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Rice prices go up in Mekong delta
There are signs of rising rice prices in the Mekong Delta region following businesses’ efforts to buy rice for storage, the Prime Minister’s decision to raise rice export prices and the State Bank’s offer of preferential loans for rice exporters.
Domestic rice prices have risen 12 percent to hover around VND4,800-4,900 per kilo, according to the Institute for Agricultural and Rural Development Policies and Strategies.
In Can Tho city, rice is sold for about VND4,600-5,100 per kilo, says Le Van Hung, Vice Director of the local department of industry and trade. Enterprises daily purchase 100-200 tonnes of rice on average; some even buy 300-400 tonnes, he adds.
The Song Hau Food company has stored more than 40,000 tonnes of husked rice and 5,100 tonnes of unhusked rice at VND5,850-6,100 per kilo. The company plans to buy another 40,000 tonnes of rice.
The vice chairman of the An Giang provincial People’s Committee, Vuong Dinh Thanh, says that the enterprises in his province are purchasing about 3,000 tonnes of rice per day to achieve the set target of 150,000 tonnes. The Tien Giang Food company has bought 10,000 tonnes of rice at VND5,900-6,100 per kilo.
Businesses in Dong Thap province also have a plan to purchase 660,000 tonnes of husked rice by the end of August.
Meanwhile, the Bank for Investment and Development of Vietnam (BIDV) has pledged to provide VND1,500 billion with an annual interest rate of 18.5 percent for enterprises to buy rice from farmers.
The Joint-Stock Bank for Foreign Trade of Vietnam (VCB) has committed to provide loans for businesses with an interest rate of 19.5 percent/year, while the Bank for Agriculture and Rural Development (Agribank) will offer loans worth VND10,000 billion for businesses with an interest rate of 19.8 percent/year.
However, Le Van Hung, Deputy Director of the Can Tho provincial Department of Industry and Trade, says that with the current interest rates, businesses cannot make profit from reserves.
Mr Hung’s view is shared by Bui Ngoc Suong, Chairman of the Kien Giang provincial People’s Committee. He says businesses involved in purchasing rice for storage will suffer great losses if they borrow high-interest loans. At present Kien Giang is cooperating with the Vietnam Food Association to seek import partners. As rice prices are declining on the global market, many businesses hesitate to borrow high-interest loans from local banks.
Vietnamese rice exporters under pressure?
Deputy Minister of Industry and Trade Nguyen Thanh Bien has asked the Vietnam Food Association and rice exporters to fulfill their signed export contracts as scheduled. He has also called for an additional purchase of 100,000-200,000 tonnes of rice for export in September, with the aim of raising the purchasing price of rice in the Mekong Delta region.
Vietnam’s export rice prices have dropped by 8.3 percent over the past two weeks due to the surging supply of rice from the Mekong Delta region. In addition, Vietnam’s rice export volume is low due to the unchanged flooring price (around US$600/tonne of five-percent broken rice). This is just US$20-50/tonne higher than the purchasing price (US$550-575/tonne).
Hence, Vietnamese rice exporter are facing difficulties on both local and foreign markets. Businesses are urging the Vietnam Food Association to reduce the flooring price of five-percent broken rice to US$550/tonne. If this step is taken, rice export activities will be promoted and the Mekong Delta region’s fears of stockpiled rice will be eased before they set about growing the summer-autumn rice crop.
Currently, the price of five-percent broken rice stays at US$575/tonne, while 25-percent broken rice is traded at US$525/tonne. Since the beginning of this year, Vietnam has exported 2.77 million tones of rice, earning US$1.6 billion.
Economists believe that rice prices on the world market will be maintained at US$550-575/tonne until the end of August.
VOV
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