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Rice producers urged to go slow on exports   2011-02-17 - VNS

The Viet Nam Food Association (VFA) has instructed its members to slow down rice exports in the early part of this year since international prices may spurt later on.


Addressing a meeting with members on Thursday, VFA chairman Truong Thanh Phong said a likely rise was indicated by supply-demand analysis.


His statement comes amid claims by some traders that prices of the grain could drop in the coming weeks due to increased supply as Viet Nam starts harvesting its major winter-spring crop by end-February.


"Prices will fall in March as there are no more Government deals while the Philippines has not detailed its import plan but it may buy less than last year," an unnamed trader was quoted by the Indonesian newspaper Jakarta Globe as saying.


The Philippines has desisted from importing large volumes despite a recommendation by a government panel to ensure reserves of more than a million tonnes.


Viet Nam has not signed many export deals unlike last year. In January 2010 alone it won contracts to export 1.5 million tonnes of rice to the Philippines.


"Maybe the Philippines will start buying Vietnamese rice in the third and fourth quarters," Nguyen Thanh Ngoc, director of Bac Lieu Food Co, said.


However, the VFA should not countenance a drop in export prices since it may affect domestic prices, exporters warned.


Pham Thai Binh, director of the Can Tho-based Trung An Co Ltd, said some buyers are trying to force Viet Nam's rice prices down.


"Viet Nam may not have sufficient rice for export," Cao Minh Lam, director of the An Giang Import-Export Co, said.


There is a global threat of a food crisis and many Asian countries are seeking to boost rice stocks amid fears of food shortages due to inflation and climate change, he added.


In Indonesia, Chief Economic Minister Hatta Rajasa on Wednesday ordered state procurement agency Bulog to import rice to gradually boost stockpiles to 2 million tonnes from the current 1.5 million tonnes, underlining fears that shortages could cause price spikes, the Jakarta Globe said.


Bangladesh has said it is buying 200,000 tonnes of parboiled rice from Thailand in the first government-to-government deal for the grain.


In China, the State Council on Wednesday decided to pay farmers higher prices for wheat and rice to offset losses due to drought. Wheat is generally grown in the north and rice, in the wetter south.


According to Xinhua News, this is a move to encourage farmers to boost production at a time when the northern region is facing its worst drought in six decades.


"China's grain situation is critical to the rest of the world – if they are forced to go out on the market to procure adequate supplies for their population, it could send huge shock waves through the world's grain markets," the US newspaper New York Times quoted the director general of the International Rice Research Institute in the Philippines, Robert S Zeigler, as saying.


Traders said other governments may also look to increase reserves despite ample supplies in Thailand and Viet Nam. They also warned of the chance the top two exporters, also facing food inflation pressures, may choose to keep more supplies at home.


"Rising supply from the world's top two exporters is likely to weigh prices down. However, there could be steady demand from traditional buyers like the Middle East, African countries, and elsewhere in Asia that could help support prices," Kiattisak Kallayasirivat of trading firm Novel Agritrade was quoted by the Jakarta Globe as saying.


Stockpiling rice


To keep rice prices steady, the VFA said its members would buy 1 million tonnes between March 1 and April 15 for its reserve.


According to its figures, in January Viet Nam's exports were 485,000 tonnes, 350,000 tonnes higher than targeted.


Last year, the country exported 6.88 million tonnes for $3.23 billion, a year-on-year increase of 15.4 per cent in volume and 21.2 per cent in value.

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