Although the loss had not yet been finally calculated it was expected, said Rachane Potjanasuntorn, director-general of the Foreign Trade Department.

"We believe that we will definitely lose from the auction because of the costs of stockpiling the remaining rice," he said.

The department announced 15 winners in the auction yesterday. It was the first time bidders were allowed to quote prices in baht, instead of the usual US dollars. The highest prices offered were between Bt15,500 and Bt16,800 per tonne.

However, the department sold only 136,431 tonnes of jasmine rice, worth Bt2.13 billion, instead of the 440,000 tonnes it wanted to sell from its stocks gathered in the 2004-2005 harvest. It wanted to clear sufficient warehouse space to accept new stocks.

Under its rice-pledging programme, the government bought rice from farmers at Bt9,700 per tonne, which was higher than the market price. However, in stockpiling the rice, it has paid additional maintenance, warehouse and transportation costs. The total cost is more than Bt15,500 per tonne.

Rachane said the government negotiated with all 34 bidders in an effort to persuade them to increase their offers, and gained an additional Bt55.58 million as a consequence. It will also save warehouse rental fees of about Bt17.06 million per a month as a result of selling the rice.

The country's largest rice exporter, CP Intertrade, won the biggest lot -89,008 tonnes - with a price of Bt15,500 per tonne. The second-largest lot, 11,067 tonnes, went to Asia Golden Rice while Thai-China Chonburi Rice Trading Co offered the highest price of Bt16,800 per tonne for 4,669 tonnes.

CP Intertrade's president Sumeth Laomoraphorn said his company had to increase the price it was offering to Bt15,500 per tonne, so it ended up taking substantially less rice than the 121,301 tonnes it first sought.

Petchanet Pratruangkrai

The Nation