Thailand is dropping plans to create a Southeast Asian rice cartel that would have fixed the price of the skyrocketing commodity over food security concerns, the country's foreign minister said yesterday.

The proposal to create an OPEC-like cartel was first floated last week by Prime Minister Samak Sundaravej to give rice producers greater control over rice prices, which have tripled since December. But the idea was heavily criticized by senators in the Philippines, a major importer, as well as some Thai rice exporters.

"We are not talking about setting up a rice cartel," Foreign Minister Noppadon Pattama said after a meeting with ambassadors from six rice exporting countries in Asia.

"If Thailand sets up an rice cartel and fixes a price, that will make matters worse and worsen food security".

Instead, Noppadon said Thailand proposed holding a meeting on rice in the next month or two that would work with top Asian exporters including India, China, Vietnam, Myanmar, Cambodia and Pakistan to improve productivity. He also said exporting countries would discuss sharing of technology, market information and price information.

Noppadon denied that the about face on the cartel had anything to do with concerns about the impact on the Philippines. "We are sympathetic to all human beings, not just the Filipinos," he said.

Rice prices have tripled this year, with the regional benchmark hitting $1,000 a metric ton for 100 percent Grade B white rice.

The run-up in rice prices has come amid global food inflation, poor weather in some rice-producing nations and demand that has outstripped supply. Some Asian countries, including India and Vietnam, have contributed to the problem by curbing rice exports to guarantee their own supplies.

Supporters say that a rice cartel - tentatively named Organization of Rice Exporting Countries - would ensure farmers benefit from the increasing demand for the staple.

But Edgardo Angara, chairman of the Philippine Senate's Committee on Agriculture, has expressed concerns that a small group of producers could control the staple food and price it out of reach for "millions and millions of people".

"It is a bad idea," he said Friday. "It will create an oligopoly and it's against humanity".

Agencies

(China Daily 05/07/2008 page10)