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Thailand moots five-nation rice cartel in Asia

Thailand moots five-nation rice cartel in Asia
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First Published: Thu, May 01 2008. 10 53 PM IST

Updated: Thu, May 01 2008. 10 53 PM IST
Bangkok: Prime Minister of Thailand Samak Sundaravej said on Wednesday that his government would try to create a cartel of rice-producing countries in partnership with Vietnam, Cambodia, Myanmar and Laos.
“We don’t aspire to be like Opec, but we hope to be just a group of five to help each other in trading rice on the world market,” Samak was quoted as saying in The Nation newspaper.
Governments in Thailand, the world's largest rice exporter, have for many years toyed with the idea of using their dominant market position to influence the price of rice in the same way that the Organization of Petroleum Exporting Countries, or Opec, tries to set crude oil prices.
The plan appears to be in a nascent stage. “I think it’s time to do it, probably within the term of this administration,” Noppadon Pattama, Thailand’s foreign minister, said on Wednesday.
But, if successful, a cartel could have far-reaching consequences on the rice market, sustaining prices at their current historic highs and worsening a food crisis that is hurting Asia’s poorest consumers. The price of Thai B-grade rice, a benchmark variety, has nearly tripled in recent months and is now hovering at about $1,000 (Rs40,500) a tonne.
Maintaining rice prices would please large-scale rice farmers and traders in countries such as Thailand and Vietnam, but it would anger places such as the Philippines, Singapore and Hong Kong, which rely heavily on imported rice. Plans for the cartel were front page news in the Philippines on Thursday.
The current ruling coalition in Thailand received the backbone of its support from rural areas, and Samak appears eager to capitalize on the rice price increase. Thai rice farmers now “have an opportunity”, he said in a recent interview.
Unlike corn, wheat and other grains that are widely traded globally, only a small number of countries export rice. The largest rice producers, China, India and Indonesia, consume most of their rice crop domestically.
Thanks to a vast, fertile delta, which allows farmers to harvest three or four times a year, Thailand exports about 10 million tonnes annually, twice as much as Vietnam, the second largest rice exporter, and three times what the US exports.
Rice prices rose sharply in March and April after many exporting countries, including Brazil, Egypt, India and Vietnam, announced that they were restricting exports to ensure domestic supplies.
©2008/The New York
Asian rice prices have almost trebled this year and prices on the Chicago Board of Trade have risen more than 80% to hit successive record highs as export restrictions by leading suppliers fuel insecurity over food supplies. With only 30 million tonnes (mt) traded annually, supply curbs by countries such as India and Vietnam have spooked importers, the Philippines and Bangladesh, for instance, at a time when global stocks have halved since hitting a record high in 2001.
October: India bans exports of non-basmati rice to curb price rise, inflation.
March: India reimposes export ban as inflation hits a 14-month high.
—Egypt bans rice exports from April 1 to October to hold down local prices.
April: Vietnam extends a ban on rice sales until June to help stabilize domestic food prices as it tries to tame double-digit inflation.
—Brazil temporarily suspends rice exports to safeguard domestic supply.
—Indonesia says it would curb medium-grade rice exports to combat inflation. SCRAMBLING FOR STOCKS
January: Bangladesh signs deals and starts importing 180,000 tonnes of white rice from neighbouring Myanmar.
March: The Philippines says it aims to import up to 2.2 mt of rice this year to meet a domestic shortfall.
—Costa Rica expects imports to jump 31% to 190,000 tonnes in 2008-09 crop year.
—Bangladesh says it would import 400,000 tonnes of rice from India to cushion the country’s dwindling stocks.
April: Singapore says it would allow importers to bring in more rice to meet higher demand amid consumer fears of a rice supply crunch and higher prices.
Fact File by Reuters
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First Published: Thu, May 01 2008. 10 53 PM IST
More Topics: Rice | Thailand | Cartel | Vietnam | Cambodia |