Panic rice buying slows in Vietnam after ban

Apr 28, 2008, 6:33 GMT

Hanoi - Traders said panic buying of rice by Vietnamese consumers slowed Monday, a day after the prime minister banned rice speculation to combat price rises of up to 200 per cent over the previous three days.

Domestic rice prices rose 100 to 200 per cent from Friday to Monday up to 25 million Vietnamese dong (1,560 dollars) per ton, rice traders said.

In a communique issued Sunday, Prime Minister Nguyen Tan Dung blamed the price surge on 'evil people' who had 'started false rumors about food imbalances in our country to speculate on rice for profit and to smuggle to other countries.'

The message stated that the country's food production in 2008 was sufficient for domestic consumption and for export orders. Vietnam's winter-spring rice crop was larger this year than last year, and the government said the current rice stockpiles of businesses and individuals were estimated at 1.3 million tons.

The price surge had sown panic among consumers and caused people in the world's second-largest rice exporter to rush to buy rice over the weekend, fearing that prices might go up further.

'The price of rice at my shop rose from 9.7 million dong per ton to 20 million per ton yesterday,' said Nguyen Trung Hau, a rice trader in Hanoi. 'Despite high prices, I sold a lot more rice yesterday than before.'

Duong Thi Thao, a saleswoman at An Lac Supermarket in Ho Chi Minh City, said her store had not raised its prices over the weekend and had nearly run out of stock.

'Two days ago, we issued a rule that each person can only buy 15 kilos of rice,' Thao said. 'We had to do it so that everyone could buy rice.'

But Hau and Thao said rice purchases were slowing Monday after the prime minister's message, which instructed authorities to 'deal strictly with rice speculation in accordance with the law.'

Article 160 of Vietnam's penal code makes those who 'take advantage of scarcity or create the sham scarcity of goods during natural calamities, epidemics and/or war' subject to prison terms of six months to 15 years.

Tran Tien Khai, an agricultural economist at the Fulbright Economic Training Programme in Ho Chi Minh City, agreed that rumors and speculation were responsible for the surge in prices.

'The customers were affected by rumors in the media that prices will increase everywhere in the world, so now some enterprises and dealers in the southern region of Vietnam try to store up as much rice as possible to increase the price on the market,' Khai said. 'The benefits will go directly to the pockets of the dealers, not to farmers. It's a bad thing.'

Vietnam's total paddy rice output was expected to be 36 million tons this year, the same as last year, according to the Agriculture Ministry.

Khai said rising prices would stimulate increased rice production by Vietnamese farmers, who have received permission in parts of the Mekong Delta to raise their annual number of rice crops from two to three.

Last month, Dung ordered local rice exporters to stop signing new rice export contracts until the end of June and to cap the total amount of rice to be exported in 2008 at 3.5 million tons to ensure food security.

The UN's World Food Programme announced last week that rising world food prices constituted a 'silent tsunami' that could drive many of the world's poorest to the brink of starvation. A report by the UN's Food and Agriculture Organization in February found that because of increased trade and deregulation, governments were less able to cushion their populations against sudden rises in global food prices.

Vietnam exported 859,000 tons of rice in the first quarter of this year, up 5.3 per cent from the same period last year, according to government statistics.