THE ECONOMIC SITUATION IN SOUTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82S00205R000200010028-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 20, 2016
• Document Release Date: August 25, 2006
• Sequence Number: 28
• Publication Date: October 20, 1969
• Content Type: IR

Approved For Release 2007/03/08 : CIA-RDP82S00205R0002t@j nn G e3
DIRECTORATE OF
INTELLIGENCE
Intelligence Report
The Economic Situation in South Vietnam
(Biweekly)
On File US Agricultural Dept. Release Instructions Apply.
State Dept. review completed
USAID review completed
Secret
A
20 October 1969
No. 0505/69
Approved For Release 2007/03/08 : CIA-RDP82SO0205R000200010028-2
 pproved For Release 2007/03/ ~ClA~-RDP82SO0205R000200010028-2
WARNING
This document contains information affecting the national defense of the
United States, within the meaning of Title 18, sections 793 and 794, of the
US Code, as amended. Its transmission or revelation of its contents to or
receipt by an unauthorized person is prohibited by law.
GROUP 1
UDED FROM AUTOMATIC
DOWNGRADING AND
DECLASSIFICATION
secret
Approved For Release' 2007/03/08 : CIA-RDP82SO0205R000200010028-2
 Approved For Release 2007/oSECR , T-RDP82SO0205ROO02000100264i
CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
The Economic Situation in South Vietnam
Summary
Rice production in South Vietnam during the
crop year ending 31 May 1970 may increase 15 to
20 percent, largely because of increased cultiva-
tion of IR 8 and IR 5 (miracle) rice. An increase
of this magnitude would make the 1970 crop the
largest since 1965 and permit a substantial re-
duction in imports.
Despite this forecast, there have been re-
newed increases in the price of rice in Saigon dur-
ing the first two weeks of October. The reasons
for these increases are unclear, but there have
been reports of considerable hoarding by rice mer-
chants and retailers. Free market currency and
gold prices were mixed during the week ending
7 October with the price of dollars regaining its
all-time high of 228 piasters per dollar.
ANNEX: Monthly and Weekly Currency and Gold
Prices (Graph)
South Vietnam Economic Indicators (charts)
SECRET
Approved For Release 2007/03/08 : CIA-RDP82S00205R000200010028-2
 Approved r Release 2007/03/Og MFL3r2SO0205R000200010028-`!?'~
Prospects for 1970 Rice Crop
1. Early indications are that South Vietnam's
rice output for the crop year ending 31 May 1970
will be the largest since 1965. Vietnamese and US
officials estimate that the 1970 rice crop will be
15 to 20 percent larger than the 4.4 million metric
tons of paddy harvested in 1969, mainly because of
the increased hectarage planted to the high-yield
IR 8 and IR 5 (miracle) rice. If the estimate
proves to be correct, South Vietnam's requirements
for imports of rice will be substantially reduced.
2. Before the end of 1969 South Vietnamese
farmers will have planted 175,000 hectares of IR 8/5,
or four times the area planted to the new seed dur-
ing 1968. Because the average yield per hectare
from IR 8/5 in South Vietnam is about five metric
tons, compared with two tons per hectare from
domestic varieties of rice, the output from IR 8/5
could total about 875,000 metric tons of paddy.
This amount, which would be grown on only seven
percent of the total rice cultivated area, would
be equal to 20 percent of the entire 1969 crop. In
addition to the gain attributable to IR 8/5, of-
ficials believe increased production will result
from an expansion of the total rice cultivated area,
a development reflecting improved security in the
countryside. Finally, they anticipate higher yields
from domestic varieties of rice due to greater use
of fertilizer, pesticides, and other inputs and to
better weather. The current floods in the Mekong
delta are expected to cause less crop damage than
the drought of last fall. Flooding may cause some
crop losses in Chau Doc, Kien Phong, An Giang, and
Sa Dec provinces, but these provinces produce mostly
a low-yield variety of floating or red rice, which
is used mainly for animal feed. Some crop damage
has been reported in the northern provinces of I
Corps as the result of the heavy rains and winds
accompanying typhoon Doris, but local officials be-
lieve the loss is minor. IR 8/5 rice planted in
these areas reportedly withstood the storms very
well, prompting several farmers who had earlier re-
fused to plant the new variety to announce that they
would switch to IR 8/5.
