Add Your Photos and Video to This Story

Global Food Crisis: Thailand Wants Rice Cartel, U.S. May Cut Back Ethanol

by John E. Carey | May 1, 2008 at 05:27 am | 703 views | add comment

The prime minister of Thailand, Samak Sundaravej, is pushing an idea to create a cartel of rice exporting nations. The cartel, he believes, will set prices and level competition.

Last week Vietnam, the world's number two rice exporter, underbid Thailand and won a contract to supply rice to the Philippines. Then Vietnam said no orders would be filled until June. Vietnam wants to make sure that it has adequate supplies for its domestic market.

Thailand has complained before that the Vietnamese sometimes result to tricky business practices to get business away from Thailand, the world's number one rice exporter.

The cartel of rice-producing countries in partnership with Thailand would include Vietnam, Cambodia, Myanmar and Laos.

China, India and Indonesia are the largest rice producers but those countries consume most of their rice crop domestically.

The idea to create a rice cartel has been discussed for years. But this is the first time Thailand and other nations seem to be planning a serious effort.

“I think it’s time to do it, probably within the term of this administration,” Noppadon Pattama, Thailand’s foreign minister, said Wednesday.

Net rice importers like the Philippines, Singapore and Hong Kong would resist a rice cartel; believing that competition keeps the price down.

In other international rice market news, Pakistan yesterday set a minimum price for rice exports. This move is meant to protect Pakistan's domestic market and to prevent Pakistani exporters from underbidding on the international market -- just as Thailand has accused Vietnam of doing.

Finally, on rice: U.S. prices are at an all time high, even though the supply is plentiful. This is mostly hysteria caused pricing, plus inflation. A 50-pound bags of long-grain rice is now selling for $32 to $38 in many Asian American communities. That, customers said, was an increase of about 35 percent over a month ago.

In many Asian American neighborhoods, high prices don't just apply to rice.

Along Stockton Street in San Francisco's bustling heart of Chinatown, there is no lack of eye-popping products and equally eye-popping prices paid for them. Dried toad goes for $42 a pound, deer tail about $350 apiece, and abalone $428 a pound, a Mother’s Day special.

Ethanol

One quarter of the U.S. corn crop now goes to making ethanol. This deprives farmers of the feed they need to fatten up cattle, pork, lamb and other animals.

This year, American beef farmers are taking cattle to market early. They are just too expensive to feed.

It takes 7 to 9 pound of grain to create one pound of beef. For pork, it takes about 5 to 7 pound of grain per pound of meat.

It now looks as if Congress will pass legislation to lower incentives to farmers to sell corn for ethanol production. Many are now saying all the world's grain needs to be going to make food -- not biofuels.