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Vietnam resorts to tariffs to control rice, urea prices
Vietnam will impose tariffs on the exportation of rice and urea in a bid to put the prices of these commodities under control.
The Government has assigned the Ministry of Finance to coordinate with other relevant agencies to draft a decision in this regard. This decision is expected to come out some time this month.
The move comes while the world is struggling with a food crisis, with rice as a staple food rocketing to a record high of US$1,000 per ton.
To ensure national food security, the Government has long imposed quotas on rice export. But most rice exporters have complained this quota system is unfair.
At a seminar on inflation held at Saigon Times Group in early April, Jonathan Pincus, senior economic expert of the United Nations Development Program in Vietnam, said the Government should tax rice exportation as a measure to control domestic prices and that this tax system was more efficient than that of quotas.
Rice export tax can be easily adjusted depending on local prices. When domestic rice prices go up, the Government can increase the export tax to reduce the quantity of rice export and when the domestic price falls, the tax can be revised down to spur export.
For urea fertilizer, the Ministry of Agriculture and Rural Development proposed in early May that the Ministry of Industry and Trade temporarily stop issuing licenses for fertilizer exportation at a time of rising fertilizer prices.
The two ministries then suggested the Government impose an export tariff of 40% on fertilizer to discourage urea export.
The export tariffs on rice and price will be decided not depending on contracted export prices.
In a related development, the Ministry of Industry and Trade is working with the Ministry of Agriculture and Rural Development and the Vietnam Food Association to devise a plan to create a rice price stabilization fund with a total volume of 100,000 tons.
Of this volume, Northern Food Corporation (Vinafood 1) and Southern Food Corporation (Vinafood 2) will be responsible for stocking 50,000 tons each, which will be used to intervene in case of market volatility.
VNN
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