Thailand, Vietnam join hands on rice

Thailand, Vietnam join hands on rice

BANGKOK (DPA): Thailand and Vietnam, which together supply more than half of the world's rice exports, on Tuesday for the first time joined hands in setting prices on the important food grain.

Thai Deputy Commerce Minister Paitoon Kaeowthong and Vietnamese Deputy Minister of Agriculture and Rural Development Cao Duc Phat signed a memorandum of understanding (MOU) in Bangkok on setting up the region's first "rice pool fund."

Under the agreement, Thailand - the world's leading rice exporter, will find the markets and set the prices on low-grade rice and then split export orders with Vietnam on a 50/50 basis, said Paitoon.

The agreement aims at ending a fierce price-cutting war between the two countries on low-grade rice exports. Vietnam has in the past sold it's low-grade rice at US$40-50 less per ton than Thailand, forcing world market prices down.

"We intend to set a fair price for both farmers and consumers, which will not be less than the price it's at today," said Paitoon.

He denied that the agreement would amount to a rice exporter's cartel to dictate prices like the Organization of Petroleum Exporting Countries (OPEC) controls oil.

Both countries will contribute 100,000 tons of rice to an joint stockpile, or "rice pool fund" which could increase to more than a million tons in the future.

"This is a good development, when two agricultural countries join hands to help their farmers sell their products at reasonable prices and create some stability in the market," said Phat.

A past attempt by Asian countries to control world rubber prices failed.

Last year Thailand exported 6.7 million tons of rice while Vietnam's exports amounted to 4.5 million tons. The total rice export market is estimated at about 20 million tons per annum.

"This sounds like a good deal but I'm worried that the two countries won't be able to implement it," said Worapong Pittayapongse, president of the Thai Rice Exporters Association.