Rice price increase not originated from supply-demand imbalance

The rice price has been escalating over recent days, prompting stockpiling and triggering rumors that events could mirror the rice price fever that took place in early 2008.

Who and what is pushing up rice prices?

As a reaction deputy minister of industry and trade Nguyen Thanh Bien has reassured the public that Vietnam does not lack rice, and that exports are in not having a negative affect in this area.

Bien, who is also the Head of the Government’s taskforce on rice export management, has confirmed rice supplies remain plentiful. Here he answers our questions:

What do you think has made the domestic rice price go up so sharply over the last days? Is it because of the short supply?

The domestic rice price has been influenced by many factors, including the rice price increase in the world market. Rice has become more expensive in the world market because of bad weather and a number of other reasons. Some countries, which are rice exporters, have also imported rice. The demand for rice imports from the countries, such as India and the Philippines, is increasing.

Vietnam’s rice export price has increased significantly in the world market, which has led to a domestic price increase.

However, I have to say that Vietnam does not lack rice. We neither lack rice for 2010 Tet nor for the whole year of 2010.

In 2008’s rice fever, Government agencies also told the public that Vietnam was not short of rice, but they seemed to be late in providing figures about exports, inventory volume and output. Can you show figures to prove Vietnam does not lack rice?

The reports sent to the Ministry of Industry and Trade showed that we still have 1.4 million tonnes in stocks. Meanwhile, we plan to export 400,000 tonnes more in the last months of the year, which means we will have some one million tonnes to be carried forward to 2010. Besides, we are going to harvest the autumn-winter-spring crop from which we will have 700,000-1 million tonnes more. The winter-spring crop’s output may reach 1.6-1.7 million tonnes.

As such, you can see we will have 2.6-2.7 million tonnes in our stocks by early 2010, while enterprises expect to export 1.4-1.6 million tonnes in the first three months of 2010. The one million tonnes in stocks would be more than enough to ensure national food security.

So, it is clear that rice exports will in no way affect food security. Rice price fever will not occur. We have to manage the rice exports in the way so as to ensure optimum profit for farmers and exporters and ensure sufficient supply for domestic consumption.

But it is really a difficult task to ensure both optimum profit from exports and sufficient supply to meet domestic demand…

Yes, it is. Therefore, in an effort to strive to sustainable rice export, the Ministry of Industry and Trade is compiling a new decree on rice management which is expected to take effect from January 1, 2010.

The new decree aims to harmonize the benefit of farmers, merchants, processors and exporters. The draft document says that in case the domestic market sees abnormal rice price fluctuations, enterprises will have to use rice reserves to stabilize the market under the instruction by the Prime Minister.

VietNamNet/TBKTVN

Tags: Vietnam rice price