Thailand and Vietnam agree to form rice pool
BANGKOK - Thailand and Vietnam, the world's two largest rice exporters, agreed to form a
limited rice pool that will attempt to support sagging rice prices in key sales.
According to a memorandum of understanding signed in Bangkok, each of the
two countries will sell 100,000 tonnes of 25 per cent broken rice for $152/tonne,
slightly over the current market price.
Niphon Wongtra-ngan, director of Thailand's Public Warehouse Organisation,
said Manila was expected to buy bulk rice from the newly formed pool. The
Philippines had been hoping to buy 200,000 tonnes of rice from Vietnam at
$140/tonne, but Bangkok persuaded Hanoi to form a pool for the sale to stop
price-cutting. Mr Niphon said that if successful, the pool sale could be the
foundation of an Organisation of Rice Exporting Countries, which he said could
work together to support rice prices, just as the Organisation of Petroleum
Exporting Countries controls petroleum prices.
However, agricultural analysts said they were sceptical that Thailand and Vietnam
- normally competitors in the world rice market - would be able to sustain and
deepen their co-operation when it came to sales of higher-quality rice.
The signing of the deal comes at a time when both Thailand and Vietnam are still
trying to assess the impact of recent severe flooding in key rice-growing areas.
Around 20 per cent of Thailand's rice-growing area has been affected by the
floods.
Although both Thailand and Vietnam are estimated to have lost at least 1m tonnes
of rice due to the monsoon flooding, Bamroong Krichphaporn, president of the
Thai Rice Miller's Association, said he expected only a slight increase in the low
market prices for rice, which is in oversupply.
Thailand grows about 22m-23m tonnes of rice annually and sells 6-6.5 tonnes
abroad. Vietnam produces an average 33m tonnes of rice a year.
By Amy Kazmin - The Financial Times - September 22, 2000.
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