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Cool response to rice-price cartel proposal

 Cool response to rice-price cartel proposal
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There has been an unenthusiastic reaction among grain traders and analysts to a renewed call for an OPEC-style cartel to get a grip on the spiralling cost of rice. The world’s biggest rice exporter, Thailand, has revived the idea of a body to set prices, also involving Vietnam, Myanmar, Laos and Cambodia. The five countries between them produce 60-million tonnes per year – about 14 per cent of the world’s output.

The cost of Asian rice has rocketed – trebling in price this year alone. But since the beginning of 2004 it has gone up a whopping 490 per cent to just a few grains short of a thousand dollars a tonne – that is 650 euros. And the reasons for the rise? Poor weather in some major rice-producing areas, and a growing demand which is out-stripping supply.

Alex Waugh, the director of the World Rice Association said: “In my opinion and in the view of most in the grain trade, we are not going to see prices collapse back to the level they were. What we are seeing is a real increase and that’s because of rise in demand around the world because of population. We have 80-million new mouths to feed every year which is the equivalent of say Germany. A new Germany every year!”

And with the astronomical price levels, comes the threat of real hardship among those for whom rice is a staple. Several big producers, including India, Vietnam and Cambodia have imposed export restrictions to safeguard supplies at home, and keep local prices down. And there is scepticism about the effectiveness of an OPEC style price-controlling cartel.

Sure, the producers can agree a price, the experts say, but unlike OPEC, they cannot control supply.