April 28, 2008 / 2:38 AM / 10 years ago

Vietnam bans rice speculation

HO CHI MINH CITY (Reuters) - Vietnam banned rice speculation after a surge in buying over the weekend in southern Vietnam but said it had sufficient stocks for domestic consumption and exports.

<p>A woman displays rice for sale at Ba Chieu market in Vietnam's southern Ho Chi Minh city April 27, 2008. REUTERS/Kham</p>

The ban is the latest sign of growing unease over food supplies around Asia, where some governments have been spooked by the possibility of a shortfall in staple rice and a three-fold price increase caused by export curbs by key suppliers including Vietnam, the world’s number-two exporter.

On Saturday, people rushed to supermarkets in Ho Chi Minh City, Vietnam’s largest urban area, to buy the staple food as many rice mills in the Mekong Delta food-producing area and small rice stalls in the city halted sales.

At Ba Chieu market in the city centre on Sunday, some stalls were empty and people were seen loading up to 10 10-kg bags of rice on motorbikes as vendors changed prices.

“The government should control the price,” said a customer in the market, who declined to give her name. “It is rising very fast and sometimes it changes daily. If prices are too high, people will go hungry.”

Vietnam’s yearly inflation rose 21.4 percent in April, one of the highest inflation rates in Asia. Rice prices in Vietnam have risen 25 percent this month from the end of March and surged 85 percent since last April to 5,500 dong (35 U.S. cents) per kg of paddy as of Friday.

For more on Agflation: The real costs of rising food prices, click on:

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Concerns mounted in the southern city many still call Saigon after a popular supermarket chain, Saigon Co-op mart, said it was selling only 10 kg of rice for each purchase to ensure all customers get the grain.

Reacting to the buying, the government moved to halt speculation, asking authorities to regulate local markets and ban non-food traders from trading the grain in Vietnam, which is the world’s second-largest exporter of the grain that is the staple of nearly half of the world’s population.

The government “strictly forbids organizations, individuals without function to trade food from buying paddy and rice for speculation”, it said in a statement issued on Sunday and broadcast nationwide by state-run Voice of Vietnam radio on Monday.

“Due to the recent food shortages in some countries, some bad elements have spread incorrect news about the possibility of losing the food supply/demand balance in our country in order to gather paddy, rice for speculation,” Deputy Prime Minister Hoang Trung Hai said in the statement.

The statement also said the Communist-run Southeast Asian country had enough stocks for domestic use and exports.

“Our food output in 2008 is fully able to ensure sufficient domestic consumption and also to set aside part for exports,” Hai said.

He did not name any speculators but said they also smuggled rice across the border despite the government reaffirming that it would maintain its ban on new export contracts through June to ensure domestic food security and tackle inflation.

Rice mills, food supplying companies, coffee or pepper trading houses and even share investors have invested in buying rice for hoarding to make profits, said Truong Thanh Phong, Chairman of the Vietnam Food Association.

Some Vietnamese fishermen also bought rice from domestic markets and sold to foreign fishing vessels, Phong said in an interview with the Ho Chi Minh City Communist Youth League-run Tuoi Tre (Youth) newspaper on Sunday.

The government said food companies and farmers now held more than 1.3 million tonnes of rice in stock after harvesting the winter-spring crop, Vietnam’s largest among three rice crops a year.

The government has also been buying the grain to boost national reserves, it said.

Additional reporting by Ho Binh Minh and Nguyen Huy Kham; Editing by Ben Tan

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