14/05/2008 (International Herald Tribune, France), Kuala Lumpur - Malaysia is prepared to offer palm oil in exchange for rice to any rice-exporting country as part of efforts to stabilize domestic supply, a Cabinet minister said.
"Currently Thailand is our main supplier of rice, but we are ready to offer palm oil to any exporting country that is ready to give us rice of suitable quality," Plantation Industries and Commodities Minister Peter Chin told Dow Jones Newswires in an interview late Tuesday.
Chin said such barter deals could help Malaysia build up its rice stockpile. His comments are significant as the proposal can add a fresh dimension to global rice diplomacy.
Malaysia is the world's second-largest producer of palm oil after Indonesia, and imports nearly 27 percent of its rice needs annually. It hopes to cut rice imports to 14 percent by 2010.
Analysts said the proposal, if pursued at government levels, could lead to swaps with countries such as India.
India, one of the world's largest palm oil importers by volume, was the third-largest rice exporter until it imposed restrictions on overseas sales in October, contributing to a rise in global rice prices.
Chin will be visiting India later this month to attend a palm oil conference.
Malaysia has been actively scouting for rice from the international market to increase its buffer stocks to volumes equivalent to three months of requirements, compared with current levels that are sufficient only for 15 days.
The country imports between 700,000 tons and 800,000 tons rice annually but purchases are likely to be higher this year due to efforts to build up the larger buffer stock.
Earlier this week, the government announced it would cap prices of high quality grades of locally grown rice from June 1 to stabilize rice prices and supply.
It also said it would spend at least 725 million ringgit (US$230 million; €150 million) to subsidize, for the first time, 550,000 U.S. tons (500,000 metric tons) of selected types of imported rice.
The government has also allocated 1.7 billion ringgit (US$550 million; €355 million) this year to help rice farmers improve infrastructure and obtain fertilizer and pesticides, nearly double what it spent last year, officials said.
The measures are likely to increase the burden on state subsidies for gasoline, food and other essential items, which are expected to hit 50 billion ringgit (US$16 billion; €10 billion) this year. Fuel and food costs in Malaysia are among the lowest in Asia.