Jakarta scraps rice purchase

Exporters say government at fault

Indonesia will scrap its plan to buy 70,000 tonnes of rice worth 1.37 billion baht from Thai exporters as a protest against the cancellation of a sale by the Thai government, say rice exporters.

Ten Thai rice exporters were invited last week to join a bid called by the Indonesian grain procurement agency Bulog. Vietnam was also given a quota to supply 30,000 tonnes at the same auction.
According to a local industry source who asked not to be named, Thai exporters proposed a price of US$658 CIF (cost insurance and freight) per tonne of 15% white rice. Vietnam quoted $609 a tonne. Both quotes were negotiated down by $2 a tonne.
Bidders from Thailand included Ponglarp Co, Siam Indiga, Chaiyaporn International Co, Asia Golden Rice, Capital Rice, and Thai Hua (2511) Co.
The source said Indonesia would not buy rice from either the Thai government or private companies because it was unhappy with Thailand's decision to cancel a sale of 300,000 tonnes in a government-to-government deal.
The sale was agreed to in a memorandum of understanding signed by the Commerce Ministry's marketing arm, the Public Warehouse Organisation, during the caretaker term of the Abhisit Vejjajiva government.
However, Commerce Minister Kittiratt Na-Ranong said this week that neither he nor his predecessor, Porntiva Nakasai, had signed a final agreement.
Meanwhile, another source said that Bulog now intended to scrap purchases from both Thailand and Vietnam and seek cheaper rice from India.
The source acknowledged that the price of $559 a tonne agreed by the PWO was too low. After deducting freight at $30 a tonne and other expenses, it would receive only $490 net.
Moreover, Bulog wants newly harvested rice, not old stock. But the price of 15% white rice now is about $600 a tonne, according to the Thai Rice Exporters Association.
Indonesia last year imported 277,305 tonnes of rice from Thailand but in the first half of this year it imported 577,017 tonnes as Jakarta wants to build up a stockpile of one million tonnes.
The source said that if Indonesia did boycott Thai rice, it would cause problems with exporters and make it hard for Thailand to sell on a government-to-government basis.
Another exporter said the industry wanted the government to seek a solution to the impasse to prevent a souring of bilateral relations.
Mr Kittiratt said he was ready to negotiate with Jakarta and would try his best to prevent a dispute.
In a related development, Finance Minister Thirachai Phuvanatnaranubala said government spending for rice purchases under its mortgage programme for the 2011-12 main crop was unlikely to reach 410 billion baht as projected earlier. The reason, he said, was that widespread floods had cut production while the government was speeding up efforts to dispose of state rice stockpiles.
The main rice crop annually covers about 60 million rai producing 25 million tonnes of paddy. Floods are estimated to have damaged 4 million rai of rice fields so far.