Sunday, 30 March 2008

Vietnam and India move to limit rice exports

By Keith Bradsher
Published: March 29, 2008

HANOI: Vietnam and India on Friday tightened limits on rice exports, joining Egypt and Cambodia in trying to conserve scarce supplies for domestic consumption at the risk of triggering further increases in global rice prices, which have roughly doubled since the start of this year.

Soaring prices for rice, a staple for nearly half the world's population, are already causing hardship across the developing world, particularly for urban workers. Together with rising prices for other foods, from wheat and soybeans to pork and cooking oil, higher rice prices are also contributing to inflation in many developing countries.

Rice-importing countries have become increasingly desperate, with fast-food restaurants in the Philippines even cutting rice portions in half.

Ben Savage, a rice broker at Jackson Son & Co. in London, said that even before the latest restrictions by Vietnam and India, international rice trading had practically stopped as exporters had become reluctant to sell as they waited to see how high prices would go. "The market has pretty much ground to a halt for the past few weeks," he said.

Shipments are still being made to complete contracts signed months ago, and governments are still doing deals with each other using state-controlled companies. But with virtually no private contracts being signed, the rice market has become extremely volatile, with prices jumping ever higher as governments impose more export restrictions.

Global rice consumption has exceeded production in each of the last seven years, so rice stockpiles have been falling steadily. Rising affluence in India and China has increased demand even as a plant virus has damaged the harvest in Vietnam and poor weather has hurt output in other countries.

Vietnam, the world's second-largest rice exporter after Thailand, announced Friday that it would reduce rice exports by 22 percent in the hope of curbing the rapidly accelerating inflation rates in the country.

India on Friday set a new minimum price for rice exports of $1,000 a ton, far above the price of $700 to $750 for most grades of rice. The new price makes it unlikely that India will export any rice except the highest grades of basmati rice for which the market within India has long been small.

Cambodia said Wednesday that it was halting all private sector rice exports. Egypt has barred all rice exports starting on April 1; while Egypt bars exports each year to conserve supplies for domestic consumption, the Egyptian government has acted earlier than usual this year and after less rice than usual has been exported.

Thailand has not imposed restrictions yet, but there has been public discussion about doing so.
Vietnam's restriction "is sure to cause more concern among rice-importing countries and push prices even higher," said Duncan Macintosh, a spokesman for the International Rice Research Institute in Manila.

China to pay farmers more for rice

China said Friday it would pay farmers more for rice and wheat, trying to raise output and cool surging inflation that threatens to fuel unrest ahead of the Beijing Olympics, The Associated Press reported from Beijing.

Beijing has frozen retail prices of rice, cooking oil and other goods in an effort to rein in food costs, which jumped 23.3 percent in February from a year earlier. But analysts warn that holding down the prices paid to farmers will discourage them from raising production and easing shortages blamed for the increases.

The price increase is meant to "raise farmers' enthusiasm for growing grain and make progress in the development in grain production," the government's National Development and Reform Commission said in a statement announcing the change.

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