Vietnam says no rice cartel agreement yet

Hanoi - RiceVietnamese officials Thursday rebutted a statement by Thai Prime Minister Samak Sundaravej that Vietnam had agreed to join a rice exporters' cartel, saying no decision had been made and that Thai negotiators scheduled to come to Vietnam to discuss the issue in April had not shown up.

"Vietnam has not yet made any official reaction to the initiative," said Deputy Minister of Industry and Trade Nguyen Thanh Bien. "The Thai side planned to come to Vietnam late last month for talks over the issue, but they haven't come yet."

On Wednesday, Samak told press in Bangkok that Thailand, Vietnam, Cambodia, Laos and Myanmar had agreed "in principle" to form an Organization of Rice Exporting Countries, modeled on OPEC. Samak said OREC would attempt to "fix the price" of rice on the international market.

Thailand is the world's number one exporter of rice, and Vietnam is number two. Vietnam exported 859,000 tons of rice in the first quarter of this year, up 5.3 per cent from the same period last year, according to government statistics.

The Thai announcement led to concern on the part of rice importing countries, many of them poor, who face the prospect of rice shortages and hunger due to the 80 per cent rise in rice prices since the start of the year. Earlier Thursday, Agriculture Secretary Arthur Yap of the Philippines, a major rice importer, urged the five prospective OREC members to keep rice exports flowing.

In April, Vietnam limited its rice exports for 2008 to 3.5 million tons, but said it wanted to protect domestic food security, not to manipulate international rice prices.

Tran Tien Khai, an agricultural economist at the Fulbright Economic Training Program in Ho Chi Minh City, said the idea of forming an exporters' cartel to eliminate fluctuations in the rice market had been floating around for years, but that divergent interests made it difficult for the countries to come together.

Thailand has higher-quality rice than Vietnam, and might try to set a higher international price. Forming a cartel would hamper Vietnamese firms' ability to increase market share by offering lower prices.

"Rice is a political commodity," Khai said. "Every country would like to maximize their own power. For countries like Vietnam and Thailand to sit together and have one agreement to control rice prices like this is very difficult."

The price of benchmark Thai B grade rice on the Chicago Board of Trade's index has risen more than 80 per cent this year to over 1,000 dollars per ton, and many Asian countries have seen double-digit retail rice prices in recent weeks as rising demand has met limited available export supplies.

Rising rice prices are part of an overall increase in world food prices which UN's World Food Programme last month called a "silent tsunami" that could drive many of the world's poorest people to the brink of starvation. (dpa)