by Vu Kim Chung
21-11-2001
The world's number two rice exporter, Vietnam, blocked shipments until February 2002 because of a shortage of reserves for its own population. The ministry ordered traders in its main rice-growing region to stop offering new rice export contracts, after seeing domestic reserves falling. Rice prices had risen about 20% in the recent months up to the end of November 2001 to 2.9 millionVietnamese dong (£136; $193) per tonne from 2.4 million dong in May and June.
"We need to maintain a stable domestic market for food supply until we have a new harvesting season," an official in the Trade Ministry's Rice Management Office said.
Expensive staple food
Traders in Vietnam had been running out of stock ahead of the winter-spring crop planting season, which started in December and produces yields between February and April. During the first 10 months of 2001, they exported almost 10% more rice than the previous year.
Running out of rice
Vietnam's rice shortage was partly due to a reduction in Vietnam's rice planting area after serious floods in 2000 interrupted the autumn crop. Total rice production for 2001 was predicted to fall to 31.9 million tonnes from the previous year's 32.5 million tonnes. At the same time, total exports for the year were expected to rise 6.4% to 3.7 million tonnes.
The freeze on new contracts to export rice would retain more of the staple crop as food for the Vietnamese people. This should help curb price rises at home.
Cheap rice internationally
Paradoxically, while rice prices have rose within Vietnam, they fell internationally. Despite the near 10% rise in exports during the first 10 months of 2001, the value of the exports fell 6.1%. The low international prices eased delivery fears among Vietnam's rice traders, who signed contracts to export more rice than they had in stock. The export freeze had no impact on the market, said one rice trader. No deals had been struck, anyway, since the beginning of November because of the high prices, he added.
"Offers of Vietnamese rice have been $20 higher than Thai rice, so nobody wanted to buy from Vietnam," he said.
Traders who have to deliver rice to other countries to honour contracts they signed earlier in 2001 began buying rice in third countries rather than shipping Vietnamese rice. Vietnam's state-run Southern Food in October bought 10,000 tonnes of rice in Thailand and shipped it straight to its customers in Russia, the trader said.