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INFLATION

Food crisis bites in Vietnam factories

AFP, Hanoi
On the outskirts of Vietnam's capital, where modern industrial parks eat into centuries-old rice paddies, farmer's daughter LeThi Luyen is strug gling to carve out a living with a factoryjob.
Like thousands of labourers here, the 22-year-old walks every day from her dormitory town along a sun-baked dirt track to the nearby manufacturing zone, where she earns about 60 dollars a month at a motorcycle parts plant.
Life was never very easy, Luyen says, squatting in the three-by-four metre (13-by-10 foot) room she shares with three other workers and her daughter in Kim Chung commune just north of Hanoi.
But things have got a whole lot harder in recent months, she says, as the surge in global food prices swept through Vietnam, driving inflation to 21 percent in April compared to a year earlier.
"Food prices have increased sharply, and the money we earn just isn't enough anymore," Luyen says. "Two months ago we paid about 8,000 dong (50 US cents) for a kilogramme of rice. Now it's about 16,000 dong."
Food prices, which take the largest chunk out of the paypackets of most Vietnamese, surged by 38 percent year-on -year in April.
"In the past, I could save a few hundred thousand dong a month, but now I can spare nothing," says Luyen. "I have to spend all my money on everyday goods. The money isn't enough, but we don't have many options."
Like many of the workers who have driven Vietnam's economic boom -- with annual growth rates topping seven percent for the past decade - Luyen came from the countryside to the city in search of a better life.
"My family are farmers."
said Luyen, from nearby Ha Tay province.
"We have grown rice for many years, but recently bad weather has harmed our crops and we have had to pay more for fertilizers and pesticides.
"Soon an industrial park will be built on our land, so we have to try to find other ways to make a living."
Luyen's story echoes those of millions across Vietnam and much of Southeast Asia and helps explain some of the causes and consequences of the current global grain price crisis, say experts.
Hanoi, like many Asian cities, emerged in a river delta, where about 1,000 yedrs ago people began harness the Red River with dykes and irrigation channels to grow rice.
"Today, as Asian cities expand, the rice area contracts," said Jonathan Pincus, chief economist of the UN Development Programme in Vietnam. "Asia is now going through an historic period of economic growth, of industrialisation.
"There is land coming out of production in Asia. Some of that land is going into residen-
tial, some of that land is going into industrial. It's not marginal land, it's some of the most irrigated rice land in Asia. "That's a factor in Vietnam, China, Indonesia and Thailand."
Vietnam's Agriculture Minister Cao Duc Phat warned in March that more than 500,000 hectares (1.2 million acres) of farmland had been converted into urban areas or factory zones between 2001-2007.
"In five years, the loss is expected to equal current rice exports," state media quoted
him as saying. "It means that we will no longer have extra rice for export and, in the long term, the country's food secu-rity will be threatened."
It's not just the loss of rice land to that has driven up prices, said Pincus. The other main "economic inputs" --fuel, labour and fertiliser, which is closely linked to energy prices — have also grown more expensive, he said.
The result has been an 80 percent surge in global rice prices so far this year, a trend accelerated by commodity
traders who have hoarded stocks to further drive up prices.
Vietnam may be the world's second-largest rice exporter, but this hasn't stopped prices surging on local markets, sparking a recent bout of panic-buying as families feared running out.
Galloping inflation, driven in large part by food and fuel prices, has become the communist government's number one problem, leading to export curbs and warnings of stiff punishments for rice speculators.
The soaring cost of living --fuelled further by livestock diseases such as bird flu and blue-ear pig fever -- has already triggered labour unrest, with dozens of strikes hitting plants early this year.
In the year's first 20 days, more than 25,000 workers walked off the job in nearly 40 strikes, the Saigon Times reported. One thousand workers walked out at Chung Shing Textile Limited in southern Long An province on May 2, demanding better wages and meals.
One of my friends, who works in a plastics plant, went on stike recently, because wages were too low and they had to work extra hours," said Luyen's dormitory neighbour, 26-year-old NguyenThi Hue.
"They raised wages a little, but they still don't match the high prices."
The UNDP's Pincus said that while food riots are unlikely in Vietnam, a foodsurplus country, more labour unrest is almost certain.
"It is a struggle, particularly for poor people, to pay these higher prices for food," he said.
"Labour unrest has certainly picked up and wage demands are coming in higher, and companies that don't want to meet those wage demands will find that workers will down tools and walk out."