2 of the world's top rice producers are reportedly in discussions about hiking prices, and it's bad news for buyers

Major rice exporter Thailand is seeking to hike rice prices with Vietnam.

Chaiwat Subprasom/SOPA Images/LightRocket/Getty Images

• Thailand and Vietnam — two of the world's top rice producers — are talking about hiking prices.
• Thailand's government spokesperson said they are aiming to increase farmer income and bargaining power.
• Thailand and Vietnam are the world's second- and third-largest rice exporters after India.

Two of the world's top rice producers are in discussions to raise prices together, Reuters reported, citing Thai government spokesperson Thanakorn Wangboonkongchana.

"We aim to raise rice prices, increase farmer income and increase bargaining power in the global market," Thanakorn said on Friday, per Reuters. "The rice price has been low for more than 20 years while the cost of production has been increasing."

Thailand and Vietnam are the world's second- and third-largest rice exporters after India. A price increase in the staple grain would be bad news for billions of people across the world, especially as it comes on top of soaring wheat prices.

Thai Commerce Minister Jurin Laksanawisit told reporters on Friday that the country's rice exports are getting a boost this year due to a recovery in global demand and as the country's currency falls to a five-year low against the US dollar, which is used in the trade of commodities internationally, per Bloomberg.

Vietnam's agriculture ministry did not immediately respond to Insider's or Reuters' requests for comments.

Vietnam's Food Association played down the prospect of measures to boost prices ahead of a June meeting with its Thai counterparts.

"The meeting will focus on measures to cooperate in sustainable food production," Nguyen Ngoc Nam, the chairman of Vietnam's Food Association, told Reuters. "It's not reasonable to talk about raising or controlling rice prices at this time when the global food price is on the rise."

Neither Thailand nor Vietnam are facing a shortage in rice supply this year, according to data from the US Department of Agriculture. However, like in many countries, inflation in both countries has risen sharply in the last year, putting pressure on the government to soften the impact on their populations. About 30% and 40% of the population in Thailand and Vietnam respectively are employed in the agricultural sector, according to the United Nations.

Consumer prices in Thailand are hovering around a 13-year high, having gained 4.71% on-year in April, according to data from the country's Commerce Ministry. Prices in Vietnam rose 2.86% on-year in May, according to data from the country's statistics office.

But consumers could turn to other major exporters for rice — like top exporter India — for supplies.

"If Thailand and Vietnam try to jack up the prices, obviously price-sensitive buyers in Africa will shift towards India," B.V. Krishna Rao, president of the All India Rice Exporters Association, told Reuters. He said neither country has approached India about participating in a rice cartel, Reuters reported.

Benchmark export prices for Thai rice have averaged $420 a metric ton this year — 16% higher than India's $363 a ton, per Reuters. 

Indian trade and government sources told Reuters on Friday that there were no plans to limit rice exports.

Read the original article on Business Insider

from Business Insider https://ift.tt/jvFKzwx