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Storms drive up global rice price

Update: November, 29/2009 - 00:00

Business Beat

(30-11-2009)

Storms drive up global rice price

by Le Hung Vong

A bid to sell 150,000 tonnes of rice to the Philippines won by the Southern Food Corporation (Vinafood 2) may help raise world rice prices, local media reports.

On November 4, Vinafood 2 won the rice exporting contract at US$480 per tonne, much higher than previous deals.

Prices are expected to continue to go up this year, as they did in 2008.

The Philippines’ scheduled bid to buy 600,000 tonnes of rice on December 1 could raise prices to $560 per tonne, the Viet Nam Food Association (VFA) has said.

Local senior economist Nguyen Dinh Bich was quoted by Sai Gon Marketing as saying that world rice prices have kept increasing.

Prices of Thai 15 per cent broken rice went up from $451 per tonne in October to $490 on November 13 and then to $495 on November 19, a total increase of $44 per tonne (9.8 per cent). Meanwhile, price of Viet Nam’s five per cent broken rice has also increased from $410 per tonne to $460 per tonne and then $480, representing a record price increase of $70 per tonne (17.1 per cent).

The upward tendency followed the Philippines announced plans to import some 1.2 million tonnes of rice while other rice producers face the risk of crop failure.

The Minister of Agriculture of the Philippines was quoted by Sai Gon Marketing as saying that the world rice price may return to the record price of 2008 due to the bad weather which has made output decrease sharply and has forced a number of countries to import the grain.

Bich said under a scenario announced by the US Agriculture Department, India may ease the rice price fever. In order to make up for the 16.15 million tonnes it lacks, it may release 7.1 million tonnes from its storage depots into the market.

It may also use 6.1 million tonnes of wheat instead of 4.15 million tonnes of rice.

The Indian Government has said there would be no rice imports for now. India has scrapped tenders to import rice, saying it has enough stocks to manage, despite a harvest shortfall following the worst monsoon in almost four decades.

The Indian Press Trust reported on November 4 that the Government of India had mulled over a plan to import 2 million tonnes of rice from Viet Nam and Thailand because of India’s decreasing rice output due to the impact of drought and floods.

Two weeks later, the Press Trust quoted an unnamed official as saying that the Indian government does not want to buy rice at such high prices.

The decision not to import rice marks a U-turn from the Indian government’s announcement when Commerce Minister Anand Sharma said India was in talks with Thailand and Viet Nam about buying rice to offset an estimated summer harvest shortfall of at least 15 million tonnes.

Sharma told reporters on November 20 that the Indian Government would review the decision if needed.

No response to India’s decision to cancel rice imports has been heard from VNA. But the association had said last week that the $70 per tonne world price rise in November was in favour of Vietnamese farmers and exporters.

Vehicle imports rise

Despite Viet Nam’s trade deficit in 2009, imports of cars and luxury motorbikes have spiked recently.

According to figures from the National Bureau of Statistics, in November some 9,000 automobiles were imported into Viet Nam, an increase of 3,000 units compared with the same period last year. The sudden influx brings the total number of automobiles imported into Viet Nam in the first 11 months to 66,300, worth over $1 billion.

In the first 10 months of this year, some 57,300 automobiles were imported, with total import turnover amounting to $905 million, compared with a total 92,000 automobiles assembled in the country in the same period.

Consumer trends and changes in tax policy are among major reasons behind the increase in auto imports. The reduction and exemption of VAT and registration fees (on imported automobiles) will expire on December 31, 2009, making the VAT return to 10 per cent instead of the current 5 per cent, and registration fees on imported cars increase to 10-12 per cent of their price instead of the present 5-6 per cent.

Also in October, some 9,000 luxury motorbikes were imported, making motorbike imports in the first 10 months of the year reach 94,400 units, with total import turnover of $112 million.

Meanwhile, the trade deficit has already exceeded the $10 billion figure that the government was trying to stay below for the whole of the year.

According to figures from the Ministry of Planning and Investment, the country added $1.75 billion to the deficit in November, bringing total trade deficit in the first 11 months to nearly $10.2 billion.

With an average trade deficit prediction of $1.5 billion for December plus the turnover for 68 tonnes of gold imported since November 11, the deficit for the whole year figure will be much bigger. — VNS

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