Saturday 12 April 2008

Rice in Asia

Lynne Kiesling at Knowledge Problem notes that The price of rice in Vietnam is high. Kiesling explains that this is in line with the prices of most commodities worldwide. There is growing demand across Asia because of economic growth and there have been poor yields recently and thus rice prices are rising. Kiesling goes on to say
This NPR story from this morning did a good job of discussing the nuanced situation for rice farmers in Vietnam; they get higher prices per unit of output, but poor yields have meant less output, and then as consumers they also face higher food prices.
Exports from rice-producing countries, such as India and China, have been limited to assure adequate supplies at home. This makes the problem only worse for importing countries. Also, if prices in large rice-producing countries like China and India don't rise because of the export controls what incentives do farmers in these places have to expand production?

4 comments:

Anonymous said...

Just checked with my Mom today

Rice is now 10,000 dong/kilo (1 USD = 16,000 dong), this is a 100% increase from last year.

Basically rice farmers are happy. Urban rich do not care much. Only urban poor are hurt.

Paul Walker said...

Interesting. With increases of that magnitude I'm guessing even the urban rich will feel it soon. That does depend on the substitutes available. Farmers as producers will be happy but not so happy as consumers. What is happening to other food prices?

Anonymous said...

The urban rich do not care much because rice only accounts for a small amount of their budget.

My family (5 adults) eats less than 1 kilo a day (for both lunch and dinner).

For the year ended 2007, annual inflation was 15%, a post-reform high.

Last quarter (Dec 07 -- Mar 08) was even worse, general price inflation was 9% (for only 3 months), driven mainly by increases in prices of petrol, electricity, building materials etc. Interestingly, virtually zero inflation in house prices.

In the mid 1980s, Vietnam's inflation reached up to 700%/year.

My family is hurt because of the unexpected increases in the prices of building materials (100% in the last 3 months). Land bought Sep 07, architectural plan and permits obtained Dec 07. Building started Mar 08. Planned to build a grand house, but original money can now cover only 2/3 of what was planned.

Anonymous said...

Rice's price today drops to 13,000 dong/kilo after peaking at 15,000 dong a few days ago.
(This is the price for the most common grade, not the highest quality rice available in Vietnam.)