OREC

The 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]

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]

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][8]

The president of the Asian Development Bank, Haruhiko Kuroda opposed the organization saying that it would be bad for both importers and exporters.[9]

In the Asian Journal of Public Affairs, Mathew Brummer discusses the interplay between politics and food security as it to relates to the potential formation of OREC as a price fixing regime: The Cartel of Good Intentions? OREC and Food Security in Asia

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.[10]

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.[11]

Economics

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.[10] 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.[12][13]

Membership

See also

References
  1. "Mekong nations to form rice price-fixing cartel". Australian Broadcasting Corporation. April 30, 2008. Archived from the original on August 24, 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. Archived from the original on May 20, 2008.
  4. "Thailand drops idea for rice cartel". International Herald Tribune. 2008-05-06. Retrieved 2008-05-20.
  5. "Asia rice exporters to discuss cartel". CNN. 2008-05-06. Archived from the original on May 16, 2008. Retrieved 2008-05-20.
  6. 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. "Cartel plan fuels rice fear". The Australian. May 6, 2008. Archived from the original on May 10, 2008. Retrieved May 6, 2008.
  9. "ADB chief opposes OPEC-style rice cartel". Xinhua. 2008-05-03. Archived from the original on May 9, 2008. Retrieved 2008-05-20.
  10. "Interview: OREC proposal "inappropriate" in current situation". People's Daily Online. May 6, 2008.
  11. "Hun Sen: Orec can solve world hunger". Bangkok Post. May 6, 2008.
  12. "Cartels and neighbors". Manila Standard Today. May 6, 2008.
  13. "Rice price overshadows Southeast Asian trade talks". swissinfo. May 2, 2008.
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