Vietnam's plant protection agency rejected cargoes totalling 50,000 tonnes of corn and soybean meal from India and ordered them re-exported, a source at the Agriculture Ministry-run body said on Wednesday.
The incident has led to the halt of more shipments from India to Vietnam and could trigger corn price to rise on Vietnam's domestic markets, which could eat into feed producers' profit, traders in both countries said, coming at a time when Asian countries are grappling with food inflation.
"The volume of corn and soymeal found with insects were on two vessels and we have ordered them to be re-exported," said the source who is familiar with the matter but declined to be identified.
The cargoes have been infected with an insect native in India, known as Khapra beetle. The Hanoi-based Plant Protection Department identified it as 'Trogoderma granarium everts', it said in a letter sent to the Indian counterpart and seen by Reuters.
The department intercepted a ship with 23,000 tonnes of Indian corn at the northern port of Haiphong on January 29, the letter said.
The beetle was also detected at another ship in Ho Chi Minh City, the plant protection agency source said.
Vietnam only reopened all markets on Tuesday after a long holiday between January 31 and February 7 to mark the Lunar New Year.
"The Indian embassy (to Vietnam) has made contact with the Plant Protection Department to seek ways to deal with the problem," said a Vietnamese trader with knowledge of the cargo at Haiphong port.
A diplomatic source in Hanoi confirmed that the Indian embassy had been in close contact with the Vietnamese side.
"The shipments are very much in Vietnam and they have not been re-exported," the source said. The embassy "hoped to have it resolved in a couple of days".
He declined to speculate on the likely outcome.
The Vietnamese trader said the Indian side was seeking Hanoi's agreement for re-fumigation so that the cargoes would be accepted.
"Earlier, Vietnam had allowed re-fumigation and then a cargo with problem could be accepted, so it is seeking the same application with the current cargoes," he said.
Earlier on Wednesday, traders in Ho Chi Minh City said Vietnam may stop the import of around 130,000 tonnes of corn and soymeal from India due to insect infestation.