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Rice traders set to lose as prices take a dive
Rice traders around the country are losing profits after buying rice stocks at high prices in November and December only to see prices nosedive recently.
“During the last harvesting season we paid farmers 3,500 kip a kg for their paddy rice but this year the price has decreased to 3,000 kip,” the owner of a Vientiane rice mill, Ms. Vongphachanh Phimmasone, told Vientiane Times yesterday.
The main reason for the fall in rice prices is a government ban placed on rice exports after local people were affected by high prices last year, she said.
She said that the cost of rice in the north of the country may be even lower because rice farmers are unable to export their crops to Vietnam and China as they usually do.
The price of rice peaked last year at 7,000-9,000 kip per kg for polished rice, depending on grade, while paddy rice rose to about 4,000 kip a kg, said Ms Vongphanchanh.
This year however, she has been selling polished rice at 5,500-6,000 kip a kg and she believes prices will remain stable at around this level for sometime.
A mill owner in Savannakhet province, Ms. Phitsamay Singhavong, said she is having difficulties sourcing paddy rice from farmers in the province or even neighbouring provinces because business groups are quickly buying up stocks of the grain.
He believes these business groups are acting on behalf of the government who will stockpile the rice and release it for general sale at a time when a lack of supply in the market pushes the price back up.
In previous years, Champassak province produced sufficient rice to meet demand in the province; however exports to neighbouring countries and water shortages dur ing the last wet season mean there is now a shortage of the grain in the southern province.
Other southern provinces including Saravan, Attapeu and Savannakhet were similarly affected by the issues which forced the government to ban rice exports.
The government has approved a 50 billion kip project to expand rice stockpiles in various provinces during 2010-11 in an effort to keep rice prices stable at times when they would normally peak.
The move came in response to a report from the Ministry of Agriculture and Forestry that revealed 40 districts in several provinces will face severe rice shortages this year, making life extremely difficult for poor families.
The stockpiles aim to secure rice prices for farmers while ensuring food security in the country, as well as helping consumers across the country cope with high prices.
vientiane times
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