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Rice summit to head off price
war
By Marwaan Macan-Markar
BANGKOK - Thai officials are hoping that an
October meeting here of Asia's leading rice-exporting
countries will sow the seeds of a solution to the thorny
issue of price-undercutting in the global rice trade.
Thailand's interest in pushing for the October 9
Rice Cooperation Meeting is hardly surprising, since the
cheaper supply of rice by its competitors threatens to
dislodge it as the world's leading rice exporter.
"What is needed is cooperation between the rice
exporting countries, given the current rice market,"
said an official at the Thai Ministry of Commerce. We
are hoping that the meeting will result in an open
exchange of information on production, agriculture
policies, stocks for export, prevailing competition and
prices."
Next month's meeting will be attended
by food and trade ministers from Asia's five major rice
exporters: Thailand, India, China, Pakistan and Vietnam.
The five countries account for nearly 70 percent of the
world's rice trade, which the Food and Agriculture
Organization (FAO) estimates to be in the tune of 25
million tons this year, a million tons higher than in
2001.
A look at the rice prices of the different
exporting countries shows the variety in the amounts
they quote for selling the staple, 90 percent of which
is produced and consumed in Asia.
Currently,
Indian rice sells for US$135 per ton as opposed to the
$200 per ton for a variety of Thai rice. Vietnam has a
rice variety that is sold at $191 per ton, and Pakistan
sells rice ranging from $170 per ton to $370 per ton.
Thailand, as the world's leading rice exporter,
is expected to ship close to 7.5 million tons to foreign
markets, the Rome-based United Nations food agency says
in its August edition of the Rice Market Monitor.
The lead taken by Thailand to host next month's
meeting comes after the failure of a previous effort it
initiated at the beginning of 2001 to achieve a measure
of cooperation. On that occasion, only Thailand and
Vietnam were involved in creating what Bangkok termed "a
rice pool", in effect a rice cartel that aims to
stabilize world rice prices. Others such as China,
India, Pakistan and Myanmar showed less interest in the
idea.
But Thailand's latest effort to achieve
stability in the global rice trade is winning support
from some quarters. The October meeting is "extremely
timely, [we are] concerned with the livelihood and food
security in the region", said Ashvin Dayal, the East
Asia regional program manager at Oxfam, the British
development agency.
Over the past 12 months, the
Asian region has witnessed "the kind of downward
undercutting taking place [in rice prices] as a result
of lack of cooperation", he added, pointing to the stiff
competition among India, Vietnam and Thailand to supply
rice to the Philippines.
A Thai rice exporter
also sees some merit in Bangkok's effort to host the
meeting if "price undercutting" is taken up during the
sessions. "The government must urge cooperation between
exporting countries to avoid the way prices are reduced
to get a larger slice of the market," said Vichai
Sriprasert, president of the Thai Rice Exporters
Association.
But there are skeptics who question
such a push toward cooperation, saying it will be far
too difficult to sustain it over the long term. They are
also questions about who will line up behind the Thai
initiative.
"The rice market is very thin and
cannot be controlled and the trade volume is low," said
Somboon Siriprachai, an economist at Bangkok's Thammasat
University. "The price of rice has been declining since
1980 and [Thailand] should accept the competition and
shift to other products."
Said Concepcion Calpe,
a senior rice commodity specialist at the FAO: "For this
type of cooperation to succeed, you need to have a lot
of exporting countries agreeing to common terms."
Calpe doubts that India will sign up, given the
strides it has made in the global rice trade over the
past two years, including coming within striking
distance of Thailand's dominance of the market. India's
achievement, said Calpe, stems from subsidies pouring
into the farming sector, which allow farmers to sell
their product at a lower price to stay competitive.
An Indian government official, however, denies
that India's rice prices, which at $135 a ton are the
lowest on the global market, have benefited from
government subsides.
But certainly, "India's
presence in the market over the last two years is being
felt by other countries," said Calpe. "Other
rice-exporting countries are losing their traditional
markets due to the prices at which India is selling its
rice."
The FAO's Rice Market Monitor reflects
that view, too. "As for exports in 2002, competition for
international market shares has intensified with India
forecast to make further inroads," the report states.
Thai trade officials are hoping that some of
these issues will surface at the meeting next month,
since Bangkok wants it to "be open and informative".
Thailand, according to him one official, will circulate
a "concept paper" on how Asia's rice-exporting nations
could jointly achieve results that would satisfy the
rice farmers, the export sector and the countries
importing rice.
"Rice farmers," said the Thai
official, "have been affected by the fluctuating prices.
They need to get a good deal."
(Inter Press
Service)
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