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Cambodia to join OPEC-style rice cartel


May 2, 2008

Cambodia to join OPEC-style rice cartel

Cambodia has an international obligation to participate in stabilising global food prices, a senior official has declared, as the kingdom moves to join an OPEC-style rice cartel of five Asean Nations.

Food must remain affordable if Cambodia is to avoid a "price war" with neighboring countries, Khieu Kanharith, Cambodian Minister of Information and government spokesman, was quoted by the Mekong Times newspaper as saying on Friday.

Referring to recent reports about the formation of a so-called Organization of Rice Exporting Countries (OREC), a proposed price-fixing body similar to the OPEC, he said the issue would be discussed with rice producing nations.

"Because if we do not unite, the world would have a more serious rice market crisis," he added.

Media reported Thursday that Thai Prime Minister Samak Sundaravej had said that Cambodia, Laos, Burma, Thailand and Vietnam need to band together and use their combined influence to exert more control over global rice prices.

Negotiations have not been scheduled so far between the countries but all five have tentatively agreed to join the rice cartel, Thon Virak, deputy director-general of the international trade department at the Cambodian Commerce Ministry, was quoted assaying in the Cambodia Daily newspaper.

The cartel could be expanded to include more Asean countries, he added.

The Cambodian government is preparing to conduct research on international rice prices and the possible functioning of the cartel, the newspaper said.

Meanwhile, Hang Chuon Naron, deputy secretary-general of the Finance Ministry, said the rice cartel idea was not new.

Cambodian Prime Minister Hun Sen had brought up the idea publicly last year, he said.

During a 2007 meeting with his Vietnamese counterpart in Phnom Penh, Hun Sen suggested rice exporting countries such as Vietnam and Thailand should form an association to strengthen the position of rice exporters as prices skyrocket.

The cartel would share market information and give each other assistance in producing rice, Hang Chuon Naron said, noting that stabilizing rice prices will add more security to the Cambodian agriculture sector and spawn more investment and growth.

"It will have no negative effect on Cambodian farmers," said Agriculture Minister Chan Sarun, who referred recently to Cambodian rice as the country's "white gold".

On April 24, Chan Sarun declared that the country would be able to produce eight million tons of rice for export annually by 2015.

Economic Institute of Cambodia President Sok Hach said the cartel will raise Cambodia's profile as an exporter, opening up its rice to more markets.

Cambodia, Vietnam and Thailand last year exported a total of 16million tons of rice: Cambodia 1.5 million tons; Vietnam five million tons; and Thailand 9.5 million tons.

Thailand and Vietnam alone control more than 40 percent of world rice exports, according to the UN Food and Agriculture Organization.

Current rice price nearly doubled that of last year in Cambodia, with global prices up from 512 U.S dollars per ton in January 2007to 998 U.S dollars by April 30, 2008.

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