Taiwan: OREC to worsen world food shortage

Rice alliance to worsen world food shortage

Sunday, June 22, 2008
CNA (Taiwan)

TAIPEI, Taiwan -- An organization to be formed by rice exporting countries in Southeast Asia will further worsen the current worldwide shortage of food, a Taiwanese economic expert said yesterday.

The warning came after Thailand's Prime Minister Samak Sundaravej proposed on April 30 the establishment of the Organization of Rice Exporting Countries (OREC) by 2012.

The OREC -- which will also include Vietnam, Cambodia, Laos and Myanmar -- might become a cartel that fixes global rice prices similar to the way the Organization of Petroleum Exporting Countries (OPEC) sets oil prices, said Tu Chaw-hsia, deputy director of the Chung-Hua Institution for Economic Research's Taiwan WTO Center.

Tu said that the cartel would very likely affect the pricing mechanism now driven by supply and demand in global food markets in the future.

This would violate the basic principles and rules of the World Trade Organization (WTO) aimed at promoting free trade, Tu said in her article published in the latest issue of the institution's biweekly Chinese-language journal.

She cited many factors contributing to soaring global grain prices, including the decreasing production of grains in some areas due to climate issues.

Also contributing to higher prices, Tu said, have been moves by many countries to turn crops into biofuel and the rising demand for grains in the emerging markets of China and India.

Global prices of grains began rising moderately in 2002, but have grown rapidly since 2007, Tu observed.

Citing data from the World Bank, Tu said that global prices of grains rose an average of 83 percent over the past three years, substantially lowering the ability of poor countries and low-income earners to buy the dietary staples.

To resolve the food shortage at home, some countries have already banned rice and wheat from being exported or started distributing grains and food, Tu said.

In addition, grain prices might soar further as the United States and European countries have promised to slash farm subsidies, she said.

The promise was made during the ongoing Doha Round of WTO negotiations, in which developing countries strongly criticized developed nations' use of subsidies to prop up their higher-cost agricultural sectors, Tu said.

The subsidies, they argued, have long kept international agricultural commodities so cheap that developing countries cannot compete, Tu said.

Meanwhile, worldwide food shortages have already sparked violence in dozens of developing countries, and Tu said that the problem, if left unsolved, might cause hunger and large-scale epidemics.

The violence is also largely the result of uneven distribution of wealth and income inequality, Tu said, describing these problems as hard to avoid in a highly globalized and liberalized world.

She said the international community now faces the challenge of working together to enhance the development of developing countries and reduce the gap between the rich and the poor.

Vietnam Expresses Support For Rice Cartel, If Development-Based

May 7, 2008 (EIRNS)—Vietnam can join a rice cartel if the organization ensures the interests of both Vietnam and the international community, according to Deputy Minister of Industry and Trade, Nguyen Cam Tu. Vietnam should ensure national food security, economic development, and the interests of rice growers, while helping ensure the world's food supply and prevent food crises, he said.

Various media, including the major financial press, have charged that a rice cartel would drive up prices even futher by withholding rice from the market. The critics also charge that a cartel in rice just won't work, due to the nature of the commodity; rice planting can't be turned off like an oil spigot, the countries won't work together, rice is subject to spoilage, etc.

Instead, as Thailand's Foreign Minister Noppadon Pattama explained after a meeting with ambassadors from six rice-exporting countries in Asia, "If Thailand fixes a price, that will make matters worse and worsen food security." Instead, Mr. Noppadon said Thailand proposed holding in the next month or two a meeting that would work with top Asian exporters, including India, China, Vietnam, Myanmar, Cambodia, and Pakistan, to improve productivity. He also said exporting countries would discuss sharing technology and market and price information.

Hun Sen still wants to discuss OREC after Thailand decided to abandon this plan

Cambodian PM: rice cartel will be discussed in October

PHNOM PENH, May 8 (Xinhua) -- The plan of creating an Organization of Rice Exporting Countries (OREC) will be discussed at the minister level meeting or top leader's meeting in October 2008 in Hanoi of Vietnam, Cambodian Prime Minister Hun Sen said here on Thursday.

