This is going to be fun. They are going to maintain prices as high as they want them to be, for the near term. The article above doesn't actually quote the Thai spokesman, but I got the quote from the Singapore papers:Thailand proposes rice cartel idea wrote: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," Samak was quoted as saying in The Nation newspaper.
Thailand, the world's largest rice exporter, has for many years toyed with the idea of using its 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 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.
What is interesting though, is that CNN has a complete spin on the story, with a more optimistic tone about rice prices and misses out the fact that the Thais want to maintain the high prices:'Though we are the food centre of the world, we have had little influence on the price,' the spokesman 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.'
http://www.cnn.com/2008/WORLD/asiapcf/0 ... index.html
CNN version wrote:BANGKOK, Thailand (CNN) -- Thai Prime Minister Samak Sundaravej piqued global interest this week when he suggested the formation of a rice cartel with other producers, a government spokesman said.
The idea came as his deputy and commerce minister proposed a rice producer summit that would include Thailand, Vietnam, India and China. Only India has so far voiced support; it is second to Thailand as the world's largest rice producer.
The notion of a rice cartel comes amid skyrocketing food prices that have been linked -- at least in part -- to rising energy costs, the business of another cartel: the Organization of the Petroleum Exporting Countries, or OPEC. Its 12 member nations supply about 40 percent of the world's oil.
Laos Foreign Ministry spokesman Yong Chanthalansy said Friday the Laotian government would "seriously consider" the idea of creating a cartel to gain "bargaining power," The Associated Press reported.
"Our priority is to help vulnerable groups in the country, both the producers and consumers," AP quoted Yong as saying. "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, AP reported.
"By forming an association, we can help prevent a price war and exchange information about food security," AP quoted Cambodia's chief government spokesman Khieu Kanharith as saying.
The United Nations is establishing a task force to address what it calls a global food crisis.
In early April, the Indian government announced a ban on exports of low-grade rice, which is essentially produced for domestic consumption, in an effort to control a surge in local food prices amid tightening supplies.
"There's no shortage of rice in India, but our buffer stock of rice has fallen. This means we could be going into the danger zone," said Amit Mitra, secretary general of the Federation of Indian Chambers of Commerce & Industry.
Vietnam and Cambodia -- other major rice producers -- also have placed restrictions on rice exports.
Meanwhile, the Thai cabinet recently decided to release more than 2 million tons of rice to the domestic market in order to maintain the price of rice in the country. The typical goal of a cartel is to regulate prices.
Last week in the United States, warehouse retailer Sam's Club, a Wal-Mart division, announced it would begin limiting specialty rice sales. A similar retailer, Costco, reportedly took similar action, but no limits were put on the purchase of the mass-market rice that's primarily consumed in the United States.
