Inflated food prices due to weak supply chain
By Minh Tam - The Saigon Times Daily
HCMC – Recent price volatility in commodities is the result of price-hike rumors and serious flaws in the supply chain, according to expert Tran Nguyen Nam
Speaking at a seminar on supply chain management held in HCMC last week, Nam, deputy head of the local market department under the Ministry of Industry and Trade, said a lot of shortcomings exist in the commodity supply chain, especially the weak connection among components of the chain, prompting an imbalance between supply and demand.
Thus, the price of necessities such as rice and fresh food are adversely affected by rumors, paving the way for merchants to earn huge profits, Nam added.
For instance, the pork price continuously soared in the first few months of 2011. As of July last year, pork price in the North had surged by 68-80% while in the South it was up 53-70% against January.
Apart from the fact that disease had impeded reinvestment in livestock of pig farmers, the pork price rise was attributed to a psychological factor as consumers were concerned pork prices would rise following a rumor of pork exports to China.
Similarly, the rice market has witnessed price volatility over the past few years. The price of rice climbed to a high of VND15,000-20,000 a kilo in April, 2008 when people flocked to stock rice due to a price hike rumor.
The scenario was repeated as 2009 saw the price of rice soaring, while the general supply still satisfied domestic consumption demand.
“The food supply chain is not well-managed as its components are vulnerable to dramatic changes on the market. As for the rice market, the drawbacks of the supply chain create golden opportunities for speculators,” he said.