"We still have time to make the rice cartel," he told reporters after leaving annual meeting for Ministry of Public Works and Transportation.

"The plan of creating OREC connects from one phase to one phase," he said.

The rice cartel will benefit people in the region and world, headed.

In October, Vietnam will host the meeting of the Ayeyawady-ChaoPhraya-Mekong Economic Cooperation Strategy (ACMECS), which is a cooperation framework among Cambodia, Laos, Myanmar, Thailand and Vietnam.

Rice Isn't Oil, Even If Some Asians Think It Is: William Pesek

Commentary by William Pesek

May 7 (Bloomberg) -- Until last week, the next oil -- the critical resource growing ever scarcer and prompting desperate behavior to ensure supplies -- was water. Turns out, it's rice.

That's at least what some Asian leaders think. Hence a plan in Southeast Asia to create an OPEC-like cartel to manage rice supplies amid record prices. Thailand and Vietnam account for almost half of global rice exports. Add in Cambodia, Laos and Myanmar and Asia's cartel would wield even more power over food prices than OPEC does with oil.

It's a terrible idea. For one thing, an Organization of Rice Exporting Countries, or OREC, would presumably favor high prices. That may benefit producers, but hurt consumers everywhere. For another, the timing is awful with commodity prices reaching unprecedented levels.

Haruhiko Kuroda, president of the Asian Development Bank in Manila, says ``the agriculture market should be market-driven'' and that ``any kind of cartel isn't good for the exporters and the importers.'' Philippines Senator Edgardo Angara says it would ``create an oligopoly and it's against humanity.''

It's hard to see how a rice cartel would even work. With oil, you have reserves -- actual stockpiles of the commodity. Rice needs to be harvested. Its production is dependent on weather, the cost of fertilizer and the availability of arable land and water. And how exactly can you control farmers growing rice or not growing it?

Move Over OPEC

Asia's disparate economies also aren't renowned for cooperation. Among Mekong Delta nations you have a constitutional monarchy, an immature multiparty democracy, two communist states and a military regime -- all at very different levels of development. Seriously, folks, good luck making that work.

The real story here is this: The very idea of a rice cartel speaks to the desperation with which Asia is treating food-price trends.

Food security hijacked recent meetings of the ADB and Association of Southeast Asian Nations, or Asean. At the ADB event in Madrid, there was vague, yet worrisome talk of 1997-like crises in certain Asian nations. Not a regional meltdown that sends contagion across the globe, but scattered ones.

One sign of the anxiety coursing through Asia is talk in India of suspending trading in more food futures as political pressure grows. India has already halted trading in wheat, rice and lentils. Now there's pressure to ban dealing in cooking oil, sugar and other commodities.

Trading Ban

The idea of banning commodities trading sounds farfetched. Markets play an important role in valuing goods and redistributing them. Yet speculation in everything from oil to gold to food is causing froth in prices. There's a speculative bubble in speculation.

It says something about the crazy market environment we're living in when George Soros leaps out of retirement to get in on it. Good timing, too: Soros earned an estimated $2.9 billion last year, according to Institutional Investor's Alpha Magazine.

``If rightly or wrongly people perceive that commodities- futures trading is contributing to a speculation-driven rise in prices, then in a democracy you will have to heed that voice,'' Indian Finance Minister Palaniappan Chidambaram told Bloomberg on May 4.

It makes you wonder why exchanges don't start demanding that buyers take delivery of the commodities they trade. The bottom line is that Wall Street doesn't realize the effect that food prices are having on the developing world.

Food Crisis

Talk of trading bans is enough to send chills down the spines of disciples of Milton Friedman. Then again, one could argue that those who believe oil prices are set by the market are delusional. OPEC ultimately controls the value of oil -- not traders.

Asia is especially vulnerable to rising food costs. It's home to the bulk of the world's population and families living in poverty. Many of the most promising markets are also there.

