Who and what is pushing up Vietnam rice prices?

The rice price has increased sharply by 10-20 percent in just one week. The biggest price increases have been seen in the  high grade quality favored by urban residents.

Price up, people rush to purchase rice

Ngoc, who lives in District 8 of HCM City, rushed to the market to purchase 50 kilos of rice after receiving a call from her sister who informed that the rice price was increasing quickly. Scented rice which was priced at 16,000 dong per kilo one month ago, is now selling at 20,000 dong. The cheapest rice, which was sold at 8,000 dong per kilo, is now selling at 9,000 dong

Thom, the owner of the rice shop in Thu Duc District, said rice prices have been increasing for the last two weeks by 800-3,000 dong per kilo. However, despite the increase, sales have been double as a result of people rushing to purchase rice to hoard for fear of continued price increases.

The owner of Trung Kien rice sales agent in District 11 told Saigon tiep thi that the domestic price has been increasing because small merchants are collecting rice for exporters in order to fulfill export contracts.

Meanwhile, according to Vo Duy Tan, a merchant, who specializes in trading rice along the Vietnam-Cambodia border line, there are two reasons behind the price increase.

Firstly, the volume of rice brought from Cambodia to Vietnam has decreased by two thirds. The second reason is that people are collecting TP6 and Hau Giang 2 rice to bring to Cambodia, which has pushed the high quality rice price up in Vietnam.

In Hanoi, according to Tien phong, the rice price has increased by 1,000-3,000 dong per kilo. Meanwhile, small merchants have warned that the price would rise further towards the end of the year and Tet.

Vietnam does not lack rice

Nguyen Thanh Nhan, deputy general director of Saigon Co-op, said the supermarket is committed to keeping current sale prices static. Nhan said that current stocks at Saigon Co-op is big enough to meet demand for some two months. The retailer has made deals with suppliers to minimize price increases and ensure supply between now and Tet.

The general director of Vinafood 2 has also added that there is no shortage of supply. Besides the 13,500 tonnes of rice in Binh Chanh stocks, 40 Foodcomarts located in districts each have 1,000 tonnes ready to serve customers.

With these stocks and with the autumn-winter crops which being harvested in Mekong Delta, a rice shortage is believed to be unlikely.

Who is pushing rice price up?

The domestic rice price has been attributed to the export rice price increases. In October 2009, Vietnam’s five percent broken rice was exported at $420-430 per tonne, while it jumped to $480 per tonne in November and then $520 now.

As such, the export price has increased by $120 per tonne just within one month. This has pushed the rice material price up by 2,000 dong per kilo, from 5,200 dong to 7,200 dong per kilo, or 38 percent.

Director of An Giang Farm Produce Import-Export Company Pham Van Bay said that the high exports the information about rice shortage have prompted businesses to stockpile rice to export later, when the price goes up.

Rice exporters now can make big profits, especially after the State Bank of Vietnam decided to adjust the dong/dollar exchange rate. The weaker dong has made the export price of every kilo of rice higher by 300 dong

VietNamNet/SGTT