By Rattaphol Onsanit
Feb. 19 (Bloomberg) -- Thailand, the world’s biggest rice exporter, will ensure its plan to secure supplies with other Southeast Asian nation won’t affect the market after a slump in prices prompted the government to assure returns for farmers.
“Definitely, we will not use the regional stockpile as an outlet to release crops,” Foreign Minister Kasit Piromya said in an interview in Bangkok. “This drive is purely humanitarian.”
Thailand is proposing a stockpile to cope with emergencies after restrictions on shipments last year by producers including Vietnam, the second biggest exporter, drove up prices to a record and sparked food riots from Haiti to Egypt. Southeast Asia, home to 570 million people, consumes about 68 million tons of milled rice a year, according to the U.S. Department of Agriculture.
The 10 member nations of the Association of Southeast Asian Nations will discuss the proposal at its 14th summit in Thailand scheduled to take place from Feb. 27 to March 1, Kasit said.
“We will discuss what the stockpile is for and what the appropriate level will be,” he said. The size “could range between a few percent or 5 percent of consumption.”
Thailand may propose the region should have 3 million tons of rice as a security stockpile, the Nation newspaper reported Jan. 14, citing an unidentified official at the trade ministry.
Southeast Asia comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, Vietnam and Philippines.
Not everyone agrees a regional rice stockpile will work or that it is needed.
‘Not Clear’
“The reason why there is a unified effort now is not clear as most countries have stockpiles,” said Anthony Lam, a general manager at Hong Kong-based trader Golden Resources Development International Ltd. “People would question the intention and what impact governments want on the market.”
Deputy Commerce Minister Alongkorn Ponlaboot said yesterday Thailand and Vietnam have made an initial agreement on devising strategies together on rice supply and prices.
“This is an early step; both sides agreed that we should have a memorandum of understanding,” Alongkorn said. “There will be further discussion at the ASEAN summit.”
Rice Cartel
Thailand and Vietnam, which supply almost half of global rice exports, may lead to cooperation similar to the Organization of Petroleum Exporting Countries, or OPEC, he said last month.
Thailand will in March begin its next round of purchases from farmers at guaranteed returns, Commerce Minister Porntiva Nakasai said yesterday. The program may attract as much as 2.5 million tons of unprocessed rice, adding to 8 million tons of the cereal expected in the current purchase.
The nation set the price for 100 percent, Grade-B rice, a benchmark, at $630 a ton yesterday, down from a record $1,038 a ton, according to the Thai Rice Exporters Association. The price may average $530 a ton this year, the trade ministry said Feb. 17.
To contact the reporter on this story: Rattaphol Onsanit in Bangkok at ronsanit@bloomberg.net
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