Global food prices surged 57 percent in March from a year earlier, according to the United Nations. ADB officials estimate food expenditure accounts for 60 percent of household outlays for poor families -- 75 percent when fuel costs are added.

It isn't hard to see why Asia is considering drastic measures. To many in the region, creating a rice cartel seems no more irrational than the Federal Reserve saving Bear Stearns Cos. from collapse. Yet OPEC's influence is a cautionary tale.

Cartel Won't Help

U.S. President George W. Bush in January traveled through the Persian Gulf begging for an increase in oil production to give U.S. consumers a break. Bush's pleas fell on deaf ears.

On the campaign trail, Hillary Clinton has ratcheted up the rhetoric on OPEC. While the summertime gas-tax holiday proposed by U.S. presidential candidates Clinton and John McCain is just plain stupid, she's right to question the world's most-watched cartel.

``They can no longer be a cartel, a monopoly that get together once every couple of months in some conference room in some plush place in the world and decide how much oil they're going to produce and what price they're going to put it at,'' she said in Indiana this week.

Given how global markets are held hostage by OPEC, a rice cartel hardly seems like a wise move.

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: William Pesek in Madrid at wpesek@bloomberg.net

Asia rice exporters to discuss cartel

A Cambodian woman cleans rice for her daily meal at Tram Knar village in Kampong Speu province about 45 kilometers (28 miles) west of Phnom Penh, Cambodia, Saturday March 29, 2008. Cambodian Prime Minister Hun Sen said Monday May 5, 2008 that a proposed OPEC-style rice cartel in Southeast Asia would ensure global food security, rejecting concerns that it would increase hunger and poverty. (AP Photo/Heng Sinith)

MANILA, Philippines (AP) -- Rice-exporting nations planned to discuss a proposed cartel to control the price of the staple food Tuesday, a day after a regional development bank called for sharper fiscal policies to help a billion poor people in Asia cope with skyrocketing food prices.

Underscoring the fallout from price rises that have sparked food riots in Haiti, Egypt and Somalia, the Asian Development Bank said its growth estimate for Asia this year would be cut if prices continued to rise, and that next year would be even worse, erasing the gains made in recent decades across the region.

"Their purchasing power has been eroded, placing them at greater risk of hunger and malnutrition," ADB President Haruhiko Kuroda said of Asia's poor, as the bank opened its annual two-day meeting in Madrid.

The rice market plunged into uncertainty Monday when the Philippines, the world's biggest importer, failed in an attempt to boost its stocks of the Asian staple.

The tender to increase its buffer stock attracted only one bidder, indicating a tightness in global exports, which could push prices even higher, traders said.

On the other hand, the Philippines' decision to delay another tender until prices dip could temper prices because of a lower immediate demand for the grain.

Rice exporters Thailand, Cambodia, Laos and Myanmar planned to meet Tuesday to discuss a proposal by Thailand, the world's largest rice exporter, that they form a cartel.

Ahead of the meeting, whose venue was not immediately announced, the countries sought to assuage concerns that they might force up prices by limiting supplies.

Unlike the Organization of Petroleum Exporting Countries, the purpose of the rice cartel would be "to contribute to ensuring food stability, not just in an individual country but also to address food shortages in the region and the world," Cambodian Prime Minister Hun Sen said Monday.

"We shall not hoard (rice) and raise prices when there are shortages," Hun Sen said.

The Philippines wasn't convinced.

"It is a bad idea. ... It will create an oligopoly and it's against humanity," Edgardo Angara, chairman of the Philippine Senate's Committee on Agriculture, said Friday, adding that the cartel could price the grain out of reach for "millions and millions of people."

Malaysia was considering banning locally grown rice from being taken out of the country to prevent shortages, a Cabinet minister said Monday.

The move was aimed at cracking down on shoppers from Singapore and Thailand who have been taking advantage of cheaper rice and other food items in neighboring Malaysia. Malaysia is not a rice exporter and imports about 30 percent of its needs, but local rice is cheaper than in neighboring countries.

