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Rice cartel hard to swallow
Establishing a joint Thailand-Vietnam rice export price faces significant difficulties. Thailand’s deputy minister of Commerce Alongkorn Ponlaboot last week visited Hanoi to foster rice export cooperation between the world’s largest rice exporters.
He said he would like to see the two trade rivals turn into trade partners to stabilise global market rice prices. World rice prices were especially volatile last year and the average price this year stands at $400-700 per tonne, after reaching $1,000 per tonne early last year.
The Thai newspaper The Nation quoted Alongkorn as saying that during meetings with the Vietnamese Ministry of Industry and Trade (MoIT), the two sides agreed to sign a memorandum of understanding to fix export prices instead of continuing price-cutting policies. He also said that this would ensure sustainable growth in rice exports and stable prices.
This would also benefit Vietnamese farmers, who would generate higher incomes since Vietnam’s rice prices have previously been much lower than Thailand’s $100 to $200 per tonne, he told the paper. However, experts said realising the plan would not be easy.
“At present, it is very hard for Vietnamese exporters to reach a consensus on rice-export prices among themselves. How can we make the two countries’ exporters agree with each other on this?” said a MoIT senior official. He also said that the two countries’ production costs were different so it would be difficult to set a common export price.
Others pointed out that this mechanism would benefit Thai exporters more than Vietnamese ones. “If we set a common price for Thai and Vietnamese rice of the same kind, customers of course will choose Thai rice,” said Nguyen Thi Nguyet, former general secretary of the Vietnam Food Association (VFA).
She explained Thai rice was usually better quality than Vietnamese rice. In addition, Thai rice often has recognisable trademarks which Vietnamese rice lacks.
“Therefore, Thai rice always enjoys higher prices,” said Nguyet. She pointed out that while the price of Thai 5 per cent broken rice last week stood at $550 per tonne, Vietnamese rice of the same variety was sold at only $450 per tonne.
Prof Vo Tong Xuan, rector of An Giang University, said that because rice was the main food source for the world’s poor, it would not be humanitarian for Vietnam and Thailand to cooperate in an aim to increase export prices. He said that the world demand for exported rice stood at 22-28 million tonnes a year. While Thailand can export 10 million tonnes a year, Vietnam only has the capacity to export a maximum of five million tonnes.
“There is a lot of room to manoeuvre for the two largest rice exporters to increase their exports and earnings,” said Xuan. He added that there were other ways to improve farmers’ incomes.
The government should encourage exporters and farmers to work together to establish high-quality rice, which meet international standards, and boost farmer incomes by following co-operative models like the one between the ADC company and farmers in Cai Lay district, Tien Giang province.
VietNamNet, VIR
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