The cabinet yesterday approved the Commerce Ministry's plan to develop a rice trade partnership with Cambodia, Laos, Myanmar and Vietnam to stabilise international rice prices.

The ministry's proposal involves the creation of a rice trade zone with the neighbouring countries, according to deputy government spokesman Pakdihan Himathongkam.

The plan will include meetings with government officials from all five countries as well as representatives from the Asean rice cooperation committee and Asean rice millers and traders' associations.

Closer commercial and governmental cooperation built into the rice trade zone is expected to stabilise rice prices in global markets, promote food security in the region, and prevent the smuggling of rice from neighbouring countries.

It is believed rice smugglers are attempting to cash in on Thailand's rice pledging scheme.

The cabinet asked the Commerce Ministry to form a working group to arrange and plan for the creation of the trade zones.

According to a source at the Commerce Ministry, the rice trade zone project will begin with Cambodia and will involve rice trade in the border areas of Thailand and Cambodia. The zone in Thailand will cover Buri Ram, Si Sa Ket, Sa Kaeo, Prachin Buri and Chachoengsao provinces.

Paddy from Cambodia will be imported and milled in Thailand and then exported from Thailand on behalf of Cambodia.

The process will be controlled to prevent Cambodian rice from being mixed with Thai rice connected to the rice pledging scheme.

At present, Cambodia's rice supply exceeds its demand by over 1 million tonnes. The country exports part of its rice to Vietnam and the rest of the excess spills into Thailand across the border.

Cambodia has insufficient mills and warehouses to handle all its rice. This forces the country to hastily export its rice at low prices, dragging down prices on the global market.

The Thai government plans to handle Cambodian rice through the rice trade zone project as a way to manage stock levels.

Officials said that the arrangement will provide Cambodia with more channels to release its rice while stabilising prices.The programme will also benefit Thailand as Cambodian rice will not have to be exported quickly and more cheaply than Thai rice.

The trade zone is also expected to eliminate illegally smuggled rice from the Thai rice pledging scheme.

Source: Bangkok Post