November 20, 2012 / 6:41 AM / 5 years ago

Thailand to ink rice MOU with China this week

BANGKOK, Nov 20 (Reuters) - Thailand will sign a memorandum of understanding to sell rice to China during Chinese Premier Wen Jiabao's official visit to Bangkok this week, a senior Commerce Ministry official said on Tuesday, but gave no details of the variety or price agreed.

Thailand, the world's No. 1 rice exporter, is in danger of losing its top position for the first time since 1983 because of a government intervention scheme that has pushed up export prices to uncompetitive levels.

The country is struggling to offload record stockpiles of 14 million tonnes of milled rice, besides desperately seeking more storage space for the grain, after it renewed the controversial price-support scheme in October.

"It would be a rough agreement that we would supply rice to China if needed," Pranee Siriphand, director general of the Ministry of Commerce's Department of Foreign Trade, told reporters, but declined to give details of the variety and quantity of rice China would buy.

However, the Thai cabinet had approved a framework to sell up to 5 million tonnes of rice within 3 years if China wanted to buy, another senior government official said.

Chinese premier Wen makes an official visit to Thailand on Tuesday and Wednesday to strengthen bonds with Bangkok and is expected to hold a joint news conference with Prime Minister Yingluck Shinawatra.

In its bid to support farmers, the government continued to pay 15,000 baht ($490) per tonne for paddy, well above offers by local millers of around 9,000 baht. This has driven government stockpiles of the staple to a record of 14 million tonnes of milled rice.

The government says it sold 7.3 million tonnes of its stockpile to foreign governments, but industry officials are sceptical of the claim as details of payments and shipments are still opaque.

Reporting by Apornrath Phoonphongphiphat; Editing by Clarence Fernandez

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