Vietnam’s government yesterday said the country has sufficient rice stocks and threatened to punish speculators who hoard rice for profit after price surges triggered a run on the staple grain.
Many supermarkets and street stalls quickly ran out of rice in Ho Chi Minh City at the weekend as thousands of consumers, worried by rumors of looming shortages, queued to stock up on rice, further driving up retail prices.
Vietnamese Prime Minister Nguyen Tan Dung in an urgent message to all cities and provinces said that Vietnam, the world’s number-two rice exporter, has enough stocks to meet domestic and export demand amid record global rice prices.
The prime minister, whose government has been battling double-digit inflation driven by food and energy prices for months, warned traders of “severe punishment” if they hoard rice and speculate on the commodity for profit.
The government “strictly forbids organizations and individuals without function to trade food from buying paddy and rice for speculation,” said an official statement, following reports that investors had bought up rice stocks and refused to sell them while waiting for prices to climb even further.
The warnings came after sudden price increases from Saturday morning sent shoppers rushing to supermarkets, especially in the country’s largest city, amid what local media dubbed “rice fever.”
Shoppers and restaurant owners were piling large stacks of 10kg rice bags onto their motorcycles, while at least one supermarket chain, Saigon Co-op, limited sales to one bag per customer.
The Thanh Nien daily reported that, within several hours on Saturday, the price of 1kg of standard rice surged from 10,000 to 18,000 dong (US$0.63 to US$1.13) in many retail outlets, further fueling the run.
In other southern towns, including the Mekong delta hub of Can Tho, prices also went up fast, while some distributors stockpiling rice and turning away customers who then went to buy up noodles instead, media reports said.
Dung assured officials and citizens that “rice production of your country in 2008 can completely meet domestic consumption, and part of it can be exported.”
The government said last week it had stopped new rice export contracts until the end of June, despite a bumper harvest in the Mekong Delta, the main rice basket, to ensure food security and fight inflation.
Dung earlier capped this year’s national rice exports at 3.5 million tonnes, down from a previous target of 4.5 million tonnes, while Vietnam has honored export contracts, including shipments to rice-deficit country like the Philippines.
World grain prices have sky-rocketed, a trend blamed on higher energy and fertilizer costs, greater global demand, droughts, the loss of farmland to biofuel plantations, industry and cities, and on price speculation.
Vietnamese consumer prices have risen by more than 17 percent in the first four months of this year year-on-year, fueling popular anger and labor unrest.
Jonathan Pincus, the UN Development Program’s chief economist in Vietnam, said the country’s problem with rice was due to prices, not supplies.
“Vietnam is a food exporting country, where there is no problem of supplies,” Pincus said. “There are problems of prices, and higher prices hurt particularly people working for wages.”
“It’s very natural to see strikes and higher wage demands because people’s money is not going as far as it used to,” he said.
Pincus said he did not foresee food riots.
But Vietnam’s government knows “that some of the gains made in poverty reduction over the past 10 years are in jeopardy if they are not able to bring food prices into line,” he said.
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