On Saturday, the Asian Development Bank announced emergency funding to help poor countries struggling with rice prices. But it warned that the price of rice and other farm products could keep rising and that would stifle economic growth in the region.

Kuroda, the bank's president, said that a continued rise in food prices would cut growth this year in Asia by just over 1 to 1.5 percentage points, with cuts of 3.4 to 4.2 percentage points next year, depending on whether the increases also triggered inflation and further fuel price rises.

Cartels and neighbors [-Manila's opposition to OREC]

Tuesday, May 6, 2008
Lowdown
By Jojo Robles
Manila Standard Today (The Philippines)

It’s bad enough that five rice-growing countries on the Indochinese Peninsula are planning to form an Opec-style rice cartel. The plan becomes really scary and sinister when its de facto spokesman is a prime minister who has been accused of ordering his notorious Khmeng Wat bodyguards to throw hand grenades at protesters denouncing his government.

Hun Sen, the prime minister of Cambodia, has an interesting explanation of the proposal to put up a cartel of rice-producing nations similar to the one that fixes the worldwide prices of petroleum products that we have come to know—and hate—as the Organization of Petroleum Exporting Countries. According to the Cambodian leader, the Mekong Delta countries that will band together to form the Organization of Rice Exporting Countries or Orec “will not only ensure food security in each of our own countries, but will help solve the entire problem of [food] shortages across the region and the world.”

Cambodia’s premier said the proposed (and self-proclaimed) rice cartel “would not try to manipulate markets.” “We will not stockpile the rice or increase prices,” he promised. “The organization is not intended to strangle the throats of countries that do not have rice.”

Right. And Opec, the inspiration for the banding together of Thailand, Myanmar, Vietnam, Laos and Cambodia into Orec, exists to make sure that there is security in the fuel supply and that the rest of the world is protected from price shocks caused by the unilateral manipulation of prices.

Why is it so hard to believe Hun Sen? Well, only last week, the Cambodian leader was urging his countrymen to start growing rice and other crops because the entire population can benefit from (or cash in on) the global food crisis—never mind if Hun Sen’s own country had been one of the worst-hit by the shortage of rice, which has ordinary Cambodians reeling from a 100 percent price increase in a year.

The resolve of the countries whose high-yield rice paddies are being irrigated by the Mekong River is also frightening. The Thai prime minister—a less scary leader who perhaps should speak for the group henceforth—said formal discussions to put up Orec will start in October.

The Asian Development Bank was quick to oppose any plans to put up an Opec-style cartel that will virtually dictate the supply and price of the cereal. According to ADB president Haruhiko Kuroda, agricultural producers should be market-oriented and countries should focus on increasing productivity in the medium and long term instead of trying to form cartels that will corner the world supply and fix prices.

Officials in the Philippines have also accused their Indochinese neighbors and co-members of the Association of Southeast Asian Nations of being “anti-poor” for even thinking about putting up a rice cartel. But you have to wonder if these same officials would not appreciate being invited to become members of a cartel, had we been self-sufficient in grain and not been importing rice for at least four decades.

* * *

The proposed creation of a rice cartel (and the birth of a class of super-wealthy would-be “rice sheiks,” we can imagine) should provide us in the Philippines with all the incentive we need to become self-sufficient in the cereal at the soonest possible time. And everyone knows it can be done, if the government deploys enough resources in the effort.

At the end of the day, the main reason why a rice cartel cannot ever hold a country like the Philippines that has the capability to grow its own grain hostage is because self-sufficiency is really possible. In fact, given the right support for local farmers such as more and cheaper farm inputs and credit, better varieties and more extensive irrigation and land planted to grain, there is no reason why we cannot stop importing rice altogether in just a couple of years.

Of course, not all countries have the capability to grow their own rice on their own. But even these countries will ultimately be freed from the constant threat of “strangling,” to use Hun Sen’s quaint term, by the cartel. This is because if enough countries that do not belong to Orec start having surpluses and start exporting, prices will drop all over due to the operation of market forces.

