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Thailand, Vietnam make progress on joint rice sale

BANGKOK - Thailand and Vietnam, the world's two biggest rice exporters, have made progress with a plan to sell rice jointly on the world market, a senior Thai official said on Wednesday.

"We had a good talk in details with Vietnamese officials, and the plan is likely to materialise," Niphon Wongtangarn, a director at state-owned Public Warehouse Organisation (PWO) told Reuters. Niphon, who had just come back from talks in Vietnam, said Vietnam had agreed that Thailand would find markets and set the selling price for the rice, estimated at around $155 per tonne on a FOB basis. The official-level negotiations this week followed ministerial talks in June when the two countries agreed to sell jointly 200,000 tonnes of 25 percent broken grade rice, Niphon said.

The two countries would each allocate 100,000 tonnes of the rice and sell it to the world market at the same price. The objective of the co-operation was to prevent price falls caused by competition between the two nations. Thailand is the world's top rice exporter and Vietnam is the second. They have fought fiercely for market share in the past with Vietnam having the edge on prices and Thailand on quality and reliability of supply.

This week, quotations for Vietnamese 25 percent broken grade rice were put at $152-$155 a tonne, FOB Saigon port for July shipment, while Thai rice for the same grade was around $20 higher, Niphon said. Following the talks between the two countries that ended on Wednesday, each government would consider within two weeks whether to approve the plan, Niphon said. "Once the plan is approved, we will start finding markets for the rice," Niphon added. He said the rice could be sold via a government-to-government deal or private deal. Either way, the sales would be on a cash payment basis.

Reuters - July 6, 2000.


Thailand,Vietnam OK rice pool to equalize export prices

BANGKOK - Thailand and Vietnam agreed to set up a "rice pool" to allow the two countries to export rice at the same price, president of Thailand's state-run Public Warehouse Organization Niphond Wongtra-ngan said Thursday. The idea to create the pool for exports is aimed at preventing competitive price cutting between Thailand and Vietnam, the world's two largest rice exporters. Niphond visited Vietnam July 5-7. During the visit, he met with the Vietnam Food Association and Vietnam's Export, Import Department at the Ministry of Trade to finalize the rice pool project.

"Each of the two countries agreed to initially allocate 100,000 metric tons of 25% broken rice to the pool and sell that rice at the same price. The two countries will sell on a 50-50 basis," Niphond said. He said Thailand will allocate rice that the PWO and the Marketing Organization for Farmers bought under the domestic intervention program while Vietnam will allocate rice it received from export companies that are the members of the association. Niphond said sales will be on a cost and freight basis since the rice will be kept separately in each country. Buyers wanting rice from the pool will have to accept Thai or Vietnam origin. He said the quality of Vietnamese 25% broken rice is at the same level as its Thai equivalent.

"We agreed to give 30 days to experiment with the program to see whether it works...If it works, we will expand the pool to have more rice to sell," Niphond said. Niphond expects the PWO and Vietnam Food Association to sign an agreement on this rice pool project in mid-July, after the Thai government's Rice Policy Committee and the Vietnamese rice minister approve the program, Niphond said. The project will benefit both countries, Niphond said. Vietnam will be able to sell rice for more than its current selling price and Thailand won't be asked by brokers and importers to lower selling prices in order to compete with Vietnam, he said. The two countries also agreed to exchange rice trading information including updated export figures, domestic and export prices, and supply and buying orders every Thursday. Thailand, the world's largest rice exporter, aims to export around 6 million tons this year. Vietnam, the second largest, expects to export around 4.3 million tons of rice in 2000.

Group Of Export Countries Mulled

Thailand also plans to persuade other major rice exporting countries including China, Pakistan, India and Myanmar to establish a group to increase the bargaining power of rice exporters in the world market, Niphond said. "I plan to visit China to persuade the country to join in the rice pool project...If China is ready for the talks, I will go to China (this month)," Niphond said. Niphond said Myanmar, also known as Burma, is also interested in the rice cooperation between Thailand and Vietnam. Myanmar's ministry of trade has informed Thailand that it wants to talk with Thailand on the same cooperation. Myanmar exports around 200,000-300,000 tons of rice a year.

Niphond said he is considering establishing the Organization of Rice Exporting Countries or OREC. "The cooperation between rice exporting countries could be introduced in the form of OREC. The OPEC-like cooperation would initially have members exchanging rice trade information," later expanding to a larger scope of cooperation, Niphond said, referring to the Organization of Petroleum Exporting Countries.

Dow Jones - July 6, 2000.