Vietnam has agreed to give Indonesia the option of buying up to 500,000 tons of rice if the need arises, probably after September, an official in Southeast Asia’s largest economy said on Tuesday, as the country prepares to ward off food inflation.
The government of Indonesia, the world’s fourth most populous nation, is wary of rising food prices after corn and soybean futures soared in the United States amid its worst drought in 56 years.
Leading members of the Group of 20 nations are prepared to trigger an emergency meeting to tackle soaring grain prices caused by the US drought and poor crops from the Black Sea bread basket.
“The government has already made steps in case we need to import,” said an official at Indonesia’s procurement agency Bulog, who asked to remain anonymous. “The agreement so far is only in case of ‘if only.’”
“It may be needed after the end of September,” he added. “If Indonesia decides to import, Vietnam is ready to support 500,000 tons.”
In Hanoi, the Vietnam Economic Times newspaper reported that the government-to-government deal involved 15 percent broken rice, without elaborating on prices or delivery details.
Speculation about talks between Vietnam and Indonesia on the rice purchase have raised prices in Vietnam, traders said.
Officials at industry body the Vietnam Food Association could not immediately be reached for comment. Indonesia had said on Aug. 2 it might need to import rice to boost stocks.
“Companies under Vinafood 2 have started buying to build stocks ahead of deal completion, as they feared prices could go up,” a trader in Ho Chi Minh City said, adding that domestic prices had risen in the past two weeks.
The export quotation for 15-percent broken rice has also risen to $415-$420 a ton this week, free-on-board Saigon Port, from $415 last Wednesday and $390-$395 per tonne on Aug. 1.
The price of the deal would be fixed at the time of specific loadings, another rice trader in Ho Chi Minh City said.
Indonesia, which has already scrapped its 5 percent import duty on soybeans for the whole of 2012, may consider lifting similar duties on other food items, the agriculture minister said last week.
Indonesia could also expand the role of national procurement agency Bulog to include beef, sugar and corn, in order to build bigger food stockpiles.