Unlike oil, of which there is a finite supply in just a handful of countries, almost any nation in the Asean region can grow more rice and eventually ignore the cartel altogether. And then where will Orec be?

Because rice can be in large amounts using the appropriate inputs and technology, there is no reason for anyone to fear Orec even in the medium term. In the meantime, by proposing their cartel, the five Mekong Delta countries have virtually exposed themselves as opportunistic, rice-based Opec wannabes.

Perhaps the five countries (comprising half of Asean, by the way) signing up for the cartel should try to save face and rethink their plan. They should realize that they are endangering too much goodwill and friendly relations for short-term profit by putting up a cartel that just cannot be sustained for a long period of time—unless they suddenly find a way to ensure that they are the only ones able to grow rice.

As for us, perhaps the government should now throw even more money and other resources at the perfectly attainable goal of self-sufficiency in rice. And when we have made the rice cartel irrelevant, perhaps we should thank our neighbors for forcing our hand on the matter and making us grow enough rice for our own use.

That’s the good part: we can always grow our own rice. Let’s just hope the Delta countries discover in time that cartels don’t make good neighbors.

Cambodian PM: Rice cartel to benefit regional, global food security

PHNOM PENH, May 5 (Xinhua) -- An organization of rice exporting countries (OREC) will help make regional and global food price more stable in the future, said Cambodian Prime Minister Hun Sen here on Monday at a university graduation ceremony.

Unlike the Organization of Petroleum Exporting Countries (OPEC), OREC would contribute to ensuring food price stability not just in individual countries, but to addressing the problem of food shortage in the region and the world, he said.

OREC won't hoard rice to raise prices when there is shortage, so people shouldn't be worried about the creation of OREC, he said.

Meanwhile, he clarified that he himself was the original creator of the OREC concept, as he first mentioned it in 2005 during a meeting of the OREC countries, namely Thailand, Cambodia, Vietnam, Laos and Myanmar.

After all, Cambodia has two million tons of rice for export each year, while Thailand has 9.5 million tons, he added.

On April 30, in response to ever spiraling rice price, Thailand highlighted the idea to establish OREC, which quickly resulted in widespread mixed reactions.

Cambodia surely appeared positive. Minister of Agriculture and Fisheries Chan Sarun told a rural products exhibition in southern province of Takeo on Sunday that OREC aims for common price of rice in order to enhance their capability of rice production, help settle the world food crisis and increase incomes for their farmers.

During a meeting in Indonesia on Sunday, the ASEAN (Association of Southeast Asia Nations) countries, including OREC themselves, agreed for cooperation to stabilize rice price.

However, on the same day during a meeting in Spain, Asian Development Bank's senior officials clearly opposed establishment of the OREC, citing that it contradicted the free spirit of market economy and would bring about disadvantages to both sellers and purchasers.

According to earlier reports, the OREC are now planning to meet as soon as possible to materialize the concept.

The rice exports of Thailand and Vietnam used to account for some 40 percent of the world's total annual export of rice. If Cambodia, Laos and Myanmar are also included, the percentage will rise over 50 percent.

Rice price has been spiraling since 2008 and high-quality rice currently sells some 1,000 U.S. dollars a ton.

Mekong mafia

05/05/2008
Philippine Daily Inquirer

MANILA, Philippines - The announcement by Thai Prime Minister Samak Sundaravej, that Thailand has revived its idea of a rice cartel and was close to forming the Organization of Rice Exporting Countries with four other Mekong Delta neighbors, is deeply disturbing. It tells us that Thailand, a close ally of the Philippines and once a force for moderation in Southeast Asian geopolitics, has succumbed to greed.

Thailand is the world's biggest exporter of rice; Vietnam is the second-biggest. (China and India are bigger producers, by far, but most of their production is consumed domestically). Even without the participation of the three other countries invited to join Orec-Burma (Myanmar), Cambodia and Laos-a cartel that includes Thailand and Vietnam will be certain to dominate today's international rice trade. The three other nations are there merely to disguise the true nature of this price-fixing scheme.

