VZCZCXRO9393
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #1426 1300950
ZNR UUUUU ZZH
R 090950Z MAY 08
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 2982
RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/USDOC WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
UNCLAS BANGKOK 001426
SIPDIS
STATE PASS USTR
USDOC FOR 4430/EAP/MAC/OKSA
USDA FOR OCRA, OGA
E.O. 12958:N/A
TAGS: EAGR ETRD ECON TH
SUBJECT: THAILAND ABANDONS IDEA OF RICE CARTEL
1. Summary: Thailand has abandoned its plans for a rice cartel
among regional rice exporting countries. Thailand's rice-importing
neighbors in Asia had criticized the plan, as had Thai rice
exporters who saw it as unworkable. As an alternative, Thailand has
proposed a Council on Rice Trade Cooperation to promote technology
transfer in rice production and increase productivity. The Council
could benefit global rice trade; long-term cooperation between
export competitors will likely be elusive. End Summary.
2. On April 30, Thailand's Prime Minister Samak Sundaravej publicly
proposed establishment of a cartel between rice-exporting countries
Thailand, Vietnam, Burma, Laos and Cambodia. Although the latter
three are minor players in the rice trade, Thailand and Vietnam
together account for half of global rice exports. Supporters of the
cartel, dubbed the Organization of Rice Exporting Countries (OREC),
said the arrangement would ensure farmers continued to benefit from
higher prices and would even out fluctuations in global rice
prices.
3. On May 6, Foreign Minister Noppadon Patama said Thailand would
not pursue the cartel idea further, saying it would worsen food
security. The plan had met with criticism, particularly from the
Philippines, which has struggled to import sufficient amounts of
rice in the face of skyrocketing prices. Thai rice exporters also
called the plan impractical. Although the five countries in the
proposed cartel control a majority of the global rice trade, they
account for only 15 percent of global production. Continued high
prices would likely spark higher rice production in other major rice
producers, undercutting the cartel. Rice exporters said that
Thailand would also have difficulty restricting rice production
among the millions of private rice farmers, and in any case rice
cannot be stored for extended periods.
4. In place of the cartel, Thailand has proposed to reestablish a
Council on Rice Trade Cooperation (CRTC) to strengthen cooperation
among rice exporters and producers, promote technology transfer and
raise rice yields. The CRTC was initiated in 2002, but failed to
make progress. Vietnam and Thailand have met biannually and
actively cooperate in information and technology exchanges.
However, as the top exporting nations, the two countries remain
strong competitors and private traders say the quality of
information exchanged has been limited.
JOHN