Thailand and Vietnam want to raise the price of rice on the world market

Thailand and Vietnam have reached an agreement to raise the price of locally produced rice on the global market amid soaring costs for farmers.

The agreement with Vietnam is the first of its kind, said Minister of Agriculture and Cooperatives Chalermchai Sri-on, adding that both countries would immediately set up special teams to promote the idea at home.

The agreement was reached at the end of recent discussions between the two countries on rice export prices, he added.

Alongkorn Ponlaboot, his adviser, has been appointed to head Thailand's price negotiation team, while the ministry has been ordered to hold meetings with farmers' associations, millers, exporters and other relevant groups, Mr. Chalermchai said.

In upcoming meetings, details of the Thai-Vietnamese rice agreement will be discussed so that all parties know what could be done next to increase the price of exported rice, depending on rising costs, he added.

"The agreement is the first step in cooperation between Thailand and Vietnam to help rice farmers obtain fairer export prices by using the pricing mechanism in the global market," Mr. Chalermchai said.

While rice farmers have been hit hard by the dual crises of the Covid-19 pandemic and the war between Russia and Ukraine, global rice prices have changed little, he said.

Thailand, the world's third-largest rice exporter, and Vietnam, the second-largest exporter, will join hands to negotiate a reasonable increase in rice prices on the world market, he said.

Last year, India exported the largest volume of rice, at 19.55 million tonnes, while Vietnam and Thailand exported 6.24 million and 6.12 million tonnes, respectively, Alongkorn said.

Thailand has set a target of exporting 7 million tonnes of rice this year, he added.

See: Thailand's Rice Production and Exports Increase

About 3.99 million tonnes of the product, worth 70.34 billion baht, were exported between January and July, representing a 58.2 percent increase in quantity compared to the figures for the same period last year, he said.

However, the value of exports increased by only 34.1 percent, he added.

To implement the agreement, Thailand and Vietnam will then work to create a government negotiating mechanism, while trying to convince other rice-exporting countries to join the initiative, he said.

“Pushing for fairer prices is a mission and a responsibility of all rice-producing and exporting countries,” said Mr. Alongkorn.

"And as climate change affects rice cultivation and yields worldwide, all parties must work together to ensure global food security."

Rice farmers would no longer be able to cope with unfair rice prices on the world market if they were left alone without help or cooperation, he added.

While the war between Russia and Ukraine has increased rice production costs, rice prices have simply not increased proportionally, he added.

Currently, the cost of rice production in Thailand has nearly doubled to between 7,500 and 8,000 baht (205.54 and 219.24 euros) per tonne of rice, compared to only between 4,500 and 5,000 baht (123.32 and 137 euros) per tonne of rice two years ago, said Pramot Charoensin, president of the Thai Farmers Association.

What farmers really need is government help to reduce production costs and achieve fairer rice prices, he added.

Vietnam is in a better situation than Thailand because labor costs are lower in the rice farming sector, he added.

Vietnam's production cost is about USD 100 (about 3,600 baht) lower per tonne of rice produced than Thailand's, he added.

He welcomed Thai-Vietnamese cooperation on rice prices, but warned that India still has the most leverage in setting rice prices on the world market due to its position as the largest exporter.

Therefore, if Thailand and Vietnam start selling their rice at much higher prices, these rice-buying countries could turn to India for rice supplies, he said.

Rangsan Sabaimuang, president of the Thai Rice Mills Association, also supports fairer prices for all parties, but doubts the attempt will ultimately succeed.

"The question is why these oil-exporting countries were able to form the Organization of the Petroleum Exporting Countries."

"I would like this to be taken as a model," he said, referring to the formation of an OPEC-like group to regulate rice prices.

Attempts by various parties on the world stage to achieve fairer prices for agricultural products have never succeeded over the past three or four decades, he said.

Thai-Vietnamese cooperation has therefore become the first step for this cooperation to become a reality, he said.

"More competition in the export of rice and agricultural products," he said.

“Only cooperation will allow rice farmers to survive.

Food security is a shared responsibility.”

Source: Bangkok Post