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PRECIOUS HANDFUL: A farmer in Thailand readying padi for sowing. With rice prices soaring, some farmers in Thailand are planting a rare third crop this year. -- PHOTO: REUTERS
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BANGKOK - EVERY Wednesday for as far back as anybody can remember, a small group of Thai-Chinese businessmen have met for lunch down a leafy lane in central Bangkok before sitting down to set world rice prices.
For decades it was a sedate affair, a bowl or two of, appropriately, rice followed by a leisurely chat between old friends about anything affecting global supply and demand: a bad flood, say, in Thailand, the world's biggest exporter, or a failed harvest in Iran.
Full of food and the latest news, these 35 barons of the rice world would then recommend a price per tonne only a few dollars different from the previous week, before heading for home.
It may only have been an 'indicative' level, but few countries or exporters could risk deviating too far from the benchmark set by the big hitters of Thailand's Rice Exporters Association, the guardians of nearly a third of all the rice to be traded globally.
That all changed when India imposed export curbs to protect domestic supplies. Vietnam, which vies with India to be the world's No. 2 exporter, followed suit, triggering concerns about Asia's ability to feed itself and pushing prices to record highs of US$1,000 (S$1,357) a tonne, three times their 2007 average.
Some traders are now saying Thai 100 per cent B grade white rice, the world's benchmark, could hit US$1,300 a tonne, making governments across Asia nervous about the soaring cost of the region's staple food.
Suddenly, a lot of eyes are trained on the second-floor boardroom of the Rice Exporters Association in Bangkok.
'It's been a tradition for many years. They have lunch first at 12, and then at 1 they review the situation in world markets,' association managing director Charin Hansuebsai told Reuters.
'But the mood has changed a lot in the last few months. In the past, the price moved very slowly, but now it's very difficult to get consensus.
'Normally it's a buyer's market - they can shop around between different sellers. Now its definitely a seller's market.'
After they agree on a price, the association passes it on by letter - or more recently e-mail - to its 180 members late that evening. It still takes a day or two for the new price to make it on to the association's website.
In reality, most exporters have tended to sell at a slight premium - if they can get away with it - or a discount to make their long-time customers in trading houses in places like Hong Kong, China and Singapore feel they are getting a good deal.
'You have to be sincere with your customers. If you don't have a relationship, you will go out of business,' said Mr Charin, a former Commerce Ministry trade official.
Judging by the chauffeur-driven Mercedes and BMWs in the car park, and the number of huge Thai business empires controlled by ethnic Chinese families with roots in the rice trade, it is a strategy that has paid off handsomely.
But the 2008 price surge - which some analysts are describing as hysteria, others as the dawn of a new era of expensive food - is straining the old loyalties and traditions at an institution with a 90-year history.
Some members are quietly quoting rice at a premium of more than 10 per cent of the recommended price.
Last week, rival exporters in Vietnam were quoting at more than US$1,200 a tonne - a 25 per cent premium on the then Thai benchmark - in an incomplete tender to the Philippines.
Gauging accurate price levels has never been this tough.
'They've got a lot of experience in the business and they know how far they can go. But the situation of the last few months has never happened before,' Mr Charin said.
REUTERS
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