Will Thailand's dream of an Asean rice cartel become reality?

IHT reports:

Thailand is reviving plans for a cartel of major rice producers, a move that could benefit farmers by maintaining soaring rice prices but propagate the food crisis for the poorest consumers in Asia.

Previous Thai governments have toyed with the idea of using the country's dominant market position to influence the price of rice in the same way that the Organization of the Petroleum Exporting Countries tries to set crude oil prices.

Higher rice prices may prove problematic -- especially for the poorest countries. But it makes some sense for rice producers from a strict economic perspective:

From a purely economic standpoint setting up an effective rice cartel appears feasible. Unlike corn, wheat and other grains, rice is very thinly traded because only a handful of countries export in large quantities. The largest rice producers, China, India and Indonesia, consume the vast majority of their rice crop domestically.

Thin trading gives countries like Thailand and Vietnam potential leverage to set rice prices.

Further commentary:

• Read a US financial analyst's views about the rice cartel proposal here.
• Will the cyclone that struck Burma impact the price of rice? See this post.