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Paddy purchases going slowly
The purchase of paddies from farmers is still going slowly with the price up by VND100-200/kg only, as rice exporters still have to buy rice through merchants.
Tran Ngoc Thieu, Head of the Planning Division under the Northern Food Corporation (Vinafood 1), said that right after the government ordered the purchase of paddies from farmers, the corporation gathered leaders of 29 member companies to discuss the purchases. A deputy director of the corporation has been sent to localities in the Cuu Long River Delta to regulate the paddy purchases.
Vinafood 1 has been assigned to collect 200,000 tonnes of rice, and it plans to get the assigned volume in August or by September 15 at the latest. It has purchased 70,000 tonnes of rice so far.
However, Thieu said that a lot of problems have arisen during the paddy collection. Vinafood 1 has 127,000 tonnes of rice in stock, and the inventory volume may reach 327,000 tonnes if it purchases more rice as requested by the Vietnam Food Association.
Meanwhile, the corporation has signed contracts to export 100,000 tonnes so far, and the corporation plans to export 350,000 tonnes of rice more by the end of the year. However, this proves to be a very difficult task, as big rice consumers have imported enough rice, while export prices remain unclear.
Moreover, in order to purchase 200,000 tonnes of rice, Vinafood 1’s member companies will have to borrow VND1,500bil from banks at the interest rate of 18.9% per annum. And even if accepting the high interest rate, it is still difficult to get loans as loans prove to be scarce.
As such, rice exporters have been forced to buy more rice while they still cannot find outlets for the rice. Meanwhile, the quality of the summer-autumn crop proves to be low, which will cause difficulties for enterprises’ business.
Thieu also confirmed that rice exporters have to purchase rice at high prices, but farmers do not sell rice at high prices. The problem lies in the fact that the enterprises which have been ordered to buy rice cannot contact farmers directly, and they have to purchase rice through merchants.
Thieu said that for a long time, the network of merchants has been acting as the intermediary, purchasing paddies directly from farmers, then preliminarily treating the paddies to re-sell to export companies.
The material rice price has increased by VND250/kg since enterprises began purchasing paddies as per request of the Prime Minister.
VNN
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