Asian Nations Seriously Discussing Rice Cartel

The developing tsunami of rising global food prices is gaining steam. Thailand yesterday announced that it wishes to form a rice cartel with neighbors Laos, Burma, Cambodia, and Vietnam. Thailand, the world's largest rice exporter, wants to take the lead in forming an OPEC-like rice cartel.

Rice prices have tripled this year, putting the pinch on consumers in regions where rice is a main diet staple. If rice gets even more expensive, we could potentially see more food riots like those taking place in Haiti, Cameroon, and Indonesia in recent months.


5 Asian Nations Are Weighing a Rice Cartel

BANGKOK — The prime minister of Thailand, Samak Sundaravej, said 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,” Mr. 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 the Petroleum Exporting Countries 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 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 a ton.

Maintaining rice prices would please large-scale rice farmers and traders in countries like Thailand and Vietnam, but it would anger places like 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 Mr. 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 tons annually, twice as much as Vietnam, the second-largest rice exporter, and three times what the United States 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.