Beijing cancels deal to buy rice from Thailand after graft probe launched

China rattled by anti-corruption investigation into sale of rice, officials say

PUBLISHED : Tuesday, 04 February, 2014, 1:23pm
UPDATED : Wednesday, 05 February, 2014, 4:13am

China has cancelled a deal to buy 1.2 million tonnes of Thai rice after Thailand's anti-corruption agency launched investigations into a state rice-buying scheme, the Thai commerce minister said yesterday.

The cancellation will add to pressure on Thailand's government, which is struggling to secure funds for the rice scheme at a time when farmers who have not been paid are protesting in the provinces.

"China lacks confidence to do business with us after the National Anti-Corruption Commission started investigations into the transparency of rice deals between Thailand and China," minister Niwatthamrong Bunsongphaisan said.

The deal between Thailand and Chinese state enterprise Beidahuang was signed in November for delivery starting the following month.

The shipment was delayed, however, after Prime Minister Yingluck Shinawatra dissolved parliament in December.

Niwatthamrong said the government would open a tender to sell 400,000 tonnes of rice next week from its stocks, which industry experts estimate could be about 15 million tonnes.

The government is desperate to get funds for the scheme as some farmers who have sold grain to the state have been waiting for months for their money.

The World Bank has estimated annual losses of 200 billion baht (HK$ 47 billion) since it was introduced in 2011. The government has struggled to sell the rice because of its high price at a time when global demand is thin. Opponents of the government are angry that taxpayers are footing the bill for a programme they call tantamount to vote-buying.

"The tender will be held next week and we expect to get around 10 billion baht to pay farmers," Niwatthamrong said.

That compares with the 130 billion baht it needs to pay up to a million farmers.