Chinese Grain Experts Pour Cold Water on Idea of "Rice OPEC"
By Interfax-China
06 May 2008 at 07:26 AM GMT-04:00
SHANGHAI (Interfax-China) -- The formation of a rice cartel similar in
style to the Organization of the Petroleum Exporting Countries faces a
few hurdles, Chinese grain experts have suggested.
The world's largest rice exporter Thailand proposed earlier this month
the formation of a rice cartel together with Laos, Burma, Cambodia and
Vietnam to increase the standing of the five countries in the
international rice market.
"I doubt such a rice monopoly organization could be successful as rice
production is very scattered, particularly in Asian countries. It
would be extremely difficult to control the millions of rice farmers,
which is unlike the few major oil producing countries and
multinationals that are monopolizing the world's oil market," a grain
expert with the Shenyang Grain Bureau, who wished to remain anonymous,
said.
"Moreover, the rice OPEC involves moral issues, but a cartel like OPEC
no doubt takes optimizing profits as its top target. Such a rice
export cartel could threaten the livelihood of 3 billion rice
consumers around the world," the expert said.
Other leading rice producers in the world like China and India also
exert some influence in the international rice market. But China is
unlikely to join such a cartel organization, an unnamed official from
the China Grain Industry Association told Interfax.
"China is the world's largest rice producer and consumer. But it now
only exports a very small proportion of its output to ensure domestic
supplies. Such a policy is unlikely to change in the mid-term," the
official said.
In 2007, China exported 1.34 million tonnes of rice, compared with its
total output of around 130 million tonnes. Thailand and Vietnam were
the world's top rice exporters last year, with exports standing at 9
million tonnes and 5 million tonnes respectively.
Commentary
After seeing how quickly rice prices soared after export restrictions
were announced, it is not surprising that major rice exporters would
consider setting up an umbrella organization to magnify their pricing
power.
As a minor rice exporter, China would be an unlikely candidate for a
"Rice OPEC." Although China may remain officially "neutral," do not be
surprised if China flexes its diplomatic and economic muscles behind
the scenes to quash any moves to create international grain price-
fixing monopolies.
With domestic grain supplies tightening, the government is clearly
opposed to any measures that would result in higher grain prices
internationally, especially as narrowing domestic production surpluses
and shrinking arable land leave the country one mediocre harvest away
from becoming a net importer of corn.
Thailand, Laos, Burma, Cambodia and Vietnam are all close neighbors
with China and well within its sphere of influence. If "Rice OPEC"
talks ever become serious, we will definitely see more frequent visits
from top officials, and possibly investment from state-owned
enterprises, as part of a concerted effort to throw a wrench in their
plans.
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