Fortunately, Hanoi is cool to the idea-a logistical nightmare at the best of times, a cruel joke on the world's poor population at this time of peak rice prices. Even more fortunately, many Thais are against the idea. The Bangkok Post, in an editorial, rightly asks whether the "dream of setting prices much higher could bring Thailand a lot of criticism for starving poor people."

The president of Thailand's own Rice Exporters Association sought to put the brakes on Samak's brusque idea. "We view the idea as impractical. It is impossible to fix rice prices. Rice is definitely different from oil because it is a sensitive product. In addition, it couldn't be kept as long."

The cartel doesn't have to work, however; its very existence, during a worldwide rice crisis, will be enough to cause Thailand's reputation great damage.

But apparently, Samak's government has been shopping the idea even with producers like India. He himself has tried to gloss over the cartel-like nature of the proposed alliance, refusing comparisons to the Organization of Petroleum Exporting Countries. "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," he told reporters.

Could Thailand define "helping each other" as fixing rice prices downwards? That's possible, but a Thai initiative to lower prices (which have already doubled since last year) will get Samak's political party in trouble with its base of rural farmers.

Which brings us to the point. Thailand's Orec proposal is motivated not by national interest but by political greed. As the Times of India noted in a report: "The Thai move is evidently aimed at buttressing the fortunes of the ruling party, which depends on rural support, by hiking support price for farmers." In other words, it makes political capital out of the world's current, rice-related misery.

The Philippines, which hosts the International Rice Research Institute, where Thai rice farmers learned the science of higher rice productivity, should demand a stop to the Orec initiative. It is not enough that we ask Thailand and Vietnam to guarantee the continued flow of rice imports; we must force Thailand to reconsider its proposal, because it is against the very spirit of Asean solidarity.

At the same time, the Philippines must devote its energies to achieving rice sufficiency soonest. We may be the top rice importer in the world, but we are not laggards in rice productivity; in fact, we have been increasing production since 1998. We simply have too many mouths to feed, and not enough land to grow rice on. But Thailand's Orec provocation should clarify our options, like a date with an executioner.

Vietnam says no rice cartel agreement yet

Fri, 02 May 2008
DPA

Hanoi - Vietnamese officials Thursday rebutted a statement by Thai Prime Minister Samak Sundaravej that Vietnam had agreed to join a rice exporters' cartel, saying no decision had been made and that Thai negotiators scheduled to come to Vietnam to discuss the issue in April had not shown up. "Vietnam has not yet made any official reaction to the initiative," said Deputy Minister of Industry and Trade Nguyen Thanh Bien. "The Thai side planned to come to Vietnam late last month for talks over the issue, but they haven't come yet."

On Wednesday, Samak told press in Bangkok that Thailand, Vietnam, Cambodia, Laos and Myanmar had agreed "in principle" to form an Organization of Rice Exporting Countries, modeled on OPEC. Samak said OREC would attempt to "fix the price" of rice on the international market.

Thailand is the world's number one exporter of rice, and Vietnam is number two. Vietnam exported 859,000 tons of rice in the first quarter of this year, up 5.3 per cent from the same period last year, according to government statistics.

The Thai announcement led to concern on the part of rice importing countries, many of them poor, who face the prospect of rice shortages and hunger due to the 80 per cent rise in rice prices since the start of the year. Earlier Thursday, Agriculture Secretary Arthur Yap of the Philippines, a major rice importer, urged the five prospective OREC members to keep rice exports flowing.

In April, Vietnam limited its rice exports for 2008 to 3.5 million tons, but said it wanted to protect domestic food security, not to manipulate international rice prices.

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 has higher-quality rice than Vietnam, and might try to set a higher international price. Forming a cartel would hamper Vietnamese firms' ability to increase market share by offering lower prices.

"Rice is a political commodity," Khai said. "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."

