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Vietnam needs long-term rice development strategy
Rice exporters have voiced concerns that the current style of rice export management will cause farmers and rice exporters losses.
Cao Minh Lam, Director of An Giang Afiex Company, said that though Vietnam has been exporting rice for 20 years, it still does not have a detailed strategy on rice development. Troubles in rice management occur every year.
Lam said that Vietnam always strives to reach three goals at the same time, ensuring national food security, fulfilling rice export goals and ensuring the benefits of farmers. Lam said that it is necessary to define which of the three the top priority is as all three targets can’t be met at the same time.
Lam has suggested that the government assign the Northern and Southern Food Corporations to take responsibility for food security. If the two corporations report volumes of rice big enough for food security, the government should allow enterprises to export rice with no limitations.
Meanwhile, a lot of questions have been raised about the role of the Vietnam Food Association (VFA) and the way it has been managing rice exports so far.
Nguyen Ngoc Nam, General Director of the Tien Giang Food Company, has pointed out a lot of problems with the association: It does not provide updated information and give predictions about the world market’s performance; it does not pay appropriate attention to trade promotion; and it ignores cases when its member companies scramble for foreign partners.
The director of a food company in HCM City has suggested that the Ministry of Industry and Trade take over the work of accepting registrations for rice exports from VFA -- a job it says the association has been doing badly.
Meanwhile, Pham Vy Ben, Director of the Thap Son Joint Stock Company, stressed that the government needs to limit the power of VFA as it is very big and has been causing losses for millions of farmers and rice exporters in Vietnam.
In the last 15 years, two rice fever attacks have occurred, in 1998 and 2008.
In 1998, due to El Nino and crop failure in the Philippines, Indonesia and China, the regional rice market witnessed a rice fever with the price skyrocketing from $200/tonne to $290/tonne FOB in HCM City.
In May 1998, Vietnam decided to halt rice exports, which then made the domestic rice price drop from VND3,900/kg to VND2,300/kg. The sudden price drop made a lot of rice enterprises in the Cuu Long River Delta suffer, as they purchased rice from farmers at high prices. When rice exports were resumed, the world’s price decreased to $200/tonne.
Ten years later, in March 2008, Vietnam once again ordered a halt to rice exports. The decision was made after VFA’s Chairman, Truong Thanh Phong, sent a dispatch to the Ministry of Agriculture and Rural Development, Ministry of Industry and Trade, and Prime Minister, asking for no new export contracts to be signed.
“I dare say that Phong made the proposal for the benefit of the Southern Food Corporation, of which he was the general director, not for the benefit of the whole nation,” said Ben.
He added that the corporation at that time signed a contract on selling 25% broken rice to the Philippines at $393/tonne.
In June 2008, when rice exports were resumed, the rice price in the world’s market decreased, which meant that Vietnamese exporters did not have opportunities to sell rice at high prices anymore.
Meanwhile, Ben said that at the meeting discussing rice exports held later in Tien Giang province, Phong shifted the blame on the government and ministries for the loss of $400mil for farmers.
“The government should not give too much power to VFA,” Ben said.
“If relevant ministries want to control the inventory volume of rice, they just need to ask the State Bank of Vietnam, which will provide information about how much money rice exporters borrow from banks to collect rice. Currently, rice exporters have been relying on bank loans to collect rice to fulfill rice export contracts,” Ben added.
Export prices down sharply
VFA has released a notice, showing the floor export prices which rice export companies should refer to when making deals with partners.
5% broken rice price, which was $450/tonne before VFA released the decision on halting rice exports, has dropped to $410/tonne, while 25% broken rice price, which was priced at $420/tonne, has decreased to $380/tonne.
Though the floor price has been lowered by $40/tonne, businesses still complain they are having difficulty finding customers.
“The order to halt rice exports in February 2009 issued by VFA removed business opportunities for enterprises. “As a lot of contracts signed before at high prices have been cancelled, foreign partners have left for other markets,” a businessman said.
VietNamNet, TP
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