“Exporters feel Thai-Vietnamese rice cooperation will be limited to information and technology exchanges,” Ponnarong Prasertsri, a farm specialist at the US embassy in Bangkok, wrote in a note. “Thai rice prices will likely remain high.”

Thai Deputy Commerce Minister Alongkorn Ponlaboot said last month that his country and Vietnam would turn from “competitors to partners” in the trade, and planned to coordinate output, exports and prices. The move follows Thai attempts in 2002 and last year to cooperate with regional countries on rice exports.

“Something like price-setting is very difficult to accomplish,” Chookiat Ophaswongse, president of the Thai Rice Exporters Association, said Monday. “Thailand and Vietnam have different production periods, different storage facilities.”

The price of Thailand’s 100 percent grade-B white rice, a benchmark, was set at US$631 a ton last week, compared with a record $1,038 reached in May.

Thailand and Vietnam hope to sign a memorandum of understanding “on bilateral rice cooperation” by the middle of the year, according to Prasertsri’s note, a weekly update that was posted on the website of the US Foreign Agricultural Service on March 6. For now, inquiries to buy Thai rice are limited because buyers consider prices too high, he wrote.

‘Increased competition’

The US Foreign Agricultural Service last month cited “increased competition” from Vietnam in cutting its forecast for exports from Thailand. Vietnamese exports may reach five million tons in 2009 for the first time in four years, buoyed in part by a widening price advantage over Thailand, the United Nations said last month.

In 2002, Thai Prime Minister Thaksin Shinawatra called for cooperation with rice producers including Bangladesh, China, India, Pakistan and Vietnam. Thailand also said last year it had agreed “in principle” with Vietnam to set up a rice cartel.

“It is a political issue,” said Ophaswongse of the Thai Rice Exporters Association. “When someone new comes into the Commerce Ministry, they want to show the public that they are trying to do something for farmers.”

The current Thai government led by Abhisit Vejjajiva has been in office for about three months. The commerce ministry is led by Porntiva Nakasai.

“Vietnam often has to rush to sell its rice to the market,” Ophaswongse said. “And while Thailand and Vietnam account for about half of global exports, our percentage of total production is very small.”

Vietnamese rice exports surged in the first two months of the year, jumping 104 percent by volume to 919,000 tons, based on preliminary figures from the General Statistics Office in Hanoi. Vietnamese farmers are taking advantage of a bumper winter-spring crop and lower output costs after a drop in the price of input materials, the Vietnam News Agency said March 7.

Thanh Nien News / Bloomberg - March 11, 2009