OPEC-style rice cartel proposed

Friday, 2 May 2008 19:52

The Prime Minister of Thailand has revived the idea of an OPEC-style Southeast Asia rice cartel.

However, analysts said the plan will not work due to the inability of governments to co-operate with each other and control output from their farmers.

The proposal by Samak Sundaravej the Thai PM, who also happens to be a TV chef, threatens to add to global food supply fears amid record high rice prices.

But it failed to gain traction seven years ago when it was first floated by Bangkok and most see little chance it will fare better this time around.

The five mainland Southeast Asian nations (Thailand, Laos, Myanmar, Cambodia and Vietnam) produce a combined 60 million tonnes of milled rice each year, about 14% of world output.

But only Thailand, the world's number one rice exporter, and Vietnam have major surpluses, last year accounting for about 47% of world wheat trade.

Mr Samak held talks with visiting Burmese Prime Minister Thein Sein and afterwards said they had agreed in principle to the idea.

Burma has resumed limited rice exports this year, mainly to South Asia, after several years off the market.

The proposed group, which includes two democracies, two Communist-led governments and a military dictatorship, appears in no hurry to hammer out the details.

Agriculture ministers will discuss the proposal in September at a meeting of the 10-nation ASEAN regional group in Vietnam.

Story from RTÉ News: http://www.rte.ie/news/2008/0502/food.html

Another article from AP: Thailand floats idea of OPEC-style rice cartel

Questions (with the help of both articles)

1. What are some of the factors determining the success of the rice cartel?
   
2. Assess the short and long term impacts of the rice cartel on producers, consumers and society as a whole, in a rice exporting country as compared to a rice importing country.

and have a look at this very current local example of suspected price fixing...

The Competition Commission of Singapore("CCS") investigates possible price fixing again

- The CCS is currently investigating a suspected breach of the Competition Act (Cap. 50B) by four Singaporean suppliers of a traditional Chinese confectionery commonly used for prayers (发糕 - see pic) [read more]