Price surge draws Thai rice barons into spotlight

By Ed Cropley

BANGKOK (Reuters) - 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 metric ton 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 late last year when India imposed export curbs to protect domestic supplies after severe flood damage to crops.

Vietnam, which vies with India to be the world's number two exporter, followed suit a few months later, triggering concerns about Asia's ability to feed itself and pushing prices to record highs of nearly $1,000 a metric ton, three times their 2007 average.

Now, the price of Thai 100 percent B grade white rice, the world's de facto benchmark, is moving 10 percent in a week and making governments across Asia nervous about possible unrest stemming from 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.