Asian rice market plunges into uncertainty ahead of meeting on possible cartel
MANILA, Philippines (AP) -- Asia's rice market plunged into uncertainty Monday as the world's biggest importer failed in an attempt to boost its stocks and four rice-exporting nations prepared to discuss a proposed cartel to control the staple grain.
Prices have more than tripled this year for the food that many Asians eat with every meal, and costs of other farm products have been skyrocketing, too. The failure by the Philippines to buy rice Monday after a tender to increase its buffer stock attracted only one bidder highlighted global anxiety over the grain.
The offer by only one company to supply the government with 675,000 tons indicates a tightness in global exports, which could push prices even higher, traders said.
On the other hand, the Philippines' decision to delay another tender until prices dip could temper prices because of lower immediate demand for the grain.
That is the uncertain situation that rice exporters Thailand, Cambodia, Laos and Myanmar face as they meet Tuesday to discuss a proposal by Thailand, the world's largest rice exporter, that they form a cartel. They are trying to assuage concerns that they might use such a grouping to force up prices by limiting supplies.
Such a cartel "is not intended to put a stranglehold on countries facing rice shortages," but will help improve regional and global food security in the future, Cambodian Prime Minister Hun Sen said Monday.
Unlike the Organization of Petroleum Exporting Countries, the purpose of the rice cartel is "to contribute to ensuring food stability, not just in an individual country but also address food shortages in the region and the world," he said.
"We shall not hoard (rice) and raise prices when there are shortages," he said.
As the world's largest importer, the Philippines wasn't convinced.
Edgardo Angara, chairman of the Philippine Senate's Committee on Agriculture, fears that a small group of producers could control the staple food and set prices out of reach of "millions and millions of people."
"It is a bad idea. ... It will create an oligopoly and it's against humanity," he said Friday.
The Asian Development Bank on Saturday announced emergency funding to help poor countries struggling with rice prices. But it warned that further price rises may be coming that would stifle economic growth in the region.
Prices of rice and other food staples have been rising rapidly around the world, boosted by poor weather in some nations and rising demand, sparking violent protests in Haiti and Egypt along with concerns of unrest elsewhere amid profiteering and hoarding.
But Australian Trade Minister Simon Crean said the crisis could spawn some good by spurring renewed efforts to liberalize global trade in the Doha round of world trade talks.
"The food crisis is the big jolt to Doha at the moment," Crean told reporters in Bali, Indonesia, where Southeast Asian trade ministers met over the weekend. "Getting an outcome in Doha is an absolute bedrock position for addressing the food crisis in the future."
He said some countries think they can solve food shortages by restricting exports -- erecting more trade barriers -- which adds urgency to the need to achieve a successful Doha outcome.
The Doha round has repeatedly stalled since its inception in Qatar's capital in 2001, largely because of wrangling between rich and poor nations over liberalizing farm trade and, more recently, manufacturing trade.
(Copyright 2008 by The Associated Press. All Rights Reserved.)
