Real cartel threat (1)
The forming of a cartel may impact the security of the region which the United States would need to address.
As the government battles the Manila rice cartel, which dictates the local prices of the staple grain, a threat looms from an enormous monopoly of big rice producers aiming to manage the global rice cost.
Thailand and Vietnam, the world's second and third largest rice exporters, respectively, have taken steps towards a proposed cartel on the strength of their 26-percent control of global exports.
In a report, Washington-based public policy think tank Center for Strategic and International Studies, or CSIS, said that while it remains unclear how the cartel would function, "it would likely involve restricting rice production to raise prices and give suppliers a monopolistic premium."
Considering that the Philippines is now the biggest importer of rice in the world, the prospect of such a cartel forming is worrying.
Fortunately, this is being questioned even by stakeholders in the countries involved.
Rice production, unlike oil, is challenging to control because production is highly fragmented and is determined months in advance by its planting.
It also depends on variables like the weather, rot, and disease. Industry organizations in Thailand and Vietnam have criticized the proposal, arguing that controlling global prices is not feasible without India's 41-percent market share.
In the short term, a rice cartel would enjoy market power, albeit not monopoly. "While basmati rice originates in India, jasmine rice originates in Thailand and is a staple of Southeast Asian diets. The exclusion of India, therefore, would not be fatal to the cartel's implementation," according to CSIS.
The think tank added that the price of certain rice varieties could rise by 20 percent as consumers need more time to adjust dietary patterns that have persisted for centuries.
According to the group, China, which is predicted to remain self-sufficient in domestic rice production for the foreseeable future, could also throw its support behind a cartel.
It would then be easier for the Asian giant to deal with the ASEAN Economic Community by leveraging the cartel.