Rice producers in 'cartel' talks

Officials from China, India, Pakistan, Vietnam and Thailand have agreed to open a rice "secretariat", an office that will oversee world markets in the same way that Opec oversees much of the trade in oil.

Wednesday's meeting aims to pin down a minimum global price below which the five countries - which together account for more than three-quarters of world rice output - will not sell.

The minimum price under discussion is reckoned to be equivalent to 1997 levels, since when prices have fallen by almost one-third.

Prices plunge

Without drastic action, rice producers fear prices will only fall further.

According to forecasts released earlier in the summer by the UN's Food and Agriculture Organisation, global rice output is to increase by 10% by 2010, with most of those gains among major producers such as India.

But at the same time, global per capita consumption is to fall by some 2%, leading to an increasing surplus on world markets.

Although increasing populations should help buoy demand, the increasing diversity of diets in poor, rice-dependent countries is bad news for sellers in the long run.

Sensitive plants

Producers also face problems in the short term.

Cartel-type behaviour is common in commodity industries, especially in Asia; Thailand, Indonesia and Malaysia recently signed a deal to prop up rubber prices.

But rice is regarded as especially sensitive, since it plays such a vital nutritional role in some of the world's least developed countries.

In Bangladesh, Cambodia and Myanmar, for example, rice accounts for three-quarters of the average supply of dietary energy, and more than two-thirds of protein.

Aid agencies and donors, therefore, are keen to keep rice affordable.

Producer countries, meanwhile, argue that development is best served by paying farmers a profitable price for their crop.