World's two biggest rice exporters Thailand and Vietnam may "strengthen cooperation" on rice prices since Thai rice prices will no longer be set by supply and demand.
Read previous articles about Vietnam and rice: Expensive Thai rice: Who will buy it? (28/07/2011) and The rise of Vietnamese rice (26/01/2011) .
The article Is rice cartel a pipe dream? (10/19/2008) ("the idea of rice producing countries in Southeast Asia grouping together to form an Opec-style rice cartel") may also be relevant.
Click button to listen to Thai-Vietnam Rice Price Cooperation to download
RICE: Exporters to meet with Vietnamese by Phusadee Arunmas
Thailand is ready to discuss the impact of a sudden rise in rice prices with Vietnam in order to strengthen cooperation between the world's two biggest exporters to market the grain globally.
Thai rice exporters will meet their Vietnamese counterparts and the Vietnam Food Association in mid-September to evaluate the potential impact of the new government's revival of crop mortgages to help raise farmers' incomes.
The Pheu Thai-led administration has pledged to pay farmers 15,000 baht for a tonne for paddy - about 4,000 baht more than prevailing market rates - during the next harvest starting in November. That could push up the export price of Thai 5% white rice to about US$800 a tonne from around $550 now.
Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, said it would be critical for both countries to review strategy since market prices in effect would no longer be set based on supply and demand. Rising prices for Thai rice will hurt its competitiveness, likely leading to more Thai investment in Vietnam and Cambodia to source cheaper rice.
He said Vietnam was already delaying exports in anticipation of the policy change in Thailand, lowering supplies to drive up prices. Vietnamese 5% white rice is now $550-560 a tonne, only $30 cheaper than similar Thai grain. In the past, the price gap was as high as $100.
"This will create a psychological impact as exporters, millers and farmers have started stocking rice. Thailand is benefiting from Vietnam's slow exports as well," said Mr Chookiat.
He estimates exports in August will reach 810,000 tonnes, bringing the total for the first eight months to 8 million, with full-year shipments at 11 million.
Higher prices will attract more farmers to cultivate rice so production this year may reach 34-35 million tonnes, up from 32 million last year. Next year, volume may reach 36 million tonnes of paddy, or around 22 million tonnes of rice.
Yanyong Phuangrach, the Commerce Ministry's permanent secretary, said Thailand had 5 million tonnes of rice in stock, 2 million held by the government.
He said Vietnam was likely to raise its export prices in line with the Thai price as Thailand has more bargaining power as the world's leading supplier.
The government expects the mortgaging programme to cost 100 billion baht and believes it can effectively manage exports. It also plans to release stocks to packers to sell cheap rice to consumers.
(Source: Bangkok Post, RICE: Exporters to meet with Vietnamese, 20/08/2011, Phusadee Arunmas, link)
Rice Industry Vocabulary
supply and demand - market prices set by supply and demand
market prices - the prices in a "free market" with buyers and sellers bargaining with each other and making deals
market prices set by supply and demand - the prices in which supply equals demand (that match demand with supply, market clearing prices)
market prices in effect would no longer be set based on supply and demand - an end to market prices set by supply and demand
impact - an effect or influence ผลกระทบ
cooperation - working together to achieve shared goals, a situation in which people or organisations work together to achieve a result that will benefit all of them การร่วมมือกัน
grain - a crop like rice or wheat
globally - throughout the world ทั่วโลก
counterparts - people or organisations with a similar function or position or function in different countries or organisations
potential - possible ความเป็นไปได้
evaluate the potential impact - think carefully about what will happen and decide if you are likely to be hurt or not
revival - bringing to life again, to bring back into use something that has not been used for a period of time
administration - one government that a country has for a period of time
pledged - seriously promised to do something สาบาน
paddy - rice after it has been harvested from the field ข้าวเปลือก
harvest - the activity of collecting a crop from the fields, in this case a rice crop การเก็บเกี่ยวผลผลิต
critical - extremely important because a future situation will be affected by it สำคัญยิ่ง
strategy - long-term plans to achieve goals ('strategy' gives the big picture, 'tactics' the details)
review strategy - evaluate strategy, look closely at strategy and make a decision whether to change it or not
critical for both countries to review strategy - very important for both countries to look closely at strategy and possibly change it (to a "rice cartel" for example)
competitiveness - how well a business can do compared to other firms (does it have lower price or higher quality? is able to maintain or gain customers in a market?) การแข่งขัน
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
source cheaper rice - look for and find cheap rice to buy
X in anticipation of Y - X was done expecting that Y will happen (in response to Y likely happening)
policy - 1. a set of plans or action agreed on by a government, political party, business, or other group; 2. a set of ideas and plans used for making decisions นโยบาย (See Wikipedia)
drive up prices - push up prices, cause prices to increase, raise prices
gap - a difference between things; space or opening in the middle of something or between things ช่องว่าง
price gap - a difference in prices
psychological impact - changing or influencing the way that people think about something
estimates - guesses of what the size, value, amount, cost, etc. of something might be การประมาณค่า
attract - to cause someone to be interested in something ดึงดูดความสนใจ
cultivate - to prepare land and grow crops on it เตรียมเพื่อเพาะปลูก, เพาะปลูก
attract more farmers to cultivate rice - make more farmers want to grow rice
volume - the quantity or amount of something
permanent - happening or existing for a long time or for all time in the future ถาวร
permanent secretary - a high level government official (not a political appointment, highest level permanent civil servant)
stock - an amount of something that you keep so that you can use it when you need it ที่เก็บไว้ในสต๊อก
rice in stock - rice stored for future use
in line with - agreeing with, following
X in line with Y - X agreeing with Y; X following Y
bargaining - try to get a better deal from someone (for example, a better price for something you want to buy)
bargaining power - how much "power" you have to control prices during "bargaining"
effectively - working well and producing the results that they wanted
release - to allow something to be available for use ปล่อย
packers - a company in the business of putting rice in bags so it can be sold in stores
release stocks to packers - allow packers to buy rice that they can package and sell
stocks - large amounts stored for future use
consumers - people who buy things (individuals and families)
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