Insect plague and new agreement make Vietnam price war unlikely

A price war on rice exports between Thailand and Vietnam is unlikely next year following the signing of an agreement yesterday, and because of current production problems in Vietnam due to flooding and infestation. According to Truong Thanh Phong, the president of the Vietnam Food Association in Bangkok, rice exports from Vietnam were currently banned to ensure national food security amid a plague of brown plant hoppers, as well as to stabilise the market price.

The ban was likely to be extended until January if the Vietnamese government failed to solve the insect problem, said Mr Truong, who was in Bangkok yesterday to attend a Thai-Vietnam Rice Trade Co-operation meeting.

Due to the plague, Vietnam was likely to export about 4.7 million tonnes of rice this year, down from an original target of five million tonnes, he said.

Mr Truong yesterday signed an agreement on rice trade co-operation with the Rice Exporters Association of Thailand.

According to Mr Truong, the Vietnamese government had agreed to raise its rice price on a gradual basis to keep it in line with Thai price levels.

Currently, the price of Vietnamese white rice is US$10-15 per tonne lower than that of Thai rice, compared with $40-50 per tonne in the past few months.

The ''working record'' signed yesterday follows up on a previous agreement between the two associations, reached at a meeting on July 21 in Ho Chi Minh City, when the two parties agreed to meet on a quarterly basis.

The next Thailand-Vietnam Rice Trade Co-operation meeting will be held in Vietnam in March.

According to Chookiat Ophaswongse, president of the Rice Exporters Association of Thailand, the agreement outlined information exchange between the two countries, a non-GMO production policy, and the possibility of new regulations for foreign investment in the rice business.Mr Chookiat said that given production problems in Vietnam, Thai rice exports would be promising next year, as global demand was expected to increase from 28 million tonnes this year to 29-30 million tonnes next year.

Thailand is expected to ship at least 8.5 million tonnes of rice next year, from about 7.2 million tonnes this year, with an export value of not less than 100 billion baht.

In a related development, Nguyen Dand Chi, deputy director-general of the Export-Import Department of Vietnam, said that Vietnam had no plan as yet to increase paddy imports from Cambodia.

Under an agreement between the two countries, Vietnam would import 200,000 tonnes of paddy from Cambodia or about 100,000 tonnes of mostly white rice.

From : The BKK Post
By : PLA
Date : Nov 17, 2006

 
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