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What if rice producers stick together?

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KAI RYSSDAL: With food commoditiy prices holding near record levels some big rice growing countries are taking a page from the global oil markets. They’re thinking of something along the lines of OPEC, only for Asia’s rice growers. Thailand, the world’s biggest rice producer, is behind the idea. We asked Marketplace’s Jeff Tyler whether a food cartel could actually work.

Jeff Tyler: The skyrocketing price of rice is already sparking protests in poor countries around the world. And a cartel that keeps prices artificially high is unlikely to sit well with rice importers like the Philippines and Bangladesh, where many people live on less than a dollar a day.

Eric Wailes is a professor of agricultural economics at the University of Arkansas.

Eric Wailes: Raising the price of rice, which is their staple food, would, I think, be considered in many quarters as immoral and unethical.

Ethics questions aside, Wailes says a cartel might be able to keep prices high, but only in the short term.

Wailes: And it would be untenable, I think, in the longer run.

A rice cartel would not be like OPEC for the simple reason that oil is a finite resource. If non-cartel nations see an economic benefit, they can plant more rice. The U.S., already the world’s fourth-largest rice producer, hasn’t been invited into the cartel. And that may be an advantage.

Thomas Wynn: If the cartel were to be formed and did not encompass the United States, then the United States could potentially benefit from the effects of the cartel.

That’s Thomas Wynn with the U.S. Rice Producers Association.

If the cartel raised prices too high, U.S. rice would begin to look more attractive.

Thomas Wynn: It could potentially mean additional markets. More than likely, it would mean an increase in price for the U.S. farmers.

Thailand has floated the idea of a rice cartel for years. Now, with prices hovering near record highs, it might get off the ground.

I’m Jeff Tyler for Marketplace.

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