Hanoi, April 3 - Vietnam extended a ban on rice sales until June to help stabilise domestic food prices as it tries to tame double-digit inflation, an industry statement and traders said on Thursday.
"No more signing of export contracts through June, 2008", Prime Minister Nguyen Tan Dung instructed the food industry in the world's second-largest rice exporter after Thailand, the Vietnam Food Association said on its website www.vietfood.org.vn.
Vietnam has already curtailed exports for March and April, an unusual move at the peak of the winter-spring crop, the country's highest yielding crop.
But worries about a cold spell that damaged part of agricultural crops in northern Vietnam early this year and double-digit inflation rocking the Communist-ruled country's small economy have prompted Hanoi to halt its grain exports.
The further restriction could raise more concern to major grain importers such as the Philippines and Indonesia as India and Cambodia have also banned exports while supply from China and Pakistan would be limited, traders said.
A trader in Ho Chi Minh City said the export restriction was designed mainly to limit company-based contracts and to protect state-backed companies that join tenders in the Philippines.
One such company is Vinafood 2, Vietnam's largest rice exporter. Its general director is also chairman of the Vietnam Food Association.
"The ban is a protection as it stops prices from rising while Vinafood 2 would join the tender and if there were no ban, the company could face losses when it goes to domestic markets to procure the grain," he said.
OTHER ASIAN EXPORTERS
Indonesia plans to announce a new policy soon to control rice exports and secure domestic stocks, amid soaring prices for the grain, a trade ministry official said.
But Thailand, the world's largest rice exporter, has no plans to curb rice exports, a senior Commerce Ministry official said on Thursday, denying rumours it might impose restrictions to protect domestic supply.
Vietnam's prime minister said total rice exports this year should be kept at between 3.5 million tonnes and 4 million tonnes, the statement said, compared with 4.5 million tonnes shipped in 2007.
"The extended ban should not strongly influence the market as Vietnam has had its curb in place," another rice trader said.
Paddy prices softened this week in southern Vietnam due to ample stocks, but traders said on Wednesday farmers could raise prices if Vietnam won more overseas tenders in the coming weeks.
Rice prices in Thailand and Vietnam are expected to surge after India's ban on exports of non-basmati rice, traders and officials have said;
The Philippines has said it would tender to buy 500,000 tonnes of rice on April 17. It already had to pay an average price of $708.04 per tonne cost and freight at a tender last month, up from $474.71 a tonne in another tender in January.
"At the upcoming tender bids could firm by $200 a tonne due to tight supply," a trader said.