HANOI: Officials at Indonesia’s state food buyer said on Wednesday that no plan had been made to ship rice from Vietnam and that the two countries had only agreed on a contingency plan to guard against possible shortages resulting from dry weather.
Late on Tuesday, a Vietnamese government department reported it had won a tender to supply nearly 1 million tonnes of the grain to Indonesia, as the archipelago struggles with a prolonged drought threatening crops.
The deal, along with a 450,000-tonne supply contract to the Philippines, was seen helping stabilise Vietnam’s rice industry through the first quarter of 2016, the Industry and Trade Ministry report said, without giving further detail.
Uncertainty surrounding the Indonesian deal could drag on Vietnamese rice prices, which gained around 3 percent to an 11-week high on Wednesday following news of the potential agreement.
“This is a supply guarantee to prepare for a (possible shortage),” Bulog CEO Djarot Kusumayakti told Reuters on Wednesday, noting that no plans for shipment had been made. Food buyer Bulog is the Indonesian government agency tasked with importing rice. Rice imports are a contentious issue in the country where President Joko Widodo is pursuing self-sufficiency in various foods in an effort to protect farmers.
Late last month Indonesia’s vice president said the country planned to import up to 1.5 million tonnes of rice from Thailand and Vietnam in October, but President Widodo’s office denied the plan, maintaining there would be no imports this year.
According to Bulog procurement director Wahyu Suparyono, the agency is observing the impact of the El Nino weather pattern on rice production, with planting potentially delayed by the long dry spell. “If the prolonged dry seasons lasts until January or February next year, we will need to import more rice,” Suparyono said.
Any deal to sell rice to Indonesia would be a boost for Vietnam, whose rice exports fell 10 percent in January-September from a year ago to an estimated 4.48 million tonnes, due partly to competition from Thailand. Vietnam is the world’s third-largest rice exporter after India and Thailand.
Rice prices in Vietnam, which touched the lowest since July 2010 in September, have been boosted by the Philippines contract and were pushed higher on news of the latest sale.
On Wednesday, 5-percent broken rice gained about 3 percent to $350-$355 a tonne, free-on-board Saigon Port, from $340-$345 a week ago, and 15-percent broken rice stood at $345 a tonne, or about $10 above last week.
Traders had said the supply to Indonesia would include 750,000 tonnes of 15-percent broken rice, with the rest 5-percent broken grain, for loading until March 2016, similar to the delivery for the Philippines.