The price of benchmark Thai B grade rice on the Chicago Board of Trade's index has risen more than 80 per cent this year to over 1,000 dollars per ton, and many Asian countries have seen double-digit retail rice prices in recent weeks as rising demand has met limited available export supplies.

Rising rice prices are part of an overall increase in world food prices which UN's World Food Programme last month called a "silent tsunami" that could drive many of the world's poorest people to the brink of starvation.

Cambodia to join OPEC-style rice cartel to stabilize global food prices

PHNOM PENH, May 2 (Xinhua) -- Cambodia has an international obligation to participate in stabilizing global food prices, a senior official has declared, as the kingdom moves to join an OPEC-style rice cartel of five ASEAN Nations.

Food must remain affordable if Cambodia is to avoid a "price war" with neighboring countries, Khieu Kanharith, Cambodian Minister of Information and government spokesman, was quoted by the Mekong Times newspaper as saying on Friday.

Referring to recent reports about the formation of a so-called Organization of Rice Exporting Countries (OREC), a proposed price-fixing body similar to the OPEC, he said the issue would be discussed with rice producing nations.

"Because if we do not unite, the world would have a more serious rice market crisis," he added.

Media reported Thursday that Thai Prime Minister Samak Sundaravej had said that Cambodia, Laos, Burma, Thailand and Vietnam need to band together and use their combined influence to exert more control over global rice prices.

Negotiations have not been scheduled so far between the countries but all five have tentatively agreed to join the rice cartel, Thon Virak, deputy director-general of the international trade department at the Cambodian Commerce Ministry, was quoted assaying in the Cambodia Daily newspaper.

The cartel could be expanded to include more ASEAN countries, he added.

The Cambodian government is preparing to conduct research on international rice prices and the possible functioning of the cartel, the newspaper said.

Meanwhile, Hang Chuon Naron, deputy secretary-general of the Finance Ministry, said the rice cartel idea was not new.

Cambodian Prime Minister Hun Sen had brought up the idea publicly last year, he said.

During a 2007 meeting with his Vietnamese counterpart in Phnom Penh, Hun Sen suggested rice exporting countries such as Vietnam and Thailand should form an association to strengthen the position of rice exporters as prices skyrocket.

The cartel would share market information and give each other assistance in producing rice, Hang Chuon Naron said, noting that stabilizing rice prices will add more security to the Cambodian agriculture sector and spawn more investment and growth.

"It will have no negative effect on Cambodian farmers," said Agriculture Minister Chan Sarun, who referred recently to Cambodian rice as the country's "white gold".

On April 24, Chan Sarun declared that the country would be able to produce eight million tons of rice for export annually by 2015.

Economic Institute of Cambodia President Sok Hach said the cartel will raise Cambodia's profile as an exporter, opening up its rice to more markets.

Cambodia, Vietnam and Thailand last year exported a total of 16million tons of rice: Cambodia 1.5 million tons; Vietnam five million tons; and Thailand 9.5 million tons.

Thailand and Vietnam alone control more than 40 percent of world rice exports, according to the UN Food and Agriculture Organization.

Current rice price nearly doubled that of last year in Cambodia, with global prices up from 512 U.S dollars per ton in January 2007to 998 U.S dollars by April 30, 2008.

The Philippines: OREC betrays ASEAN solidarity

GMA ADVISER SAYS RICE CARTEL PROPOSAL BETRAYS ASEAN SOLIDARITY

MANILA, MAY 2, 2008 (STAR) By Paolo Romero - President Arroyo’s economic adviser strongly opposed yesterday proposals to create a rice cartel among rice-producing nations in the region.

Albay Gov. Joey Salceda said from the standpoint of national interest, the proposal of Thai Prime Minister Samak Sundaravej to create a rice cartel to include Cambodia, Myanmar and Laos similar to the Organization of Petroleum Exporting Countries that tries to sets crude oil prices is “clearly a betrayal of Asean solidarity.”

