VFA announces floor rice prices, determining to restore order on market

The Vietnam Food Association VFA has announced the new floor rice export prices, the move which is believed to help stop some rice exporters who break the commitments and export at low prices.

The decision has been made after some Vietnamese rice exporters offered rice to Malaysian importers at the low price of 460 dollars per ton. Malaysia, citing the contracts with low export prices, has asked to re-negotiate the price of the contract on selling 300,000 tons of five percent broken rice that Vietnam signed in mid December, saying that it had to accept overly high price.

From now on, five percent broken rice will be exported at the prices no less than 500 dollars per ton (FOB), while the minimum export price for 10 percent broken rice is 495 dollars per ton, and the floor export price will be 485 dollars per ton for 15 percent broken rice. The floor price will be 470 dollars for 25 percent broken rice.

The new floor price levels have been effective since December 22, 2011.

Besides the signed contracts, Vietnam is now negotiating for selling another 200,000 tons of rice to Malaysia. If the negotiation succeeds, Vietnamese enterprises would have to deliver 500,000 tons of five percent broken rice in total in the first and second quarters of 2012, if counting on the 300,000 tons contracted in mid December.

The contract on exporting 300,000 tons to Malaysia was inked in mid December at the price of 570 dollars per ton. However, as some Vietnamese exporters have offered lower export prices, Malaysia is now trying to force the prices down when negotiating for buying 200,000 tons more.

Some experts say that it is very likely that Vietnam would have to accept lower prices in the contract which is still under negotiations.

The rice exporters who offered exports at low prices have been violently criticized by the business circle which has requested the Ministry of Industry and Trade to punish heavily.

Experts have predicted that the rice export market in the first quarter of 2012 would see a lot of changes.

In the past, Indonesia signed the contracts on buying 250,000 tons of 15 percent broken rice from India at 410 dollars per ton, with the delivery time in January and February 2012. However, it is likely that Indian exporters cannot make deliveries on time. Therefore, analysts have predicted that Indonesia may break the contracts signed with India and shift to buy rice from Vietnam.

Though the 15 percent broken rice Vietnam sold to Indonesia in the past was priced at 540 dollars per ton, higher than that offered by Indian exporters, Indonesia still accepts Vietnamese rice, because Vietnamese rice is fresh and it has higher quality than the same kind of product of India.

Indonesia has voiced its request for negotiating to buy Vietnam’s rice to replace the rice it ordered previously with Indian exporters. Therefore, it is very likely that Vietnam would replace India to become the rice supplier for Indonesia in a contract on exporting 250,000 tons of 15 percent broken rice.

As for the Filipino market, the government of the country has granted quotas to import 500,000 tons of 25 percent broken rice, and has assigned private businesses to implement the contracts. The destination for Filipino businessmen is Vietnam.

In order to sell rice successfully to the Philippines, VFA has assigned the Southern Food Corporation (Vinafood 2) to come forward to negotiate the affair, in order to avoid the troubles like the ones occurred in 2011.

Experts say that India has also offered to sell 25 percent broken rice to the Philippines at 380 dollars per ton, Filipino consumers do not like Indian rice because of its low quality.

Source: TBKTVN

Tags: Vietnam rice, Vietnam Rice prices