May 2, 2008 / 8:29 AM / in 10 years

Rice price overshadows Southeast Asian trade talks

NUSA DUA, Indonesia (Reuters) - Southeast Asian trade officials met on Friday for talks on how to respond to soaring rice prices, after U.S. President George W. Bush proposed $770 million (389 million pounds) in new U.S. food aid to stave off a global food crisis.

A vendor prepares rice in plastic containers at a market in central Jakarta May 2, 2008. REUTERS/Crack Palinggi

The weekend gathering of the 10-member Association of Southeast Asian Nations (ASEAN) on the resort island of Bali, famed for its shimmering green rice terraces, is also discussing efforts to build momentum for long-delayed world trade talks.

“Our minister will talk about the rice price. We share the general concern,” said an official from the Philippines, which is the world’s top rice importer, buying about 10 percent of its annual needs from overseas.

Asian rice prices have almost trebled this year and prices on the Chicago Board of Trade have risen more than 80 percent.

Bush, expressing concern as rocketing world food prices intensified unrest in poor countries, promised on Thursday that the United States would take the lead as hunger takes hold of a greater swathe of the developing world.

“With the new international funding I’m announcing ... we’re sending a clear message to the world that America will lead the fight against hunger for years to come,” Bush said.

The World Food Programme, which has issued an emergency appeal for $755 million to help feed 73 million hungry people in 80 countries, said on Friday it was not yet sure if the new U.S. aid would resolve its funding problems.

“We will have to wait to see how this money is going to be allocated to the different agencies responsible for responding to the impact of global food prices,” said WFP spokesman Gregory Barrow. “But clearly this is a major step for all of us who are engaged in addressing this problem.”

At the Bali talks, which conclude on Sunday and were also involving representatives from Australia, New Zealand, India and the United States, Malaysian trade minister Muhyiddin Yassin said he would press for the “hot topic” of food security to be higher on the agenda.

“RICE SUMMIT”

The world’s biggest rice exporter, Thailand, is also at the Bali meeting of ASEAN economic ministers and an official from its delegation said the seller’s perspective should also be heard.

“The cost for producers, such as fertiliser, is going up. Everything is going up,” said the official.

With only 30 million tonnes traded annually, government export curbs, such as those from India and Vietnam, have spooked importers such as the Philippines and Bangladesh, at a time when global stocks have halved from a record high in 2001.

Media reports quoted Indian commerce minister, Kamal Nath, who is also due to attend the meeting, as saying rice exporters like India, Thailand and Vietnam had a key role and would support Bangkok convening a “rice summit”. No other details were available.

An Indian official in Bali confirmed New Delhi had floated the idea, but doubted it would be brought up at this meeting.

A Thai trade official, who declined to be named, sought to soothe concerns about a further rise in rice prices, reaffirming the country’s policy not to curb rice exports.

“Thailand’s policy remains the same. We don’t have any problem over the supply of rice,” he said.

Thailand should produce around 19 million tonnes of milled rice in 2008, with 7-8 million tonnes for local consumption and the rest for exports and stock, its agriculture ministry said.

Thai Prime Minister Samak Sundaravej recently revived talk of an “OPEC-style” rice cartel in Southeast Asia involving producers Thailand, Vietnam, Myanmar, Laos and Cambodia. But analysts said on Friday the idea was unlikely to gain traction.

“I don’t think it would work. All they can do is agree on a price, but they can’t control the supply like oil,” said Graham Catterwell, an economic analyst with 30 years of experience in Thailand and the region. “It’s going nowhere.”

Writing by Ed Davies; Editing by Alex Richardson and Jon Boyle

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