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OREC

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The denomination Organisation of Rice Exporting Countries (OREC) describes a project of a small group of South-East Asian countries to create a homonymous organisation. The group is made up, in alphabetical order, of Cambodia, Laos, Myanmar, Thailand and Vietnam. The project came to the attention of international media after remarks made publicly by Thailand's Prime Minister Samak Sundaravej on the 30th April 2008.[1][2]

It is yet unclear whether the organisation's intention would be to create a rice price fixing cartel similar to the one of the OPEC for petroleum. However, it can be assumed that some price coordination will be the objective given the coincidence of the announcement with rising world-market prices for rice and the fact that all prospective members are traditional rice producers with high current export levels or export potentials for rice.[3] Statements by the involved countries in early May indicated that a price-fixing cartel would only serve to "worsen food security" and the organization's purpose is "to contribute to ensuring food stability, not just in an individual country but also to address food shortages in the region and the world".[4][5]

It can be expected that the organisation would be founded by 2012. Thailand's foreign minister Noppadon Pattama stated, “I think it’s time to do it, probably within the term of this administration,”.[6]

Programmatic discussion / Political agenda

The discussion on a political agenda appears to be of a programmatic nature at this early stage with only few political statements being made to the public. Thailand's prime minister Mr. Samak was quoted in the Thai newspaper The Nation as saying that, “We [OREC] don’t aspire to be like OPEC, but we hope to be just a group of five to help each other in trading rice on the world market”.[6]

A few days later Cambodia's prime minister, in an attempt to allay fears in the region about the creation of rice exporting cartel, specified some of what he thinks may be the core principles of action of OREC, "[...] to contribute to ensuring food stability not just in individual countries but also to address food shortages in the region and the world.". He further added, "We shall not hoard (rice) and raise prices when there are shortages.", and that "[...]our friends in ASEAN should not be worried about creation of this association."[7]

Some indications on the organisations' programmatic future may also be found in the statements of one of its first promoters, Mr. Ngô Văn Tân (poet Tân Văn). In early 2005 he wrote an article in which he promoted the Ideology of Rice Power in Vietnamese language Mạnh Vì Gạo. He paid special attention to the hardship of peasants in rice producing and exporting countries facing price pressures from international buyers.[8]

In another article appearing in the Vietnamese newspaper Saigon Tiep Thi on May 30, 2007 he suggested Vietnam and other rice exporting countries to establish an organization called OREC in order to make rice price "reasonable" and supply stable, thus creating a win-win situation for both buyers and producers. The alternative would discourage farmers from production, thus causing future shortage.[9] The same article appeared again in various Vietnamese newspapers and websites on March 30, 2008.[10] Ngô Văn Tân also promoted the idea of using a portion of profits from rice trade to fight food shortages in poor areas, a form of food redistribution that make the world more fair and just. According to him, this organization would invite all the 21 rice exporting nations to establish a forum and exchange ideas, technologies, marketing strategies and efficient distrubtions to stabilize price and to prevent future starvation due to unforeseen weather changes and disasters. They are:

  • Thailand export 8 million tons (27.60% of global rice exports)
  • Vietnam … 6 million tons (20.67%)
  • India … 4.4 million tons (15.12%)
  • United States … 3.1 million tons (10.6%)
  • Pakistan … 1.8 million tons (6.3%)
  • China (including Taiwan) … 901,550 tons (3.1%)
  • Egypt … 836,940 tons (2.9%)
  • Italy … 668,940 tons (2.3%)
  • Uruguay … 609,170 tons (2.1%)
  • Spain … 346,030 tons (1.2%)
  • Argentina … 257,750 tons (0.9%)
  • Guyana … 256,330 tons (0.9%)
  • United Arab Emirates … 164,350 tons (0.6%)
  • Belgium-Luxembourg … 157,190 tons (0.5%)
  • Myanmar … 150,030 tons (0.5%).
  • Guyana … 256,330 tons (up 59.2% in 2004)
  • Argentina … 257,750 tons (up 45.1%)
  • Egypt … 836,940 tons (up 42.9%)
  • United Arab Emirates … 164.35 (down 14.6%)
  • Spain … 346.03 (down 9.4%)
  • Uruguay … 625 (down 2.5%)

International Reactions

Plans for the creation of OREC were denounced in the Philippines, the world's biggest rice importer. The Philippines is dependent on rice imports and is facing problems in sourcing rice on world markets.[5][11]

The president of the Asian Development Bank, Haruhiko Kuroda opposed the organization saying that it would be bad for both importers and exporters.[12]

History

A first unsuccessful attempt to coordinate prices for rice on world markets was made in 2002 at the occasion of a meeting of senior government officials from major rice exporting countries from ASEAN and India.[13]

According to Cambodia's prime minister Hun Sen the five proposed members of OREC cartel will discuss the organisation at regional talks in October 2008.[14]

Economics

No pertinent economic analysis is available at this early stage.

Critics predict that a cartel on rice may be to the economic detriment of those who initiate it since rice producing countries may be able to expand their land under cultivation in the medium to long term. Members of the cartel may thus lose today's rice export markets with governments pushing towards stronger national production in order to achieve food self-reliance.[13] Controlling the supply-side on a world scale may be a difficult goal to achieve for OREC. Herein can be seen a major difference to the oil-cartel OPEC.[15][16]

Membership

  • Cambodia
  • Laos
  • Myanmar
  • Thailand
  • Vietnam

Website: http://www.orecinternational.org

See also

References

  1. ^ "Mekong nations to form rice price-fixing cartel". Australian Broadcasting Corporation. April 30, 2008.
  2. ^ "PM floats idea of five-nation rice cartel". Bangkok Post. May 1, 2008.
  3. ^ "Mekong nations to form OPEC-style rice cartel - Thai PM". Forbes. April 30, 2008.
  4. ^ "Thailand drops idea for rice cartel". International Herald Tribune. 2008-05-06. Retrieved 2008-05-20.
  5. ^ a b "Asia rice exporters to discuss cartel". CNN. 2008-05-06. Retrieved 2008-05-20. [dead link]
  6. ^ a b Fuller, Thomas (May 1, 2008). "5 Asian Nations Are Weighing a Rice Cartel". The New York Times. Retrieved May 20, 2010.
  7. ^ "Cambodian leader tries to allay fears about creation of rice exporting cartel". International Herald Tribune. May 5, 2008.
  8. ^ "Fair Trade Price" (in e). Engage The World.{{cite web}}: CS1 maint: unrecognized language (link)
  9. ^ "Ăn gạo ít thôi!" (in Vietnamese). Saigon Tiep Thi. May 30, 2007.
  10. ^ "Phát ngôn - Hành động ấn tượng tuần này?" (in Vietnamese). Tuan Vietnam. March 30, 2008.
  11. ^ "Cartel plan fuels rice fear". The Australian. May 6, 2008.
  12. ^ "ADB chief opposes OPEC-style rice cartel". Xinhua. 2008-05-03. Retrieved 2008-05-20.
  13. ^ a b "Interview: OREC proposal "inappropriate" in current situation". People's Daily Online. May 6, 2008.
  14. ^ "Hun Sen: Orec can solve world hunger". Bangkok Post. May 6, 2008.
  15. ^ "Cartels and neighbors". Manila Standard Today. May 6, 2008.
  16. ^ "Rice price overshadows Southeast Asian trade talks". swissinfo. May 2, 2008.
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