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May 04, 2008

Vietnam moves to curb rice speculative buying over shortage fears

Vietnam took action to quell panic over rice supplies on April 29, banning speculation in the market after a "chaotic" buying binge highlighted growing global fears about food security.

Queues and empty shelves were still evident on April 29 in Vietnam, which joined other nations in feeling the impact of a nearly threefold rise in rice prices this year.

The global sense of crisis over soaring food costs and supplies has toppled Haiti's government and caused riots in Africa, where the cost of food is already a big part of household budgets.

Although Asia consumes over 80 percent of the world's rice, the impact has been limited as countries like China, India and Japan are self-sufficient.

The frantic pace of price increases in Thailand, the world's largest rice exporter, looks set to cool in the weeks ahead, a Thai rice exporter said, with improved supplies.

"The market is likely to correct up to 20 percent even if the bans by India and Vietnam remain," said Korbsook Iamsuri, the secretary general of the Thai Rice Exporters' Association. "Crop arrivals are much better than what it was three weeks ago," she said, as Thai prices remained above the historic $1,000 per tonne level reached a week ago.

In Ho Chi Minh City, Vietnam's largest urban area of about 8 million people, people rushed to supermarkets and street markets in scenes described as "chaotic" by some local media reports.

Concern mounted in the southern city after a popular supermarket chain, Saigon Co-op Mart, said it was selling only 10 kg of rice for each purchase. That came less than a week after U.S. giant Wal-Mart Stores Inc's Sam's Club warehouse division put limits on purchases of rice.

Reacting to the buying, Vietnam's government moved to halt speculation, asking authorities to regulate local markets and ban non-food traders from trading the grain.

Governments of several food-growing countries have imposed food export curbs due to worries about domestic shortages, spooking markets when world inventories are down sharply.

U.N. Secretary-General Ban Ki-moon has called the problem a "global crisis" and urged world leaders to discuss ways to improve food distribution systems and production.

The events in Vietnam came as the Philippines said it has asked the World Bank to persuade rice-exporting nations to lift shipment curbs threatening importing countries' food security. "I have asked the World Bank if it's possible to use its moral persuasion, its stature, its influence to talk to the supplier countries," Agriculture Secretary Arthur Yap said.

Vietnam's government statement said it "strictly forbids organisations, individuals without function to trade food, from buying paddy and rice for speculation." Food companies and farmers have more than 1.3 million tonnes of rice in stock, the government said. It said it had also been buying rice to boost national reserves.

Rice futures on Chicago Board of Trade also rose more than 1 percent, as continued strong demand from rice-importing nations such as the Philippines provided support.

Reuters

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