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Rice price plunges into chaos
The rice price in the Mekong Delta has crashed by about 25% in the past ten days due to a standstill in export, which is attributed by traders to the illogical price regulation mechanism imposed by the food association.
The average price in Can Tho City on Tuesday was trading at some VND2,200 a kilo of wet paddy, and VND3,500-3,600 a kilo of dried paddy, a fall of some VND500 compared to ten days ago. The price of long-grained rice for export in Soc Trang Province nearby, the key rice growing locality in the delta, is hovering around VND5,300 a kilo, or some US$320 a ton.
Traders, most of whom requested anonymity, harshly criticized the Vietnam Food Association (VFA), saying its price regulation mechanism has choked off exports. The association currently sets the floor price for export contracts at US$600 a ton of 5% broken rice, which all exporters have to abide by, while the current price should be some US$520 a ton.
In the first 12 days of this month, Vietnam shipped abroad a mere 80,100 tons of rice compared to over 510,000 tons in August. As the outbound shipment is blocked, traders cannot buy rice from farmers for the lack of warehousing facilities.
The price regulation mechanism is causing great agony for farmers, who cannot sell their produce to service bank loans or pay debts to traders of agricultural materials like fertilizer or insecticide.
A local rice exporter who asked not to be named attacked the association's rule.
"VFA always gives a vague explanation that the export price is maintained high to protect local production and local farmers, and to prevent cheap selling," he said angrily.
The situation in the country's rice basket looks more gloomy as the next harvest is drawing closer. Many fear that rice farmers will be pushed deeper into indebtedness if the paddy price remains dampened.
The association's pricing rule ironically is unknown to some central authorities.
Diep Kinh Tan, deputy minister of agriculture and rural development, said he himself did not learn that the floor price set by VFA was higher than the market price.
"I only learned of this fact late last week," Tan said, adding "I will inform the agriculture ministry of the situation so that quick solutions will be brought out to relieve hardship for farmers."
The VFA, meanwhile, still defends in stance.
"The floor price set out by VFA is flexible, not as complained by some rice-exporting enterprises to be preventively high and inflexible," said Huynh Minh Hue, acting general secretary of the association.
Hue repeated the association's voice to the Daily over the phone on Tuesday that "the floor price is aimed to protect the rights and interests of exporters and farmers. That is for the sake of the common benefits, and there may be some enterprises finding the mechanism illogical."
The Government early last month instructed rice exporters to buy all commercial rice from farmers at a price level which ensures a profit margin of 40% for farmers. The Government also asked banks to reschedule loans for farmers and extend new loans, but most farmers could not obtain new money due to the lack of collateral.
VNN
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