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VFA chief suggests shift for rice taxes
Chairman of the Viet Nam Food Association Truong Thanh Phong spoke to Tuoi Tre (Youth) newspaper about the low price of rice in the Mekong Delta and his association’s efforts to help farmers in the area.
What is the situation with rice pricing for the summer-autumn crop in the Cuu Long (Mekong) Delta ? Why are so many companies refusing to buy rice?
Now, the price of rice is very low, and farmers must sell rice for around VND4,200-4,300 (US$0.25) per kilo. During the last winter-spring crop, when the production price per kilo was just VND2,500, farmers could sell their rice at VND5,500-6,000 ($0.3) per kilo. So now, farmers are facing serious difficulties with production alone costing VND3,500 per kilo.
In fact, all prices are increasing, but the income from rice is decreasing, leaving many farmers in dire straits. Farmers can’t sell their rice because they cannot accept such a low price, not to mention that demand is also down.
Many farmers say that the price of rice is low because companies aren’t buying rice, but rice exports have resumed. What’s the reason for this?
Rice exportation began again in early July, and enterprises have already signed contracts to export 900,000 tonnes of rice. However, the bank interest rate now is very high. Enterprises have to pay about $15 per tonne to store rice every month. As a result, many of them have chosen to wait until export vessels are ready to make purchases so as to reduce the price and the mounting bank interest.
However, this is not the main reason for the low price. Rice prices around the world have decreased dramatically. Not long ago the worst rice in Vietnam, made up of about 25 per cent broken rice, could be sold at a price of $1,200 per tonne. But now, even our best rice, which just five per cent broken rice, can be sold at only $620-630 per tonne.
Another reason for the pricing is that countries importing rice from Vietnam such as Indonesia and Malaysia are also entering their harvest season. And Africa, which has a large demand for rice, doesn’t buy ours due to high prices and shipping fees.
Is there a solution?
This is a really difficult issue for both farmers and enterprises. If farmers cannot sell their rice, many will go bankrupt because of their outstanding loans and used credit from crop season.
Meanwhile, if enterprises buy rice, they face three real problems. First, high interest rates are keeping prices high. Second, if the rice export price by the end of the year is not high, enterprises will suffer serious losses. Third, the tax on rice exports will be counted progressively from August 15 at VND500,000 ($30) per tonne of rice sold from $600 per tonne. The progressive price will depend on the rate. So one reason that companies aren’t buying now is that they are awaiting the Ministry of Finance’s regulations on exported rice taxes.
How does the Viet Nam Food Association plan to help solve these problems?
Rice farmers can get by when they are selling at VND5,500-6,000 per kilo, and some even lower at VND5,000.
In the coming days, the association will discuss solutions to the problem. Specifically it will call for enterprises to purchase rice at an affordable price of VND5,000 per kilo. Companies that reaped the benefits of rice in the beginning of the year should shoulder some of the burden.
In addition, we will propose that taxes on exported rice should be applied from $800 per tonne. Anything below is exempt from the tax.
VNS
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