He said an “organization of rice exporting countries (OREC) would control 75 percent of tradeable (rice) surplus in the region.”

“That’s what friends are for in the Asean,” Salceda told The STAR. “In crunch time, you only have yourself to rely on and to blame. Life is cruel.”

He said the only way for the Philippines to address the food situation is to “put real money in agriculture and take care of our farmers and go for rice sufficiency.”

Salceda said the emergence of OREC has a clarifying effect on what “we as a nation should value.” He said the proposed rice cartel makes rice sufficiency a categorical imperative.

President Arroyo had reiterated her assurance of the country’s secure food supply as the government works to stabilize prices of basic commodities.

Press Secretary Ignacio Bunye said the first priority of Mrs. Arroyo is to put food on the table for Filipinos, particularly the poor.

Meantime, Rep. Abraham Mitra believes the advantage that may probably be brought about by five nations to create an Opec-type rice cartel is that it will force the Philippines – once a top rice exporter – to now be self-sufficient.

“One good thing that OREC will probably bring is it will force us to grow more food. If we have the resources to grow rice, then there is no reason why we should allow ourselves to be a hostage of any cartel,” said Mitra.

The congressman, who heads the House committee on agriculture, reminded the government that “we have control over our agricultural policy, and that is to start to be insular-looking when it comes to rice and food security.”

“We are entering an era in which the saying ‘No man is an island’ can be applied no more to rice. At least on this staple, we must strive to grow all our needs,” Mitra said.

He said there is no longer any point in the “previous school of thought” that the country can use its vast tract of land resources “for more lucrative agricultural and non-agricultural purposes, and use the income to buy cheap rice abroad.”

In a statement, Mitra said the “initial rice price shocks” would lead the Philippines to eventually overcome “supply gaps” in the staple. “Necessity is the mother of rice production.”

“To its credit, government is moving towards that direction (self-sufficiency). Funds are being released, agencies are mobilized. Once shunned as a poor cousin of high-value crops like asparagus, rice is again the star of the agriculture program,” he said.

Mitra, on the other hand, allayed fears that the rice production drive would lead to “monocropping” and the eventual loss of the “rich variety of Philippine agriculture.”

With Delon Porcalla

Mekong nations to form Opec-style rice cartel: Thai PM

April 30, 2008
AFP

BANGKOK - THAILAND'S prime minister said on Wednesday his country had agreed in principle to form a rice price-fixing cartel with Myanmar, Laos, Vietnam and Cambodia as costs of the staple grain rocket.

The grouping of Mekong nations would be similar to the oil cartel Opec, and would be called the Organisation of Rice Exporting Countries (Orec).

'I have talked with Myanmar and invited them to join the rice exporting countries cartel, which will include Vietnam, Laos and Cambodia, to fix the price,' Premier Samak Sundaravej told reporters.

He said Myanmar's Prime Minister General Thein Sein, in Thailand for an official visit, had agreed to join, even through the military-ruled nation was not currently a large rice exporter.

'Thailand will help them in terms of technical support to improve their production for export,' Mr Samak said.

Mr Samak said Vietnam, Laos and Cambodia had also agreed to join, and Thai Foreign Minister Noppadon Pattama said Orec should begin meeting soon.

Thailand is the world's largest rice exporter, and shipped an estimated 9.5 million tonnes of rice overseas last year.

World rice prices have soared this year, a trend blamed on higher energy and fertiliser costs, greater global demand, droughts, the loss of rice farmland to biofuel plantations, and price speculation.

International demand for Thai rice has soared after other top exporters Vietnam and India imposed limits on exports to ensure domestic supply.

Thailand has repeatedly insisted it will not limit exports, but on Tuesday the government announced it was releasing its stockpile of 2.1 million tonnes into the domestic market to keep prices stable.

The benchmark Thai variety, Pathumthani fragrant rice, was priced last Wednesday at 998 dollars (S$1,358) per tonne for export, up from 512 dollars a tonne in January this year, the Thai Rice Exporters Association said in a price survey.