Rice exports cut in "self-defence"

For decades Vietnam struggled to feed itself but is now the second-largest exporter of rice after Thailand. Last year, it sold 4.5 million tonnes to foreign buyers, so it is no wonder that the government's decision to reduce rice exports by 22 percent sent countries, such as the Philippines, scrambling to secure stocks.

Vietnam may have the luxury of sitting on a rice surplus, but it has its own worries. Inflation, an unusually long winter, pests, shrinking land for rice cultivation, as well as increasingly frequent and damaging typhoons, are raising concerns in government.

Economist Le Dang Doanh, a former adviser to Vietnam's Ministry of Planning and Investment, calls the government's decision to limit rice exports "an act of self-defence". There is no fear that people will starve, as a half million did during World War II when Japanese-occupied Vietnam was forced to send one million tonnes of rice to Japan every year. The real issue is whether everyone can afford it, said Doanh.

In March, consumer prices rose 19.4 percent over the previous year, with food prices up 30 percent in the same period. Price increases have led the government to lower its growth target from 8.5 to 7.5 percent.

With inflation at its highest in a decade, senior government officials worry that sustained high prices will make the population restless. "If you look to the Philippines, to Indonesia, the rice shortage creates a lot of turmoil," said Doanh. "That's why the government must ensure it cannot happen here."

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Higher rice prices could conceivably be more palatable for a nation where 70 percent of the population is involved in rice production. Yet even with rice at a record high, farmers such as Nguyen Thi Lan, who works a paddy just outside Hanoi, the capital, does not expect to benefit.

"Everything is going up," said Lan, standing calf-deep in the muddy waters of her rice paddy, picking out snails that eat the seedlings. "We used to pay around 5,000 dong [US 30 cents] per kilogramme for nitrogen. Now it is 9,000 dong. Potassium fertilizer is up three times."

A harsh winter in northern Vietnam delayed the spring planting by several weeks. Because of cooler temperatures, farmers expect yields in the north to fall 30 percent. Lan does not believe that even with higher rice prices she will cover her costs. With the vagaries of the weather, rising prices of fertilizer and an epidemic of rice-eating pests, Lan, 51, says that when developers offer her the right price for her land, she will sell.

When she does sell, however, there will be one less hectare available for planting. Lan's family plot sits in the shadow of factories and half-built luxury villas on land that only last year was planted with rice. Developers - as well as the golden apple snail - are eating up the rice fields that once encircled the capital.

Balancing act

Rapid industrialisation threatens Vietnam's rice production, said Trang Hieu Dung, director of planning at the Ministry of Agriculture and Rural Development. "The total area under rice cultivation is four million hectares," said Dung. "Each year we lose about 40,000 hectares of land. Land has been reclaimed for the construction of industrial zones, building new urban areas and housing developments, and roads and highways. Farmers are also switching to other crops."

Photo: Manoocher Deghati/IRIN

A man sells rice in in the southern Philippines. Vietnam's decision to reduce rice exports has left the Philippines scrambling to secure stocks

The decision to curb exports means farmers will lose out on record high prices, concedes Phan Huy Thong, deputy director of cultivation at the Ministry of Agriculture and Rural Development.

"Exports bring dollars into the country. We want the farmers to earn high profits," he said. "But we have to look far beyond that to the whole society, not a single group of people, in this case, rice producers. The problem for the government is to balance the benefits for the farmers and the society."

One of the biggest losers will be Asia's poor, who subsist largely on a rice diet. Because they spend a greater percentage of their income on food, they suffer disproportionately. International aid agencies are also at the mercy of rising prices.

"We are essentially being out-bid by wealthier buyers," says Paul Risley, Asia spokesman for the UN World Food Programme (WFP). "But we are the buyer of last resort on behalf of poor and vulnerable populations."

Because of price spikes in the past two weeks, WFP estimates it will have to spend an additional $160 million to feed the 28 million people it assists in Asia.

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