Exports of Vietnamese agricultural products have been hit hard by the global economic slowdown, with falling demand sending prices plummeting.
Global prices of key crops, such as rice, rubber, pepper, cashews and coffee, have all declined in recent weeks and months.
Nguyen Xuan Vinh, the owner of a rubber plantation in the southern Binh Phuoc Province, said he was going to ask his rubber tappers to stop working because he can’t afford to pay their salaries anymore.
Vinh said rubber prices had dropped by more than half since July to about VND28 million (US$1,670) per ton. The price drop means the plantation is now only earning VND5 million ($297) every day, a quarter of its usual income.
The supply of rubber is currently far in excess of demand, according to Binh Phuoc Province Department of Industry and Trade Director Ho Van Huu.
The director of a rubber company in Binh Duong Province, who did not wish to be named, said as the global economy declined, the consumption of rubber products, especially by the car industry, had fallen sharply. The global slowdown is expected to continue to suppress demand for rubber for car tires.
Indonesia last week asked producers to cut the frequency of tree tapping to curb output and support prices that have fallen to the lowest since July 2005 on the Tokyo Commodity Exchange.
Thailand, the world’s biggest rubber exporter, Indonesia, the second-largest, and Malaysia will meet in Bangkok on October 29 and 30 to discuss measures to stem the decline in prices.
Natural rubber futures have fallen for seven straight weeks on the Tokyo Commodity Exchange.
“Demand will be under pressure for the next two or three quarters,” said Felix Yeo, trading manager at a Singapore unit of Japan’s largest rubber-trading company Marubeni.
Export prices of cashew, coffee, pepper and rice are also falling.
Nguyen Thanh Binh, vice chairman of the Cashew Association in Binh Phuoc Province, said cashew prices last week dropped by $0.20-0.50 per kilogram from the previous week.
Meanwhile, the average pepper price is now VND37,000 ($2.20) per kilogram, a VND2,000 (12 cent) drop from last month. According to the Vietnam Pepper Association, many farmers and dealers are stockpiling pepper, hoping for a price surge.
Export prices of coffee have also fallen to about $1,670 a ton, from $2,000 a ton last month, Vietnam News quoted Doan Trieu Nhan, a senior official at the Vietnam Coffee and Cocoa Association, as saying.
Rice exporters in the Mekong Delta are also reportedly sitting on significant stockpiles after they encountered difficulties finding buyers.
A manager of a rice exporting company in Long An Province on Monday said exporters stopped buying rice from farmers last week.
“It is highly likely that we will have to sell under market prices to clear our stockpiles to prepare for the upcoming winter-spring crop,” the manager said.
The Ministry of Industry and Trade has recently asked the Finance
Ministry to slash duties on rice exports to zero, Hanoi Moi newspaper reported Tuesday, citing an unidentified official of the trade ministry.
The lack of export duties will help trading companies increase profits and encourage them to buy more rice from farmer stockpiles as the world price tumbles, the report said.
Vietnam, the second-biggest rice exporter, imposed a tax on exports in July on concern there would be a shortage. The tax was as much as VND2.9 million ($174) on rice that cost $1,300 a ton at the time. The country doesn’t tax shipments that cost less than $800 a ton.
This week, the highest grade of rice grown in Vietnam – 5 percent broken – sold for $505 per ton. In May it was fetching $1,088 per ton.
Global supplies, at a record low of 73 million tons as recently as 2005, are expected by the International Rice Research Institute to reach 82 million tons this year and next, AP reported.
The institute projects a 1 percent increase in milled rice production this year, to 432 million tons, the news wire said.
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FARMERS PUT THEIR HANDS OUT
Nguyen Quoc Cuong, chairman of the Vietnam Farmers’ Union, proposed the government protect farmers from market fluctuations. Prices of input materials, fuel, electricity and coal should be taken into consideration, he said.
As input costs skyrocketed, the selling prices of some agricultural products were declining, Cuong said, adding a great volume of rice was being stocked in the Mekong Delta, the country’s rice basket.
Pointing out some localities were yet to finish disbursing government financial aid – made available in March - to fishermen to help them cope with soaring fuel prices, Cuong said support policies for farmers should be implemented quickly.
He said the government should ask large state-run companies, which were capable of controlling the market, to purchase agricultural products at “reasonable” prices to ensure farmers could make a profit.
In August, Prime Minister Nguyen Tan Dung requested food corporations buy all the summer-fall rice crop and ensure farmers made at least 40 percent profit on their harvest.
But as the grain was still being stockpiled in large quantities, Cuong urged the government to monitor purchasing activities more strictly.
Cao Duc Phat, Minister of Agriculture and Rural Development, said the government was considering some proposals to assist farmers. Phat said an agriculture insurance fund should be considered.
Phat also said his ministry and the Ministry of Planning and Investment were checking related legal documents for adjustment proposals in a bid to attract more investors, including foreigners, to the country’s agriculture sector. |
