Hanoi - Vietnam's Prime Minister Nguyen Tan Dung has ordered authorities not to sign any more rice export contracts this year, the head of the Vietnam Food Association said Thursday. "The prime minister sent a letter to the Vietnam Food Association asking us to urge rice exporters to stop signing new rice export contracts and focus on implementing the contracts signed," said Nguyen Thi Nguyet, chairwoman of the Vietnam Food Association.
The move is due largely to domestic food security concerns, officials said.
A February cold snap in the north of the country, which lasted an unprecedented 45 days, destroyed over 100,000 hectares of rice paddies. The Ministry of Agriculture estimates total damage at 14 million dollars.
"In northern Vietnam , a large area of rice was sowed 15 days behind schedule due to the cold spell," said Trang Hieu Dung, director of the Ministry of Agriculture's planning department. "This area may bear no rice if the hot season arrives when the rice is blossoming."
Vietnam has signed contracts to export some 4 million tons of rice in 2008, a figure comparable to last year. Exports in the first quarter of 2008 were up 5.3 per cent year-on-year.
Earnings from rice exports, however, rose 43 per cent to 366 million dollars, due to rising global prices. Rice went up 70 dollars per tonne this week, worldwide.
February's cold snap and rising global rice prices have led to price hikes across Vietnam.
The cost of rice in the domestic market has gone up some 20 per cent since the beginning of this year, with prices rising dramatically in the last month. Nguyet said prices have now stabilized.
Vietnam comes second to Thailand in the world export market, but in fact produces more rice. But Vietnamese typically consume more rice than Thai people, leaving less available for export.
Consumption is especially high in rural areas, where poverty tends to be much higher than in cities.
"Vietnam consumes more rice than other countries because the country's living standard is still low," Dung said. "What would people eat instead of rice?"
Consumption of the national staple crop is typically high in poor and developing countries, said Lisa Studdert, a health specialist with the Asian Development Bank in Hanoi. Dietary diversity improves as countries grow richer, though this has risks as well.
"Diets dominated by rice, with low consumption of vegetables and meats, will be low in iron, and that's where you get high levels of anemia," Studdert said. "But often the diversification will come in the form of white bread, donuts, cakes, and high-fat meats. So that has a downside to it."
Vietnam is unable to increase its rice production to take advantage of higher prices, due to the scarcity of land. Rapid urbanization and industrialization are reducing the territory available for agriculture.
"We cannot increase the rice output because there are more and more people, while the land available for farming is shrinking," said Dung. "Meanwhile, rice productivity cannot be raised any further."
