Wacky Proposal for a Rice Cartel

Sometimes there are stories which are so self-refuting that it’s hard to provide further commentary. Such is the announcement that China, India, Pakistan, Thailand and Vietnam are investigating ways to cartelize world rice markets. They want to do for rice what OPEC has done for oil.

Rice prices have been in free fall since 1997, losing more than a third of their value in just 5 years. World projections show rice production continuing to increase, so the price of rice is likely to fall even further over the next few years while global consumption is projected to decline.

Under those conditions a cartel is a great idea for producers, but how do they ever expect to enforce cartel agreements? OPEC has had a nightmare enforcing its cartel agreements on oil which is a relatively easy commodity to track and exclude potential competitors (not to mention monitor violators). Since rice can be grown throughout most of the world, there is almost no way cartel efforts can succeed.

Ironically, each of the governments involved has had disastrous experience with state subsidies and internal control of food markets. Apparently they believe that if they simply try the same failed policies on a bigger scale that they might finally work. Don’t bet on it.


Rice producers in ‘cartel’ talks. The BBC, October 9, 2002.

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