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.
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.
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