Thailand Presses for Rice Cartel

Thailand has been pressing for the formation of a rice cartel similar to the petroleum cartel OPEC. Wednesday, the prime ministers of Thailand and Burma discussed the plan. Vichienchot Sukchokrat, a spokesman for the Thai government, said, “With the oil price rising so much, we import expensive oil but sell rice very cheaply and that's unfair to us and hurts our trade balance.” It’s a case of the right problem and the wrong solution. A rice cartel would result in greater starvation than there already is.

The Thai government is trying to get Laos, Burma, Cambodia and Vietnam (all exporters of rice) to cooperate on prices. Cambodia's government spokesman Khieu Kanharith said, “By forming an association, we can help prevent a price war and exchange information about food security.” Laos has also expressed a willingness to participate. Vietnam has not jumped on the bandwagon yet, but it has cut its exports by 22% this year. However, it claims the move was to ensure enough for local consumption and not an attempt to drive up prices.

Naturally, the importers of rice, such as the Philippines, are vehemently opposed. Edgardo Angara, chairman of the Philippine senate committee on agriculture, said, “Almost three billion people are rice eaters. It's not a good idea, it's a bad idea. It will create an oligopoly and it's against humanity.” Usually, this journal is skeptical of politicians who claim anything is against humanity, but in this case, he’s right. Anything that makes a staple like rice more expensive will cause those on the edge of hunger to go right over.

There is also opposition from the Rice Exporters Association in Thailand. Its president, Chookiat Ophaswongse, has said, “When there is a crisis with rice, they [the government] talk about this cartel. You cannot control farmers growing or not growing rice. It's not like oil.” He is entirely correct. Of course, his group would benefit from higher prices but would probably lose out because they’d have their production capped.

The problem of rising prices for rice and other foods is not going to be solved by cartels or government actions. Energy costs have soared and alternatives to petroleum are vital. Solve the energy problem using solar, wind, geothermal, or whatever other renewable source is feasible in the exporting countries, and the need for higher crop prices abates. There is a speculative dimension as well. Stocks and bonds have been poor performers over the last several months, so a lot of money was diverted into commodities, bidding prices up. When Wall Street gets itself sorted out, much of this speculative premium will go away. Energy costs will drop, and so will food prices.

© Copyright 2008 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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