Rice prices unexpectedly plunge, dealing a blow to farmers

Experts once predicted that the rice price in Asia would keep rising and may reach the three-year peak. However, in fact, the rice price in Mekong Delta provinces has been decreasing dramatically, which has discouraged farmers.

Both high and low quality rice prices go down

Contrary to all predictions, the rice price continues the downward trend for the second consecutive week.

On the first days of the second week of September, farmers were so happy when seeing the prices of long grain rice products (OM 5451, OM 4218, OM 4900, Jasmines) escalate. However, the upward trend did not last many days.

Farmers in the provinces of Tien Giang, Long An, Soc Trang and Tra Vinh said that IR 50404, a low quality rice variety, is now sold to merchants at 5200-5300 dong per kilo only, a decrease of 100-200 dong per kilo from the price on September 8. Despite the price decreases, the demand for IR 50404 remains very weak.

Long grain rice products, after reaching the record price of 7600 dong per kilo, has seen the prices decrease by 200-300 dong per kilo. OM 4218,OM 5451, OM 4900, for example, are selling at 5700-5800 dong per kilo to merchants, while OM 4900 at 5800-5900 dong.

The rice prices at farm produce wholesale markets of Phu Cuong in Cai Lay district and Ba Dac in Cai Be district have also dropped by 150 dong per kilo.

The merchants at Ba Dac Market said that the prices of five percent broken rice sold to polishing factories, where rice is further processed for export have decreased to 8850 dong per kilo, down by 100 dong. If comparing with the first week of September, the material rice used for making five percent broken rice has dropped by 300-400 dong per kilo, while the material used for making 25 percent broken rice has dropped by 150 dong to 8700 dong per kilo

Prices sliding, why?

According to the Vietnam Food Association VFA, Vietnam exported 127,500 tons of rice after the first eight days of September 2011, worth 63.3 million dollars. As such, from January 1 to September 8, Vietnam exported 5.5 million tons in total, valued at 2.6 billion dollars.

Vietnamese experts believed that with the increasingly high demand in the world market, the Asian market would see further sharp price increases, and that the rice price may reach the highest peak in the last three years. However, the domestic price has been decreasing continuously for the last two weeks.

Explaining the decreases, an executive of the Hoang Thuan Rice Trade Company in Tien Giang province said that rice export companies all collected rice in August already, planning to export later, when the Thai policy on purchasing rice from farmers at high prices. The export companies now stop collecting rice from farmers, and the decreasing demand has certainly led to the decreasing prices.

Meanwhile, Truong Thanh Phong, Chair of VFA said: “The domestic prices have been decreasing because rice exporters cannot sigh new export contracts.”

Nguyen Thanh Bien, Deputy Minister of Industry and Trade, said that the domestic prices once went up because of the rumor. VFA’s members received the messages saying that Vietnam had won a lot of bids to sell rice, therefore, they tried to collect rice at high prices, thus pushing the domestic prices up.

However, as the rumor has been corrected, the domestic price has come back to its actual value.

However, the information released by Bien has surprised rice enterprises. “It is understandable why even VFA’s members do not have exact information whether VFA can sign new export contracts,” a rice company in Cai Be district in Tien Giang said.

“If you say enterprises collect rice because of the information that Vietnam won bids to provide rice, you mean that VFA’s members are just like children who do not know anything,” he said.

Source: TBKTSG

Tags: Vietnam rice, Vietnam rice exports, Vietnam rice exports 2011