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Thailand seeks rice price pact with Vietnam to boost 'bargaining power'

Thailand seeks rice price pact with Vietnam to boost 'bargaining power'

FILE PHOTO: A rice mill worker holds up rice fallen onto the ground in Udon Thani, Thailand, September 16, 2015. REUTERS/Jorge Silva/File Photo

BANGKOK: Thailand and Vietnam are in talks on a pact to raise the price of their rice exports to increase their leverage in the global market and improve farmer incomes, a Thai government official said on Friday (May 27).

Agriculture officials from Thailand and Vietnam, the world's second and third biggest rice exporters, met in Bangkok on Friday to discuss joint measures to support their farmers and rice industries and manage growing production costs.

"We aim to raise rice prices, increase farmer income and increase bargaining power in the global market," Thai government spokesperson Thanakorn Wangboonkongchana said in a statement after discussions on the sidelines of a farms expo.

"The rice price has been low for more than 20 years while the cost of production has been increasing."

Vietnam's agriculture ministry did not immediately respond to a request for comment on increasing prices.

Any move to establish a cartel to raise prices would be bad news for buyers and consumers amid rising global food costs. Big exporter Thailand is seeing rising foreign demand for its agricultural commodities, helped by a weaker currency.

Vietnam and Thailand account for roughly 10 per cent of global production of rough rice, and about 26 per cent of global exports, according to the US Department of Agriculture.

So far in 2022, Thai export prices for 5 per cent broken rice have averaged about US$420 a tonne, or 16 per cent more than India's average of US$363.

The chairman of Vietnam's Food Association said his organisation would meet its Thai counterpart in June for more talks on rice production but would not aim to control prices.

"The meeting will focus on measures to cooperate in sustainable food production," Nguyen Ngoc Nam told Reuters. "It's not reasonable to talk about raising or controlling rice prices at this time when the global food price is on the rise."

He said Vietnam's priority was managing exports to ensure its own food security, adding it would export 6 million tonnes of the grain this year, down from 6.24 million tonnes last year.

India, the world's top rice shipper, accounts for about 40 per cent of global supply but prices hit a five-year low this week on a weaker Indian rupee and abundant supply in top exporting countries.

India does not plan to curb rice exports because it has sufficient stocks and local rates were lower than state-set support prices, trade and government sources said on Thursday.

B.V. Krishna Rao, president of the All India Rice Exporters Association, said there had been no approach from Thailand and Vietnam about joining them in a rice cartel.

"If Thailand and Vietnam try to jack up the prices, obviously price sensitive buyers in Africa will shift towards India," he said, adding that a proportion of buyers would opt for Thai or Vietnamese rice "but that section is small."

Source: Reuters/ta

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