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Thailand is seeking a rice price agreement with Vietnam in order to increase its 'bargaining leverage'

Image: Reuters Berita 24 English - A Thai government official said on Friday that Thailand and Vietnam are in talks to enhance the price of ...

Image: Reuters

Berita 24 English - A Thai government official said on Friday that Thailand and Vietnam are in talks to enhance the price of their rice exports to increase their power in the global market and improve farmer incomes.

Thailand and Vietnam, the world's second and third largest rice exporters, met in Bangkok on Friday to discuss collaborative measures to boost their farmers and rice sectors while controlling rising production costs.

After negotiations on the sidelines of a farm expo, Thai government spokesperson Thanakorn Wangboonkongchana stated in a statement, "We hope to boost rice prices, enhance farmer income, and increase negotiating power in the global market."

"Rice prices have been low for more than 20 years, but production costs have been rising."

A request for comment on rising pricing was not immediately returned by Vietnam's agriculture ministry.

Any attempt to form a cartel to raise prices would be bad news for importers and consumers as global food prices continue to rise. Thailand, a major exporter, is seeing an increase in overseas demand for its agricultural exports, aided by a weaker baht.

According to the United States Department of Agriculture, Vietnam and Thailand account for around 10% of global rough rice production and 26% of global exports.

Thai export prices for 5 percent broken rice have averaged over $420 per tonne so far in 2022, which is 16 percent higher than India's average of $363.

The leader of the Vietnam Food Association said his group will meet with its Thai counterpart in June for more discussions on rice output, but would not seek to regulate prices.

"Measures to collaborate in sustainable food production will be the emphasis of the meeting," Nguyen Ngoc Nam told Reuters. "Talking about raising or limiting rice prices at a time when global food prices are rising is not fair."

He stated that regulating exports was Vietnam's top priority in order to secure its own food security, adding that the country would export 6 million tonnes of rice this year, down from 6.24 million tonnes last year.

India, the world's largest rice exporter, accounts for almost 40% of global supply, but prices fell to a five-year low this week due to a weaker Indian currency and plentiful supplies in top exporting countries.

According to trade and government sources, India does not intend to restrict rice exports because it has sufficient inventories and local rates are lower than state-mandated support prices.

According to B.V. Krishna Rao, head of the All India Rice Exporters Association, Thailand and Vietnam have not approached them about forming a rice cartel.

"Obviously, price sensitive clients in Africa will transfer to India if Thailand and Vietnam try to raise prices," he said, adding that a small percentage of purchasers would choose Thai or Vietnamese rice.

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