Hypothetical Theory of Thailand of the Founded Rice Cartel

Thailand's Hypothetical Theory of a Founded RiceThe Asian Development Bank (ADB) also came out
Cartelagainst the idea of setting up an OPEC-style rice
What if Thailand will set up a rice cartel that will surelycartel. The bank's president Haruhiko Kuroda
fixes pricing to worsen the food security of the entiresuggested it would be better to allow market forces to
region?operate freely.
Noppadon Pattama, Thailand's Foreign Minister saidIn a time when the global food market is experiencing
Tuesday that the kingdom is dropping its previouscontinuous price hikes, hoarding and panic buying,
plans to create a cartel with other rice-exportingraising the proposal is inappropriate and may not be
countries in Southeast Asia, citing concerns over foodbeneficial to the rice exporting countries and their
security.farmers in long term, said He Changchui, regional
The statement signaled the about-face on the cartelrepresentative for Asia and the Pacific of the Food
after Prime Minister Samak Sundaravej said last weekand Agriculture Organization (FAO).
that Thailand had agreed in principle to form anEven inside Thailand, the Rice Exporters Association
OPEC-like cartel with Mekong nations of Vietnam,tried to explain to the premier why OREC is technically
Cambodia, Myanmar and Laos.impractical. They said unlike oil, rice is renewable and
The five nations produce a combined 600 million tonssustainable, and it can grow pretty well anywhere.
of rice each year, about 14 percent of the worldThey added that the rice-exporting countries can't fix
output.price as OPEC does because they can't control their
The proposal, resolutely backed by Cambodia and metproduction
with positive responses from other three countries,Analysts say that even if the five countries agree on a
came under fire of rice-importing countries such as thebroad price band, it would be difficult to enforce since
Philippines which claimed that the formation of anbuyers could turn to elsewhere to purchase.
oligopoly may deprive a large number of people ofThey pointed out that maintaining rice prices would
their rights to reach for staple food.please large-scale rice farmers and traders in
IDEA OF RICE CARTEL REVIVEDcountries like Thailand and Vietnam, but it would enrage
Thailand first floated the idea of rice cartel in 2001 tonations which rely heavily on imported rice.
pave off a shrinking market share caused by higherREPLACEMENT SUGGESTED
export price. Samak revived the long-dormant riceTo replace the short-lived rice cartel proposal,
cartel talk to give rice producers greater control overNappadon said that he favored the creation of a
prices which has tripled since January this year.Council of Rice Trading Countries (CRTC) to discuss
The proposal was welcomed by Cambodia, whoseboosting rice production, exchange of technology and
government spokesman said the formation of such animproving rice quality.
association would facilitate the exchange ofThe foreign minister invited ambassadors from India,
information and help fade off a price war.Pakistan, Cambodia, China, Vietnam and Myanmar to
The rice cartel, tentatively named Organization of Riceappoint representatives for the council in the next few
Exporting Countries (OREC), is aimed to ensure foodmonths.
stability and address food shortages in the region andCambodia, however, still insisted that an association of
the world, Cambodia Prime Minister Hun Sen said.rice exporting countries could still be helpful to avoid
Lao Foreign Minister spokesman said his country wouldfierce competition which will threaten the livelihoods of
seriously consider the idea, saying a cartel would givepeople in the region and beyond.
the group of countries "bargaining power."The country's Information Minister Khieu Kanharith said
After meeting with Myanmar Prime Minister, Samakthey would pursue discussions about forming such an
releases informqtion that Thein Sein has approved inassociation at a meeting in Vietnam later this year.
principle of the thought.After the Philippines scrapped its largest 675,000-ton
Vietnam has also made its stance clear that it can joinrice tender of the year, Thai rice prices dipped by
the OPEC-like body if the future organization ensuressome 5-10 percent. But experts forecast that Thai rice
the harmonization of interests of both Vietnam and theprices are expected to remain strong as the current
international community.fall is not a big deal compared with the price surge
ARGUMENT OVER PLANover the last few months.
Despite the major rice-exporting nations' enthusiasmThe ADB announced last week emergency funding to
for the plan, the Philippines, the world's biggest ricehelp poor countries grappling with spiraling rice prices. It
importer, slammed Thailand's proposal as a "bad idea."warned that price for staple food could keep rising and
Edgardo Angara, chairman of the Philippine Senate'sit would stifle economic growth in the region.
Committee on Agriculture, worried that a small groupThe benchmark Thai variety, Pathumthani fragrant rice,
of producers could control the staple food and price itwas priced two weeks ago at 998 dollars per ton for
beyond the reach for millions and millions of people.export, up from 512 dollars in January.
Senior officials of the island country blasted theThailand is world's No. 1 rice exporter and it shipped an
proposal, warning it would aggravate hunger andestimated 9.5 million tons of rice overseas in 2007.
poverty.