Everyone’s Still Talking about Rice
Vietnamese leaders have rejected Prime Minister Samak Sundaravej’s assertion that a Southeast Asian rice price-fixing cartel was soon to be in business. According to the Vietnamese government, the Thai negotiators who were scheduled to visit them in Vietnam to thrash out the issue last month had never even shown up. The cartel idea has also come under strong resistance in Thailand, where rice exporters say such a cartel would be hard to put into operation, as rice is a politically turbulent commodity and production is quite hard to control. Vietnamese Deputy Minister of Industry and Trade Nguyen Thanh Bien said on Thursday, “Vietnam has not yet made any official reaction to the initiative. “The Thai side planned to come to Vietnam late last month for talks over the issue, but they haven’t come yet.”
Just the day before, Mr Samak had claimed in Bangkok that Thailand, Vietnam, Laos, Cambodia, and Burma had an agreement “in principle” to form an Organization of Rice Exporting Countries, modeled around OPEC. Samak said OREC would attempt to “fix the price” of rice in the global marketplace. Thailand is the world’s largest exporter of rice, and Vietnam is second. Vietnam produced for export over 859,000 tons of rice in the first three months of this year, an increase of 5.3 % from the same time last year, according to government figures.
The Thai government’s proclamation led to alarm on the part of rice importing nations, many of them with meager resources, who face the bad outlook of rice shortages and hunger due to the more than 80 per cent increase in rice prices since the beginning of this year. Tran Tien Khai, an agricultural economist at the Fulbright Economic Training Program in Ho Chi Minh City, said the idea of forming an exporters’ cartel to eliminate fluctuations in the rice market had been floating around for years, but that divergent interests made it difficult for the countries to come together. Thailand produces superior-quality rice than Vietnam, and might try to set an elevated worldwide price. Forming a cartel, however, would actually impede Vietnamese companies’ ability to augment market share by setting lower prices.
Khai states that, “Rice is a political commodity; every country would like to maximize their own power. For countries like Vietnam and Thailand to sit together and have one agreement to control rice prices like this is very difficult.” Increasing rice prices are an important element of an overall rise in global food prices that some at the UN’s World Food Program last month referred to as a “silent tsunami” that could push many of the world’s people to the into starvation.
Everyone’s Still Talking about Rice
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