Prime Minister Hun Sen moved to diminish concerns about a proposed rice cartel between five Asean nations Monday, saying it won’t raise prices unfairly and will help—not hurt—the world food crisis.
Some economists in recent days have suggested that the cartel could hurt poorer countries that are already having trouble with increased prices.
But speaking at a graduation ceremony in Phnom Penh, the prime minister dismissed such fears, saying: “Friends should not worry about the creation of this organization.”
Comprised of Cambodia, Thailand, Vietnam, Burma and Laos, the proposed group, to be called the Organization of Rice Exporting Countries, would ensure fair and good prices, but not necessarily high prices, Hun Sen said.
He added that stable prices would encourage more rice production and therefore expand exports and the world food supply.
“It would help the food shortage in the region and the world,” Hun Sen said, adding that country representatives are scheduled to meet in September to discuss the plan.
The countries would initially produce approximately 15 million tons per year, Hun Sen said, adding that Cambodia exports approximately 2 million tons per year. Thailand and Vietnam alone control more than 40 percent of world rice exports in terms of dollar value, according to the UN Food and Agriculture Organization.
And although it would share a similar name, Hun Sen also drew distinctions between OREC and OPEC, the Organization of Petroleum Exporting Countries.
Unlike oil, production of rice cannot be halted, so OREC’s ability to manipulate the rice market is more limited, Hun Sen said. He added that because rice is perishable, it wouldn’t be stockpiled to drive up the price.
SRP lawmaker Yim Sovann said the government needs to reduce the cost of producing rice and make Cambodian farmers more competitive before joining the group. He said the government needs to encourage national production of fertilizer, pesticides and farming equipment to lower overhead costs.
“The government should not only establish the organization,” he said.
Economist Kang Chandararot, executive director of the Cambodia Institute of Development Study, said the idea could raise world food prices but will assist Cambodian farmers. “This is not just a good idea, but a good strategy to improve the price.”
(Additional reporting by Tim Sturrock)
