[R-G] Thailand Proposes Rice Cartel

[Yoshie Furuhashi]

<http://online.wsj.com/article/SB120971438829362381.html?mod=googlenews_wsj>
Thailand Proposes Rice Cartel
Associated Press
May 2, 2008 10:49 a.m.

BANGKOK, Thailand -- Thailand, the world's biggest rice exporter, said
Friday 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," Mr. 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 metric ton for 100% Grade B white rice. The run-up
in rice prices has come amid global food inflation, poor weather in
some rice-producing nations 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 three 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 Friday
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," Mr. 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.

Mr. Vichienchot, the Thai government spokesman, confirmed that Prime
Minister Samak Sundaravej brought up the idea of a grouping modeled
after OPEC during his discussions Wednesday with Myanmar's Prime
Minister Lt. Gen. 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," Mr. Vichienchot
said.

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

Much like the Organization of Petroleum Exporting Countries 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," Mr. Zeigler said. "So I
think the differences are so large as to make any comparison between
the two wild fantasies."

Chookiat Ophaswongse, president of the Thai Rice Exporters
Association, said he was against the idea of a cartel. He said it
would have difficulty swaying world markets because such a grouping
would still exclude big producers like India and Pakistan and would
find it difficult to control farmers producing rice on a seasonal
basis.

"When there is a crisis with rice, they [the government] talks about
this cartel. It has never happened and I don't think it will," Mr.
Chookiat said. "You cannot control farmers growing or not growing
rice. It's not like oil," which even if isn't pumped out of the ground
is still there.

-- 
Yoshie
<http://montages.blogspot.com/>