Citing Inflation, Vietnam Trims Rice Exports

Vietnam has become the world's second-largest exporter of rice (after Thailand). But the effects of inflation have persuaded the Vietnamese government to cut back on rice exports.

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In parts of the developing world, the high price of rice and other foods, not to mention the rising price of fuel, have helped spark riots. Experts warned prices are only heading higher and supplies lower.

But as NPR's Michael Sullivan reports from Hanoi, some countries are better positioned to cope than others.

MICHAEL SULLIVAN: Thirty years ago, Vietnam couldn't feed itself. Today, it's the second largest rice exporter in the world after Thailand. But last month, Vietnam decided to cut back on the amount of rice it exports, not because it's worried about feeding its people, but because of inflation.

(SOUNDBITE OF TRAFFIC)

SULLIVAN: Filling your motorcycle with gas, now costs about 30 percent more than it did just three months ago. And the cost of fuel has helped drive up prices of just about everything else, too. And even though Tuesday was a public holiday here - King Hung's birthday - this motorist, 60-year-old Windi Hung(ph) said he had little to celebrate.

WINDI HUNG: (Speaking in foreign language)

SULLIVAN: The price of everything has increased he says - food, consumer goods, you name it. Every time you go to the market, he says, it's like someone is picking your pocket. And for state employees, or those of us living on a pension, he says, we have to either dig into our savings or put off buying things we need.

Vietnam's economy is still growing in a sizzling rate of nearly 8 percent a year, but inflation is now running more than twice that. And it's this that's led Vietnam to curtail its rice exports, not fears of a shortage.

JONATHAN PINCUS: It's a question of political stability and also economic competitiveness.

SULLIVAN: Jonathan Pincus is the United Nations' senior country economist in Vietnam.

PINCUS: Food prices are driving the inflation right here higher, which means that firms are being pressured by their workers, clearly, to pay higher wages, which is a problem for a country that depends so heavily on labor- intensive exports.

SULLIVAN: Keeping more rice at home keeps domestic prices down and within reach of the poor, something that's not happening in rice-importing countries like the Philippines. But an abundant and relatively cheap supply now doesn't guaranty one a few years down the road.

(SOUNDBITE OF WATER POURING)

SULLIVAN: Dwinti Lan(ph) has been working her family's rice plot here in Bac Ninh province, just outside Hanoi for more than 30 years. But a company from Singapore now wants it for an industrial park.

DWINTI LAN: (Speaking in foreign language)

SULLIVAN: They want to take the fields from there to there, she says, pointing with her finger at an area bordered by a new highway on one side and a row of trees on the other. Not just my land, she says, but my neighbors land, too.

And though she's reluctant to part with her land, narrow profit margins and a bad back have led her to decide to sell if the Singaporeans up their offer. Stories like hers alarm people like Chang Yudong(ph), director of planning at the Ministry of Agriculture and Rural Development.

CHANG YUDONG: (Speaking in foreign language)

SULLIVAN: Vietnam is losing about 40,000 hectares of rice land a year, he says, taken for industrial parks, roads and new housing developments. And that, he says, could be a problem in the future.

U.N. country economist Jonathan Pincus isn't worried that's going to happen in a short to medium term in part, he says, because population growth in Vietnam has slowed and because the government is watching carefully to ensure its food security.

PINCUS: You know, having said that, Indonesia went from rice self- sufficiency to a very large deficit fairly quickly, so these transitions can happen. But I think partly in Indonesia's case, it was less a question of land coming out of cultivation and population rising much more quickly and also farmer shifting out of rice into other crops.

SULLIVAN: In Asia, Indonesia and the Philippines are most vulnerable to higher prices and reduced exports from countries like Vietnam and Thailand. Robert Zeigler, director general of the International Rice Research Institute outside Manila, says he expects record prices to stabilize in the next few weeks, as the spring harvest comes in.

ROBERT ZEIGLER: But there will be another crunch that comes and that's going to be in August, September when this harvest is consumed and we're waiting for the next, which is always a problem period. I mean, many countries have that. In Bangladesh, that period is called the monga, which is the period of hunger where people just don't have enough to eat. So the question is how serious would that interval be? And that, I mean, I can't predict.

SULLIVAN: Michael Sullivan, NPR News, Hanoi.

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