Opec-style rice cartel?

Hi everyone :)

this is an article which i read in Today a few weeks ago.
the following is my analysis:

1. Cartel is a combination of independent commercial or industrial enterprises designed to limit competition or fix prices (http://www.merriam-webster.com/dictionary/cartel). By forming a cartel, Thailand, Laos, Myanmar, Cambodia and Vietnam will have the largest market share. As such, they will be able to control the supply as well as the prices of the rice.

2. The price of rice has tripled due to various reason:1. Decrease in rice supply as a result of reduction in acreage devoted to rice due to urbanization and poor weather conditions
2. Increase in demand due to greater affluence in China and India (http://www.outsidethebeltway.com/archives/2008/04/the_price_of_rice/)
3. Rice is a staple food for many Asian countries. If the rice producers form a cartel, they will have the ability to control the prices. Having a small group of producers controlling a food staple could be disastrous, since they might jack up the prices to increase their total revenue. As demand for rice is generally price inelastic, an increase in price will lead to a less than proportionate decrease in quantity demanded. Thus forming a rice cartel might give the producers the power to manipulate the rice prices for their own good.

4. The current global food crisis has resulted in consumers speculative-buying and rice-hoarding, prompting rice sellers to further increase rice prices. Thus Thailand hopes that the formation of a rice cartel will influence and stabilise the rice prices.

5. Even if the cartel is formed, countries can still choose to import rice from other countries such as India and Pakistan. This means that the market share of the cartel is not extremely large and thus its influence on the market is not going to be very large. The cartel’s ability to control prices will then be limited.

I just did more research about the rice cartel and found out that Thailand has decided to drop the idea of forming a rice cartel. Apparently, Thailand feels that a rice cartel will “worsen food security”. For more information, pls visit http://www.iht.com/articles/2008/05/06/business/baht.php

that's all!
Mui Suan