"We should develop a rice strategy together like OPEC," Thai deputy Commerce minister Alongkorn Ponlaboot told reporters Friday at his office near Bangkok. He will visit Vietnam from February 15 to 17.

Thailand is reviving the talks amid a 40% decline in rice exports this year and price drops of 50%. The two countries, which supply almost half of global rice exports, discussed the idea last year before the ousting of Thai prime minister Samak Sundaravej stalled negotiations.

Thai rice exports will probably be lower than 600,000 metric tonnes in February, compared with 1.04 million tonnes a year earlier, Chookiat Ophaswongse, president of the Thai Rice Exporters Association, told reporters Friday.

Prime minister Nguyen Tan Dung has set this year's rice export target at 4.5-5 million tonnes, compared with nearly 4.7 million tonnes last year.

Thanh Nien News - February 19, 2009

Thailand and Vietnam agree to set joint rice-export price

Thailand and Vietnam, the world's two largest rice exporters, have for the first time agreed to establish a joint rice-export price.

The move is a bid to stabilise prices and strengthen competitiveness in the world market.

The two countries reached agreement during the latest meeting between the Thai government and Vietnam Rice Cooperation in Hanoi earlier this week. The successful deal comes at the end of a seven-year effort to create a reference price for rice in the world market. Deputy Commerce Minister Alongkorn Ponlaboot, who led the meeting, said Thailand and Vietnam had agreed to sign a memorandum of understanding for fixing the export price instead of continuing a policy of price-cutting.

"This agreement will ensure sustainable growth in rice exports, because Thailand and Vietnam are the world's biggest rice suppliers. Rice prices will be more stable, because each country will stop undercutting prices," said Alongkorn.

He said the Vietnamese leader was enthusiastic about working with Thailand, because it would create more benefits for his country's farmers. Vietnamese farmers should be able to generate higher incomes, because Vietnam's rice price has previously been much lower than Thailand's US$100 to $200 (Bt3,500 to Bt7,000) per tonne.

There will be four levels of cooperation: between governments, exporters, farmers and academic experts. Leaders of both countries will work out the details during the upcoming Asean Summit in Hua Hin from February 27 to March 1.

Alongkorn said the two countries had not yet settled on an appropriate price, because they needed time to study all of the factors.

The agreement will not be concluded until next year, because under the new Constitution, Thailand must ask for parliamentary approval for all international commitments.

Initially, a fair export price should be set at between $600 to $700 a tonne for four kinds of white rice: 100 per cent, 5 per cent, 10 per cent and 25 per cent. A joint price will not be set for jasmine rice, because it is a premium-quality variety that Vietnam does not grow.

Thai Rice Exporters Association president Chookiat Ophaswongse said it was very difficult for two rice-export rivals to agree on a price-fixing scheme.

"It's hard to set a minimum export price, due to different production costs. However, exporters are expected to tighten cooperation on production, cost reduction and price stabilisation, in order to reduce price-cutting," he said.

Thai rice exporters have found it difficult to compete with Vietnam in recent years, because that country's rice price has been much lower than the Kingdom's.

Early this month, 100-per-cent grade-B Thai white rice was quoted at $575 a tonne, while Vietnam offered it for only $410.

By Petchanet Pratruangkrai - The Nation - February 19, 2009