Exporters only buying in small quantities as rice farmers suffer

Farmers in Mekong Delta are now entering the peak rice harvesting period. However, they cannot sell rice in large quantity because exporters are only placing limited orders.

According to Pham Van Du, a senior official of the Ministry of Agriculture and Rural Development (MARD), Mekong Delta is harvesting some 450,000 hectares of rice. The region expects to have to bountiful crop thanks to the good weather with an average yield of 6.5-7 million tones per hectare.

However, farmers are not happy.   Because of the bumper crop rice prices have been staying at low level. IR 50404 rice is selling at 4,100 dong per kilo, long-grain rice at 4,500 dong, while jasmine rice 5,000 dong per kilo, while exporters predicted before that the winter-spring crop rice would not be lower than 5,00 dong per kilo.

Current prices at which exporters are collecting from farmers represent a decrease of 1,500 dong per kilo in comparison with two weeks before Tet.

Analysts say that rice export companies are just collecting rice at moderate levels, while still listening for news of the world market. As they remain uncertain about the world’s price, they still are unable push up purchasing rice from farmers.

MARD predicted that the rice supply in 2010 would be lower than the demand which would make the rice price higher in 2010 than 2009. However, it remains unclear how high the rice price will be in 2010. India reportedly is lacking rice because its domestic prices are very high, but the country is still not importing rice.

A rice exporter in Soc Trang province, who asked to be anonymous, said that there are two reasons that have made the winter-spring crop rice price decrease. Firstly, exporters have not pushed up rice purchases while they are not certain about exports. Under current regulations, export companies must have 50 percent of the rice export volume to be able to sign export contracts. The rice stocks now are reportedly just enough for signed contracts only, which means exporters need to collect more rice to sign new contracts. However, they are still hesitant to collect rice because they fear they would incur losses if they cannot sign export contracts.

To date, Vietnamese exporters have relied on a contract to export 1.4 million tones of rice to the Philippines under the bid called by the Phillipines Government. Meanwhile, exporters have signed a number of commercial contracts.

Secondly, also according to the rice exporter in Soc Trang, enterprises now find it hard to borrow money in VND. They are having to pay a high interest rate of 15-16 percent per annum with which they need to export rice immediately after they collect rice from farmers, or they will suffer loss.

The Vietnam Food Association (VFA) reportedly is going to open an extraordinary meeting to discuss the measures to help raise the rice price. Prior to that, the members of the association committed not to let the rice price drop to below 4,000 dong per kilo.

VietNamNet/TBKTVN

Tags: Vietnam agriculture, Vietnam rice