Five ink deal to form rice cartel [-Will farmers benefit from rice price increase?]

Yanyong: 10% price rise acceptable

Goal is to boost price by 10% annually

23/08/2012
Bangkok Post

Five Asean rice-producing countries are joining forces to form a regional alliance with the ambitious goal to boost rice prices by 10% annually.

Trade ministers from Thailand, Vietnam, Cambodia, Myanmar and Laos are scheduled to sign the agreement later this year to establish the Asean Rice Federation, said Yanyong Phuangrach, the commerce permanent secretary.

Mr Yanyong called the cooperation a first for a region that exports 20 million tonnes of rice a year.

The cooperation will help lift rice prices and the census is agreed among these members that rice is not only a staple but also a main source of revenue for them.

He said a 10% rise each year is acceptable and will not have significant effect on consumers.

"The cooperation can stabilise rice prices and ensure food security in the region," he told a press briefing yesterday.

But Korbsook Iamsuri, president of the Thai Rice Exporters Association, questioned the wisdom of raising prices by 10%, fearing a conflict of interest with Asean members such as Indonesia and the Philippines that are major customers.

In her view, the federation would be better off focusing on production standards and environmentally friendly cultivation.

After leading the world in rice exports for nearly 50 years, Thailand is expected to ship 6.5 million tonnes this year _ just behind Vietnam, which will likely emerge as the No. 2 exporter behind India, according to US data.

Mr Yanyong said Cambodia, which produces 1 million tonnes of rice a year, wants to use Thailand's rice price as a benchmark in order to gain more income.

He predicts that after setting up the federation, export prices for premium white rice could rise to US$660 a tonne from $580-600.

Thailand will also plan to open free-trade zones along its borders by year-end to mill rice for neighbouring countries that lack the facilities to prepare and process rice for exports such as mills, silos and processing units.

Mr Yanyong said the Thai-Cambodian meeting covered discussion on the establishment of a Thai-Cambodian trading zone.

Thailand will also import Cambodian paddy to be milled for exports, which will increase the rice value.

"A similar project is planned for Myanmar border because the country grows even more rice than Cambodia," said Mr Yanyong.

He projected world rice prices would increase because of natural disasters in many countries.

The US Agriculture Department revised down its world rice production forecast to 463 million tonnes from 465 million tonnes due to natural disasters.

Consumption is expected to increase by one to 1.5 million tonnes, reaching 466-467 million tonnes.