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Manila: Asia's rice market plunged into uncertainty on Monday as the world's biggest importer failed in an attempt to boost its stocks and four rice-exporting nations prepared to discuss a proposed cartel to control the staple grain.
Prices have more than tripled this year for the food that many Asians eat with every meal, and costs of other farm products have been skyrocketing, too. The failure by the Philippines to buy rice yesterday after a tender to increase its buffer stock attracted only one bidder highlighted global anxiety over the grain.
The offer by only one company to supply the government with 675,000 tonnes indicates a tightness in global exports, which could push prices even higher, traders said.
On the other hand, the Philippines' decision to delay another tender until prices dip could temper prices because of lower immediate demand for the grain. That is the uncertain situation that rice exporters Thailand, Cambodia, Laos and Myanmar face as they meet today to discuss a proposal by Thailand, the world's largest rice exporter, that they form a cartel. They are trying to assuage concerns that they might use such a grouping to force up prices by limiting supplies.
Such a cartel "is not intended to put a stranglehold on countries facing rice shortages," but will help improve regional and global food security in the future, Cambodian Prime Minister Hun Sen said yesterday.
The purpose of the rice cartel is "to contribute to ensuring food stability, not just in an individual country but also address food shortages in the region and the world," he said.
"We shall not hoard [rice] and raise prices when there are shortages," he said.
As the world's largest importer, the Philippines wasn't convinced.
Edgardo Angara, chairman of the Philippine Senate's Committee on Agriculture, fears that a small group of producers could control the staple food and set prices out of reach of "millions and millions of people. It is a bad idea. ... It will create an oligopoly and it's against humanity," he said Friday.
A Malaysian Cabinet minister said yesterday that the government may ban locally grown rice from being taken out of the country to prevent shortages.
The move is aimed at cracking down on shoppers from neighbouring Singapore and Thailand who take advantage of cheaper rice and other food items in Malaysia. Malaysia is not a rice exporter and imports about 30 per cent of its needs, but local rice is cheaper than in neighbouring countries.
The Asian Development Bank on Saturday announced emergency funding to help poor countries struggling with rice prices.
But it warned that further price rises may be coming that would stifle economic growth in the region.
Prices of rice and other food staples have been rising rapidly around the world.
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