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OPEC-style cartel for the rice industry?
3rd May 2008
Two stories on the global rice industry attracted my attention last week. The perception that the surge in rice prices is good news across the board for rice producers is questioned by this article in the Financial Times which explains that the dramatic increase in prices is now benefitting smaller producers who have limited storage facilities, face rising costs and have little surplus production available to take advantage of the global price spike. There has been a noticeable increase in rice planting in countries such as Thailand, but by the time the fresh output comes to market, the price may well have fallen a long way from recent highs.
The rest of the article is here
The BBC reports today that Thailand wants to form an Opec-style rice cartel to give it more control over international rice prices. The article can be found here Revision questions for students:
(a) Explain what is meant by a cartel and what its aims might be (b) Briefly explain how a cartel might seek to stabilise the price of rice on world markets (c) Outline the difficulties that a newly formed cartel might have in meeting its objectives
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.