Speculation drives up rice prices

Many residents in the major big cities across the country rushed to buy rice on April 26-27 following the rumor that Vietnam was in short supply of rice for local consumption. Notably, rice prices in Ho Chi Minh City and Hanoi rose sharply from VND13,000/kg to VND15,000/kg and even VND20,000/kg for first grade rice. While local residents in Khanh Hoa, Ninh Thuan, Dak Lak, Binh Thuan, Ba Ria-Vung Tau, Ca Mau and Lam Dong provinces were out on a buying spree, many suppliers complained that they had no rice in stock for sale.  

News of a rice price fever in the media led to a stampede by local people trying to stockpile rice.

What is the truth behind the price fever? Prof. Vo Tong Xuan, who has spent years studying and developing rice farming techniques in the Mekong River Delta, attributes the fever to speculators. 

Echoing Prof. Xuan’s view, Truong Thanh Phong, President of the Vietnam Food Association says that several traders and food suppliers capitalised on the global food crisis to stop selling rice in the hope of making a greater profit. 

Supply still exceeds demand

Mr Phong affirms that Vietnam not only has an adequate supply of rice for local consumption but also reserves a certain amount for export.

At the first-ever teleconference held in Hanoi on April 27, Prime Minister Nguyen Tan Dung reaffirmed that Vietnam is not in short supply of rice at the moment and that the country remains the second biggest rice exporter in the world in 2008.

According to the Ministry of Agriculture and Rural Development, the Mekong delta provinces have just completed harvesting 9.4 million tonnes of the winter-spring rice crop, an increase of 300,000 tonnes compared to last year. South-central coastal and Central Highland provinces are currently harvesting with an estimated output of 1.3 million tonnes, which is about 80,000 tonnes less than last year’s crop.

Meanwhile, the northern provinces have completed transplanting winter-spring rice following the prolonged cold spell and the rice is growing well. Farmers predict that they would achieve 6.5 million tonnes, equivalent to last year’s crop.

As a result, Vietnam’s winter-spring rice crop this year is estimated at 17.2 million tonnes, an increase of 200,000 tonnes compared to the previous crop. This means the country not only meets the demand for local consumption but also has extra for export.

Immediate measures to control speculation

At an urgent meeting in Ho Chi Minh City on April 27, local food companies agreed to supply 2,000 tonnes of rice to supermarkets in the city, offering the listed price of VND11,000/kg. The municipal People’s Committee instructed district market management forces to enhance inspections in order to keep rice prices under control.

Elsewhere, localities such as Bac Lieu, Ben Tre and Quang Ngai provinces asked the relevant agencies to join efforts aimed at preventing rice dealers and private traders from speculating. They also asked people to be kept abreast of accurate information from State agencies and not to let rice dealers and private traders capitalise on the situation and corner the market.