Thailand offers rice at a loss

REPRIEVE

But in a reprieve for the government, Thailand's state-backed farm bank, which runs the rice scheme, raised 32.58 billion baht ($991.33 million) in a domestic debt issue that was far better subscribed than expected, officials said on Thursday. It had aimed to raise 20 billion baht.

Earlier this week, Thai rice prices slipped as fears of payment disruptions under the rice-buying scheme forced farmers to unload the grain in the market, despite higher prices offered by the government, traders said.

The money raised in the bond issue looks set to be used to pay farmers since rice sales are limited by the ban on exports.

"The caretaker government has no authority to seal any state binding agreements, including rice deals, so government-to-government rice sales will halt automatically," Surasak said.

Thailand sold 1 million tonnes of rice to China in November to be supplied over a period of one year but the shipments have been held up as the Election Commision says the caretaker government cannot enact long-term contracts that would commit any new government, an official of the commission said.

The rice-buying programme made Thai rice more expensive in the global market, and in 2012 the country lost its crown as the world's top exporter, with India taking over.

Anti-Yingluck protesters say the rice scheme is corrupt and has helped wealthy farmers and regional politicians more than the poor.

Protesters brought parts of Bangkok to a near-standstill this week but the government is sticking to a plan for a Feb 2 election as it believes support for the leader of the agitation is waning.

The protesters have rejected the proposal to hold elections and want an unelected "people's council" to take power.

Nevertheless, rival exporters Vietnam and India fear losing market share when Thailand resumes exports with reduced prices.

"Definitely there's a big chance that we will buy more from Thailand if they offer a better price," said Estoperez of the Philippines' NFA, one of the world's biggest buyers of rice.  "Whether it is a government-to-government deal or a private transaction, the price and quality are always important for us."