Vietnam revived to lift rice prices

Thailand is reviving talks with Vietnam this week on ways to stabilise rice export prices, which are now well below the record of US$1,080 per tonne seen in April 2008.

Deputy Commerce Minister Alongkorn Ponlaboot, accompanied by representatives from the Thai Rice Exporters Association and Thai Farmers Association, are in Vietnam from today to Wednesday to discuss the issue with the deputy trade minister and the Vietnam Food Association.

According to Mr Alongkorn, Thailand and Vietnam, which account for up to 50% of the world's rice exports, should work closely together to stabilise prices.

''Thailand and Vietnam should jointly set strategic rice prices that will be used as the world's rice reference prices,'' he said. ''For instance, we may set the rice export prices together at no less than US$700 per tonne which reflects production costs and a certain rate of profit to make it fair to farmers who are mostly still poor.''

Thailand and Vietnam export about 15 million tonnes each year, 8-10 million tonnes from Thailand and the rest from Vietnam. The global rice trade averages 30 million tonnes a year.

However, Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said an agreement was unlikely to materialise as Vietnam's rice market is controlled by a socialist government.

''In our visit last November, we proposed Vietnamese exporters bump up the minimum export price by another $50-60 per tonne to shore up prices, but they said they could not do that as everything is the government's decision,'' said Mr Chookiat.

''The negotiation should be done on a step-by-step basis, focusing first on the joint agreement on rice production control in each country. Once the supply of each country gets too big, it will be tough for any talks, as each will need to rush to dispose of its stockpiles.''

Thai white rice cound not compete with Vietnamese grain now, as Thai government intervention has made rice prices relatively high. Benchmark 100% B grade white rice is quoted by Thai exporters at US$610 per tonne, $170 higher than that from Vietnam.