By Huang Haimin Thai Thanhvan
HANOI, April 18 (Xinhua) -- "Food prices are going up every day. Luckily, the state has decided to lower rice export this year to stabilize domestic market price," teacher Nguyen Thi Hoa said while shopping at a market in Vietnam's Hanoi capital city.
Like many other housewives in the 87-million population country where rice is a staple food, the 45-year-old woman expected a price decrease following the cut, which could help lessen her financial burden as her family spent 70 percent of their budget on food.
The Vietnamese government has recently capped rice export at 3.5-4 million tons in 2008, down from the initial target of 4-4.5 million tons and the country's shipment of 4.5 million tons in 2007, in a move to lower skyrocketing food prices, which were now driving double-digit inflation, and to secure food security.
Food price accounts for some 43 percent of the basket Vietnam uses to calculate its consumer price index, which posted year-on-year rise of 16.38 percent in the first quarter of this year.
Another reason for the limitation is that a long cold spell lasting from mid-January to late February has damaged most of acreage of the Winter-Spring crop in the northern region, lowering the region's rice output by 100,000-200,000 tons, said Chairman of the Vietnam Food Association Truong Thanh Phong.
Despite its positive impacts on local consumers, the export curb could limit margins of rice farmers.
"Domestic prices could not be as high as export ones. Meanwhile, we have to pay a lot of money for fertilizers and other production materials," said Nguyen Thi Nu, a farmer in northern Nam Dinh province, one of best rice growing areas in Vietnam.
For rice businesses which should have benefited from higher prices, they prefer stable prices than high ones. They now have to suffer high prices to purchase rice for contracts inked at a time of lower costs.
In addition to capping export volume, the government has asked businesses not to sign new rice export contracts until June. Local exporters must ensure that their rice export contracts for the first half of this year would not exceed 50 percent of the average shipments over the past two years.
Local firms have inked contracts of shipping abroad 1.8 million tons of rice for delivery this year.
In another move, Vietnamese Prime Minister Nguyen Tan Dung has asked the Ministry of Finance to map out a plan on imposing rice export tax to limit the commodity's shipments.
The export limitation of Vietnam, the world's second rice exporter which accounts for 20-25 percent of some 20 million tons of rice annually traded in the world, has happened at a time when the commodity's prices have surged in the international market, and global reserves have decreased.
Rice prices in the world market have increased by 50 percent in the last two months, heavily impacting life of people in Asia where rice is a staple food. The prices were expected to rise by 40 percent in the coming months, according to the Trade Information Center under the Vietnamese Ministry of Industry and Trade.
The price hike was mainly due to soaring costs of petroleum products and fertilizers, and lower outputs of subsidiary crops caused by pests and climate changes, said experts.
The global rice reserve was estimated at 72 million tons between 2007 and 2008, the lowest since the 1983-1984 period and half of the peak in the 2000-2001 period, according to the U.S. Department of Agriculture.
To support local exporters, the Vietnamese government has asked banks to facilitate them in accessing loans to purchase rice for reserve.
Officials from Vietnam, Thailand and India were expected to gather later this month to discuss the possibility of setting up a rice export alliance, aiming to help farmers and stabilize the international market, said the center.
Vietnam sold overseas 859,000 tons of rice worth 366 million U.S. dollars in the first quarter of this year, posting year-on-year rises of 5.3 percent and 42.6 percent respectively, according to the country's General Statistics Office.
It reaped rice export revenues of 1.5 billion dollars in 2007, mainly from selling the commodity to the Philippines, Malaysia, Cuba, Indonesia and Japan.