The =91Rice-Cartel=92 Pipe Dream
Foreign 2008-05-11 16:28
Competition and disparate production among would-be members make the
rice-cartel proposal unfeasible.
No one knows what is going through his mind, but Thai Prime Minister
Samak Sundaravej, has, essentially, decided to take on Mother Nature.
By asking fellow Southeast Asia rice-growing countries to form a cartel
=97the Organisation of Rice Exporting Countries, an Opec for rice=97Samak
is trying to do the impossible.
First of all, countries like Laos and Cambodia barely grow enough rice
to feed their own citizens. Cambodia aims to export eight million
tonnes of rice by 2015, while Laos, in the same year, hopes to produce
enough to feed its 6.5 million citizens, who by then should number
about 7 million.
Secondly, exporting countries in the region have a long history of
competition, not cooperation, when it comes to this commodity.
Thailand and Viet Nam, the top two rice-exporting countries in the
world, have been at each other=92s throat since the late 1990s. Try to
ask Ha Noi about its clients and see what you get. It=92s the next item
on Viet Nam=92s list of state secrets.
Rice prices have tripled this year, with the regional benchmark
hitting US$1,000 a metric tonne for 100 per cent Grade B white rice.
Increases in the price of rice have come amid global inflation, poor
weather in some rice-producing nations and a demand that has
outstripped supply. Some Asian countries, including India and Viet
Nam, have contributed to the problem by curbing rice exports to
guarantee their own supplies. Economically, rice is considered a
highly elastic product. This means rice eaters can opt for something
else like corn, wheat, and other forms of carbohydrates.
Farm products, especially in Asia, are unpredictable.
Moreover, Asia=92s irrigation system is far from perfect. Growing rice
in Southeast Asia largely depends on the grace of God, not to mention
insects and humidity. One can=92t control rainfall, the essential
element for rice growing. But an Opec member can turn its oil pumps
off or on.
An overproduction of rice would not be the answer, as the product does
not have a long shelf life. In other words, steering market prices is
virtually impossible.
So what can be done?
Filipino senator Edgardo Angara, chairman of the Philippine Senate
committee on agriculture, was quite blunt when he said the idea that a
small group of producers could control a food staple and set prices
out of reach of =93millions and millions of people=94 was immoral.
=93Almost 3 billion people are rice-eaters. It=92s not a good idea. It is
a bad idea...It will create an oligopoly and it=92s against humanity,=94
he said.
The Philippines is paying double what it paid for the same amount of
rice just a year ago and has every right to be frustrated.
For a start, Asean countries can work on information sharing and help
increase member productivity, enabling members to feed their own
citizens. At the heart of this effort should be the well-being and
food security of fellow Asean members.
If Asean is to be taken seriously as a global player, it needs to stop
neglecting the basic needs of its members. The association can also
look beyond its geographical borders, to Africa, for example, where
food security has long been an issue.
In fact, food and energy security is one of the points on which Asean
has agreed to cooperate. In the agreement, rice-growers are required
to reserve food for other members, while energy producers are required
to reserve energy. Sadly, this hasn=92t happened. (The Nation/ AsiaNews)
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