BANGKOK, Feb 19: The world’s top rice exporters, Thailand and Vietnam, have agreed to cooperate to stabilise prices, a senior Thai official said on Thursday, but details have not been set yet and traders in both countries were sceptical.

The two countries signed a memorandum of understanding in Hanoi earlier this week when a Thai delegation including government officials, exporters and farmers visited Vietnam, Deputy Commerce Minister Alongkorn Pollabutr said.

“This is cooperation with operators ranging from policy-makers through exporters to farmers to stop prices fluctuating too much, as they did last year,” Alongkorn told Reuters.

The price of Thailand’s benchmark 100 per cent B grade white rice hit a record high of $1,080 per ton last April but has since dropped right back and was quoted at $580 this week.

Traders, mindful of past failures, doubted the two countries would be able to achieve much on prices.

The last attempt was in 2006, when Thailand proposed an “Opec-style” rice cartel with Vietnam, but the proposal went nowhere, especially as the governments failed to control output from their farmers, traders said.

“It’s difficult to have such cooperation, to set minimum export prices, as the two countries have different production costs,” said Chookiat Ophaswongse, president of the Thai Rice Exporters Association.

“Another major obstacle is continuity of policy, which depends on political stability,” said another exporter, who asked not to be named. Thailand had four prime ministers in 2008.

There was similar scepticism in Vietnam.

“There are discrepancies between Vietnam and Thailand, as the Thai government has its intervention scheme that influences prices while Vietnam doesn’t have one,” one Vietnamese industry official said.

Differing rice quality was another problem, he added, Thai rice being superior.

Alongkorn said that under the agreement the two countries, which account for 50 per cent of world rice trade, could create reference rice prices to lead the global market.

He declined to give further details and said the two countries needed time to work out prices and other matters.

The price of Thai 5 per cent broken grade white rice is at $550 per ton, well above levels in Vietnam, where the government has set a floor price of $440 per ton.

“It’s really difficult to implement such rice cooperation,” a trader with a foreign firm in Ho Chi Minh City said. “Unlike the food association here, all Thai rice exporters are private firms and it is difficult for the government to control them.”

But Vietnam should develop similar intervention schemes and work closely with Thailand in regulating a reference price so the two would be able to compete with India or Pakistan, he added.

The state-backed Vietnam Food Association oversees rice production and exports. It is also charged with implementing government policies to make exports profitable while ensuring national food security.

Alongkorn said the broad agreement meant Thailand and Vietnam would also cooperate on rice production, helping each other to cut costs and transferring technologies to push up yields.—Reuters