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Rice prices fall - farmers fear losses
Farmers harvesting the first crops of the season are anxious, as rice prices have fallen sharply and traders are still selling large volumes of stocked rice.
Farmers in the Mekong Delta have harvested over 120,000 hectares of the summer- autumn crop, out of one million hectares. It is just the beginning of the harvest, but local farmers are worried about prices, which are dropping sharply.
In Cai Lay Town, Tien Giang Province, a kilo of IR 50404 rice sold at paddy fields is VND2,650 per kilo, dried rice fetches VND3,100, a decrease of between VND1,000 and 1,200 over the past three months.
Farmer Dang Van Tam, from Cha La Hamlet, Phu Nhuan Commune, said, “Not only IR 50404, but other kinds, such as OM 2514 and 2717, are witnessing a drop in prices. We now sell jasmine aromatic rice for between VND4,500 and 4,800 a kilo, while it was bought by traders between VND6,000 and 6,500 in the previous crop.”
According to Duong Quoc Nghia, deputy director of Dong Thap Province’s Department of Agricultural and Rural Development, for the current crop, local farmers have sown more than 195,000 hectares with an estimated production of over one million tons. However, only 89,000 tons from 17,000 hectares have been harvested.
With some 930,000 tons of unharvested rice, Mr. Nghia doubted that farmers can gain much profit, as “additional expenses for having the wet harvested rice dried in the rainy seasons will contribute to farmers’ financial burdens while the price of rice is falling.”
Explaining why traders cannot purchase rice from farmers at higher prices, Ho Minh Khai, director of Co Do, a rice processor and exporter located in the Mekong Delta, said, “The current drop in rice prices, in both domestic and global markets, is affecting our exports. We have no choice but to stop purchasing rice from farmers while trying to sell rice in stock as soon as possible to cut losses.“
He pointed out that in the previous crop, the company bought 21 tons of high quality rice at VND5,750 a kilo, but has sold just 14 tons. The price has now fallen to VND4,600.
Mr. Khai said, “With nearly seven tons of rice in stock, we are suffering a loss of some VND3 billion (US$ 169,490).
“We can only think about purchasing rice of summer-autumn crops from farmers after we have sold out all the rice in stock,” he added.
In Kien Giang Province, four rice export companies, including Kien Giang Tourism and Trading, Kien Giang Import-Export, CP Agricultural and Forestry Product and Agricultural Product Trading have more than 126,000 tons of rice from the previous crop in stock.
For this summer-autumn crop, local farmers will harvest some 1.2 million tons of rice, among them 400,000 tons will be used for export.
The problem is Kien Giang has no rice depot. Rice trading and export businesses have little choice but to temporarily keep the purchased rice in their warehouses. It means that if they cannot sell the rice in stock to clear their warehouses, they cannot purchase any summer-autumn rice from farmers.
The situation seems to be worse in Tien Giang Province, where Tien Giang Food was given loans from the State bank to purchase over 75,000 tons of rice of the previous crop as a reserve for export. Unfortunately, none of the rice has been exported because of the affect of the sharp fall in world rice prices.
But not all farmers in the delta are faced with bad luck. While many farmers in the region are worrying about rice prices and how to sell their produce, members of My Thanh Co-operative in My Thanh Nam Commune, Cai Lay Town, Tien Giang Province are very happy.
Provided by the ADC Company, the farmers received an advance of two-thirds of the of money needed for the production of 12 hectares of rice, which are being grown in accordance with Global GAP standards.
The estimated production of the crop is some 60 tons over 12 hectares. ADC will buy a kilo of common rice at VND6,000 and a kilo of aromatic rice at VND 9,000.
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