rice to Iraq. Unfortunately, that company had paid insufficient attention to the quality of the rice, resulting in the Iraqi authorities acting against all Thai rice exports to the country.
In a bid to get Iraq to allow Thai rice traders to rejoin its bidding, the Foreign Trade Department early this month undertook a mission to Baghdad to explain about the overall quality of Thai rice and urge them to allow Thai rice traders to participate in the bidding process again.
Sompong Kitireanglarp, president of Ponglarb, one of the traders involved in the recent bidding, said Thai rice exporters should win some contracts as there was now more confidence in Iraq about Thai rice quality. Thai rice is now also quite competitive on price. 
The price proposed is on the CIF (cost, insurance and freight) basis, which is higher than the current FOB (free on board) price, which is quoted at $394 a tonne. 
Traders from Uruguay and the US are among the rival bidders.
Sompong said three or four Thai rice traders had taken part in the bidding, with each of them proposing to sell about 20,000-40,000 tonnes of rice to Iraq.