Thailand proposes Opec-style cartel for exporters of rice

In an attempt to halt the soaring rice price crisis confronting Asia, a number of regional nations have proposed setting up an Opec-style cartel for exporters of the staple on which billions of people depend every day.

At a meeting of Asian nations in The Philippines, the government of Thailand – the world's largest exporter of rice – proposed setting up the group to enforce controls on its price, which has more than tripled since January.

It said it envisaged establishing the cartel with Laos, Myanmar, Cambodia and Vietnam."Though we are the food centre of the world, we have had little influence on the price," said the Thai government's spokesman Vichienchot Sukchokrat.

"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."

The proposal by the Thai government was met warmly by other regional nations, all struggling in the face of the food crisis that is bringing new pressures around the globe. Both the Laotian and Cambodian governments outlined their support for the plan.

The five mainland Southeast Asian nations produce a combined 60 million tonnes of milled rice each year, about 14 per cent of world output. Only Thailand and Vietnam have major surpluses.

But many analysts have questioned whether such a cartel could work. Robert Zeigler, who heads the International Rice Research Institute in The Philippines, said that, while the world had "come together in the past" to ensure it had enough to eat, there were hurdles to the establishment of an Opec-style cartel.

"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," he told Associated Press. "So I think the differences are so large as to make any comparison between the two wild fantasies."

Mr Zeigler's comments came as President Gloria Macapagal Arroyo of The Philippines visited the institute, underscoring the problems facing the country as it desperately shores up efforts to secure its rice supplies.

The problems facing The Philippines and other countries in the region have been exacerbated by the decision by a number of major producers such as India to halt exports of rice to safeguard their own domestic supplies.

The Philippines' agriculture secretary, Arthur Yap, said yesterday that the government managed to secure an additional 1.6 million tonnes of rice to make up for a 10 per cent gap between domestic production and current consumption levels.

This is not the first time that a rice cartel has been proposed as a means to control prices. Seven years ago, when it was first proposed by Thailand, the idea went nowhere.

A number of analysts believe the same will happen this time."I don't think it would work. All they can do is agree on a price, but they can't control the supply like oil," said Graham Catterwell, an economic analyst in the region. "It's going nowhere."