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Vietnam exporting rice in big quantities, but at low prices
Though the second-biggest rice exporter in the world, Vietnam exports rice at nearly the lowest levels in the world. And it is simply because Vietnamese exporters offer to sell rice at low prices.
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Prices of Thai rice (red columns) and Vietnamese rice (black) |
According to Huynh Minh Hue, Deputy Chairman of the Vietnam Food Association (VFA), Vietnam’s export rice price is always lower than the price of Thailand’s rice of the same kind. However, the noteworthy thing is that the gap between Vietnam’s and Thailand’s rice export prices has become bigger. Especially, Vietnam’s rice price has become even lower than Pakistan’s though the quality of Vietnam’s rice is recognised as better than Pakistan’s.
Export volume up, value down
According to VFA, Vietnam had exported 5,632 million tonnes of rice by August 27, an increase of 66.58 percent in comparison with the same period of last year, but it had reaped $1.834 billion only, a decrease of 3.64 percent in value.
According to the Ministry of Agriculture and Rural Development, Vietnam’s export price stayed at $413 per tonne in late June and early July for 5 percent broken rice and $355 per tonne for 25 percent broken rice. Meanwhile, the export price dropped to the year’s deepest low in August to $392.94 per tonne and $340.39 per tonne, respectively. The average export price of Thailand’s rice in August was $524.26 and $432.06 per tonne, respectively.
The noteworthy thing is that though the high-quality rice exports increased sharply in comparison with the same period of last year, the average export price still decreased. Vietnamese enterprises exported 1,606 million tonnes of high-quality rice, accounting for 39.09 percent of total rice exports.
There are favourable conditions for rice export as the demand for rice has been high from import countries, while supply has been low, since Thailand and India have not sold reserved rice to the market.
Rice exporters do themselves harm
Deputy Chairman of VFA Nguyen Tho Tri said that when the world’s market was gloomy, some Vietnamese companies rushed to export rice at low prices. Some other companies, which do not have big depots to store rice, also rushed to sell rice, offering low export prices, thus forcing the average export price down.
Tri said that though VFA has set the floor export price at $400 per tonne, some exporters still offer to sell at $380 per tonne.
Under the current regulations, enterprises which sign contracts at prices lower than the floor prices will not be able to register export contracts with VFA. However, Tri said, enterprises have many methods to ‘dodge the laws’.
“Just a few exporters that agree to export rice at prices lower than the floor prices are enough to provide foreign importers with the means to force Vietnam’s export prices down,” Tri said.
Price down by 29 percent
According to the Ministry of Industry and Trade, exports of farm produce all have increased: rice exports have increased by 43 percent, pepper 46.8 percent and coffee 17 percent. However, the export price decreases have made export turnover decrease by 10 percent in comparison with the same period of 2008. Especially, the rice export price has dropped by 29 percent.
Hue of VFA said that Vietnam should aim to keep high export prices rather than increasing export volume. He said that many Vietnamese exporters may cancel export contracts if Vietnamese export prices go down.
The rice market in Mekong Delta has been ‘cold’ since enterprises collected 400,000 tonnes of rice to store as per request of VFA. The dried rice is now selling at 3,600 dong per kilogramme, while long grain rice is priced at 3,800 dong per kilogramme.
VietNamNet, TT
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