China walked away from a deal to buy 1.2 million tonnes of rice from Thailand after Thai authorities launched a corruption probe into a controversial subsidy to rice farmers.
Thailand’s commerce minister told reporters Tuesday that China lacked confidence in the arrangement after the National Anti-Corruption Commission in Thailand began to investigate the country’s rice-buying scheme.
The deal with China was signed in November and called for first delivery in December. Shipments were delayed when Thai prime minister Yingluck Shinawatra, pictured, dissolved Parliament in December amid protests.
Yingluck’s government has been buying farmers’ rice crops for the past two years at prices up to 50% higher than world prices, the BBC said.
The government has been trying to sell its rice stocks to pay the farmers.
Some haven’t been paid for their October crop and have threatened to join protests in Bangkok to oust the prime minister.
Yingluck campaigned on the rice-subsidy scheme to win support from the rural north.
Her government hasn’t been able to secure loans from banks to rescue the sinking rice scheme.
Julie DiMauro is the executive editor of FCPA Blog and can be reached here.