Hanoi, March 28 - Vietnam will cut rice exports by 22 percent this year, the government confirmed on Friday in a battle to rein in rocketing inflation at home that threatens to drive up prices and heighten supply security fears across Asia.
The world's second-biggest exporter will limit rice shipments to 3.5 milliion tonnes, from 4.5 million last year, a government statement quoted Prime Minister Nguyen Tan Dung as saying, after Hanoi imposed a limit for the first 10-month shipment last week.
Vietnam exported 859,000 tonnes of rice in the first three months of this year, up 5.3 percent from a year earlier, government figures show.
Communist-run Vietnam's decision is the latest in a series of measures by governments across Asia and as far as Egypt to ensure sufficient supplies of the staple food for growing populations at a time when global stockpiles have halved and prices have surged.
Medium-grade Thai 15 percent broken rice more than doubled to $735 a tonne free-on board Bangkok on Thursday, from $360 at the end of 2007.
For Vietnam, the target is inflation. Consumer prices rose by nearly 20 percent in March, the highest in more than 12 years.
"In order to stabilise food prices, the Prime Minister clearly stated that this year a maximum 3.5 million tonnes of rice will be exported," the government said in a statement on its Website (www.chinhphu.vn).
Food prices account for nearly 43 percent of the basket Vietnam uses to calculate its consumer price index. Vietnam rice prices are up 26 percent so far this year. The government said earlier this month that it was planning to impose a tax on rice exports to discourage overseas sales.
FALLING RICE STOCKS
World rice inventories now stand at about 72 million tonnes -- about 17 percent of global annual consumption, data from the U.S. Department of Agriculture show. Just eight years ago stockpiles were equal to 35 percent of demand.
"Vietnam will save 1 million tonnes of rice for northern provinces and will see prices easing following this cut," said a rice trader at a foreign firm in Ho Chi Minh City, Vietnam's largest grain trading market.
A long cold spell in January and February has damaged part of the rice crop in northern Vietnam.
"Prices have yet to fall since exporters are still loading for the Philippines, but will drop in the next three weeks if there is no permission in place for new export deals," the trader said.
The government should soon allow new contracts or face rising stocks of the high-quality 5 percent broken rice as the Mekong Delta's winter-spring crop harvest has been peaking while the Philippines buys only the 25 percent broken grain, traders said.
Egypt is banning rice exports from April 1 to October to hold down local prices and the Philippines aims to import up to 2.2 million tonnes this year in what could be the biggest overseas purchase of the national staple in a decade.
Vietnam's food prices this month have risen 30 percent from last March, helping to push March inflation to 19.39 percent. Five months of double-digit inflation and the world economic slowdown have moved the government to cut its 2008 GDP growth target to 7.5 percent.