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Thailand proposes OPEC-style rice cartel

AP , BANGKOK

A rice farmer inspects a valuable yield of rice laid out to dry in a factory in Nonthaburi Province, Thailand, on Wednesday. The country’s rice exports between January and last month reached 4.07 million tonnes compared with 3 million tonnes during the same period last year.

PHOTO: EPA

Thailand, the world’s biggest rice exporter, said yesterday that it wants to form an OPEC-style cartel with four Southeast Asian neighbors so that together they have more control over international prices of the commodity.

Thai Commerce Minister Mingkwan Saengsuwan plans to talk with his counterparts in Laos, Myanmar, Cambodia and Vietnam about forming a cartel to gain more influence over prices, said government spokesman Vichienchot Sukchokrat.

“Though we are the food center of the world, we have had little influence on the price,” Vichienchot said. “With the oil price rising so much, we import expensive oil but sell rice very cheaply and that’s unfair to us and hurts our trade balance.”

Rice prices have tripled this year, with the regional benchmark hitting US$1,000 a tonne for 100 percent Grade B white rice.

The run-up in rice prices has come amid global food inflation, poor weather in some countries that produce rice and demand that has outstripped supply.

Some Asian countries, including India and Vietnam, have contributed to the problem by curbing rice exports to guarantee their own supplies.

In the Philippines, the world’s top rice importer, Senator Edgardo Angara, chairman of the Senate Committee on Agriculture, fears the potential that a small group of producers could control a food staple and set prices out of reach of “millions and millions of people.”

“Almost 3 billion people are rice eaters. It’s not a good idea. It is a bad idea ... It will create an oligopoly and it’s against humanity,” he said.

However, Laos Foreign Ministry spokesman Yong Chanthalansy said yesterday the Laotian government would “seriously consider” the idea of creating a cartel because it would give the five countries “bargaining power.”

“Our priority is to help vulnerable groups in the country, both the producers and consumers,” Yong said. “We are especially vulnerable because we are a landlocked country so everything depends on irrigation.”

Cambodia, which in the past has championed the rice cartel idea, also welcomed the latest proposal and said it was a “necessity” given the current global food crisis.

“By forming an association, we can help prevent a price war and exchange information about food security,” Cambodia’s chief government spokesman Khieu Kanharith said.

Vichienchot, the Thai government spokesman, confirmed that Thai Prime Minister Samak Sundaravej brought up the idea of a grouping modeled after OPEC during his discussions on Wednesday with Myanmar’s Prime Minister Lieutenant General Thein Sein in Bangkok.

“The idea is that we can work together to improve yields and production and have some influence on setting the prices, making it a little more balanced,” Vichienchot said.

Samak said on Wednesday Myanmar supported the idea, while officials in Vietnam have said they are studying it and could possibly support it.

Much like how OPEC sets oil prices, the tentatively named Organization of Rice Exporting Countries would help set prices for rice. Supporters say that would ensure farmers benefit from the increasing demand for the staple.

Robert Zeigler, director general of the International Rice Research Institute in the Philippines, said he expected it would be difficult to apply the OPEC model to rice.

“Rice is grown by millions of farmers in one, two, three hectares of land. Oil is produced by a few multinational companies in a few countries,” Zeigler said. “So I think the differences are so large as to make any comparison between the two wild fantasies.”

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