-2-
SECRET
Approved For Release 2007/03/08 : CIA-RDP82SO0205R000200010028-2
 Approved For Release 2007/0389 P82S00205R000200010028T2
3. There has been some concern that consumer
acceptance of IR'8/5 rice, said by many to be less
palatable because of its high starch content, will
become a problem as its production increases. Con-
sumer acceptance is a critical issue since increased
production of IR 8/5 is one of the key factors in
the program to make South Vietnam self-sufficient
in rice again by late 1971. US agricultural tech-
nicians in South Vietnam report that consumer
response so far has been favorable, especially when
the new rice has been mixed with local varieties.
Most of the IR 8/5 rice produced thus far in South
Vietnam, however, has been used for seed rather
than sold on the market. The coming year will be
a trial period for its marketability.
4. South Vietnam's imports of milled rice,
which probably will total about 330,000 metric tons
in 1969, may be cut in half in 1970 if the harvest
now under way fulfills expectations. South Vietnam
was a net exporter of rice until 1965 when output
began to decline as the war accelerated and thousands
of farmers abandoned their land. During 1965-69
rice production declined 18 percent and imports be-
came a significant part of total supply. In 1967
imports reached a peak of 750,000 metric tons, an
amount equal to about 30 percent of domestic output
of milled rice in the 1966-67 crop year.
5. After a short period of decline, retail
prices in Saigon began to increase again during the
week ending 6 October and reportedly continued to
rise the following week. Although complete data
are not available, it appears that increases in
rice prices again are a major factor. Prices of
rice and sugar rose sharply during August as the
result of speculation that stocks of these goods
were depleted. Prices stabilized during September,
however, as the government released larger than
normal supplies of these foodstuffs to the market.
Nevertheless, during the first two weeks of October
the prices of the two most widely consumed domestic
varieties of rice reportedly rose eight percent,
Approved For Release
-3-
SECRET
2007/03/08 : CIA-RDP82S00205R000200010028-2
 ApprovetFor Release 2007/C@J;RWFDP82S00205R00020001002ET-2
reaching new highs. The reasons for this latest
increase are not clear. Vietnamese rice merchants
have told embassy officials that considerable hoard-
ing has been occurring. The fact that deliveries
of rice from the delta to Saigon and issuances of
rice from government stocks have both been at un-
usually high levels tends to confirm the reports of
hoarding.
6. Unlike the general retail price index, dur-
ing the week ending 7 October the price index for
imported commodities declined slightly for the
fourth consecutive week.
USAID Retail Price Indexes for Saigon
(1 January 1965 = 100)
All Items
Food Items
Nonfood Items
2
Jan
1968
308
344
241
6
Jan
1969
400
443
319
22
Sep
1969
462
535
326
29
Sep
1969
463
535
327
6
Oct
1969
470
547
329
Currency and Gold
7. Free market dollar and MPC (scrip) prices in
Saigon increased during the week ending 7 October,
while the price of a dollar's worth of gold leaf de-
clined one piaster to 307 piasters. The price of
dollars rose three piasters to 228 piasters per dol-
lar, regaining the all-time high first reached on
9 September. The rate for MPC jumped nine piasters
to 148 piasters per dollar, compared with the official
rate of 118 to 1. (A graph on monthly and weekly
currency and gold prices as well as charts on the
cost of living, money supply, and foreign exchange
reserves are included in the Annex.)
Approved For Release
-4-
SECRET
2007/03/08 : CIA-RDP82S00205R000200010028-2
 Approved For Release 2007/03/08 : CIA-RDP82S00205R000200010028
Saigon Free Market Gold and Currency Prices
225 ? - 228
Approved For Release '2007/03/08 : CIA-RDP82SO0205R000200010028-2
 Approved For Release 2007/03/08 :'CIA-RDP82S0-0205R000200010028-2
1959 100
90
JUL
J
Approved For Release 2007/03/08 : CIA-RDP82SO0205R000200010028-2
Saigon Cost of Living Index * (For Working Class Family)
 Ap 74d For Release 2007/03/08: CIA-RDP82SO0205R000200; 028-2
e
Approved For Release:! 2007/03/08 : CIA-RDP82SO0205R000200010028-2
Secret