HO CHI MINH CITY (Reuters) - Vietnam moved to quell panic over rice supplies on Monday, banning speculation in the market after a "chaotic" buying binge at the weekend highlighted growing global fears about food security.
By Grant McCool
HO CHI MINH CITY (Reuters) - Vietnam moved to quell panic over rice supplies on Monday, banning speculation in the market after a "chaotic" buying binge at the weekend highlighted growing global fears about food security.
Queues and empty shelves were still evident on Monday as the world's second-biggest rice exporter joined other nations in feeling the impact of a nearly threefold rise in rice prices this year, a rally triggered by exports curbs by top suppliers -- including Vietnam itself, which has banned exports through June.
The growing sense of crisis over soaring food costs and supplies caused riots in Africa and toppled Haiti's government. Although Asia consumes over 80 percent of the world's rice, the impact has been limited as countries like China, India and Japan are self-sufficient.
!ADVERTISEMENT!The frantic pace of price increases in Thailand, the world's largest rice exporter, looks set to cool in the weeks ahead, a Thai rice exporter said, with improved supplies.
"The market is likely to correct up to 20 percent even if the bans by India and Vietnam remain," Korbsook Iamsuri, the secretary general of the Thai Rice Exporters' Association told Reuters on Monday.
"Crop arrivals are much better than what it was three weeks ago," she said, as Thai prices remained above the historic $1,000 per tonne level reached a week ago.
Over the weekend, in Ho Chi Minh City, Vietnam's largest urban area of about eight million people, people rushed to supermarkets and street markets in scenes described as "chaotic" by some local media reports.
Concern 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. That came less than a week after U.S. giant Wal-Mart Stores Inc's <WMT.N> Sam's Club warehouse division put limits on purchases of rice.
By Monday, there were lines at the co-op and people loading up bags of rice, although it was also a sale day for food and other produce to mark the April 30 Liberation Day holiday.
Authorities are trying to reduce hoarding and a supermarket worker filling bags of rice said, "We don't want people to buy a lot at the same time."
At Ba Chieu market in the city centre on Sunday, some stalls were empty and people were seen loading up to 10-kg bags of rice on motorbikes as vendors raised prices on the spot.
"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."
WORLD BANK HELP
The events in Vietnam came as the Philippines said it has asked the World Bank to persuade rice-exporting nations to lift shipment curbs that threatened the food security of importing countries.
"I have asked the World Bank if it's possible to use its moral persuasion, its stature, its influence to talk to the supplier countries," Agriculture Secretary Arthur Yap told local television.
Rice has become a hot political issue in the Philippines. Yap confirmed the Philippines is considering rolling back the government's direct role in subsidizing expensive rice imports.
The Vietnamese government, facing the challenge of double-digit inflation as it makes the transition to a market economy, blamed hoarding and speculation for the weekend buying spree, and reacted by ordering local authorities to regulate markets and ban non-food traders from trading rice.
"Our food output in 2008 is fully able to ensure sufficient domestic consumption and also to set aside part for exports," it said in a statement broadcast nationwide on Voice of Vietnam radio on Monday.
For more on Agflation: The real costs of rising food prices, click on:
http://www.reuters.com/news/globalcoverage/agflation
HOARDING AND SPECULATION
Vietnamese 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.
The government statement said it "strictly forbids organizations, individuals without function to trade food, from buying paddy and rice for speculation."
Food companies and farmers have more than 1.3 million tonnes of rice in stock, the government said. It said it has also been buying rice to boost national reserves.
The consumer rush for rice took place even as Vietnam's output for the winter-spring crop was estimated at 9.9 million tonnes, 400,000 tonnes higher than last year.
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.
Rice futures on Chicago Board of Trade also rose more than 1 percent, as continued strong demand from rice-importing nations such as the Philippines provided support.
(Additional reporting by Ho Binh Minh and Nguyen Huy Kham in Vietnam, Sambit Mohanty in Singapore, Apornrath Phoonphongphiphat in Thailand and Carmel Crimmins in Philippines; Editing by Valerie Lee)
