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Rice exports face Indian, Pakistani competition
Local exporters have not signed any rice export contracts in October due to stiff competition from low-priced rice in India and Pakistan, speakers said at a meeting held by the Viet Nam Food Association (VFA) in HCM City last Friday.
Le Minh Truong, Director of the Can Tho-based Song Hau Food Co, said his company only bought paddy for the contracts signed earlier this year in October, because it had signed no new export contract.
"We cannot sign any new contracts because of the big gap between the prices of rice from Viet Nam and India," said Truong.
He said that on November 4, Viet Nam was offering 5 per cent broken rice for US$570 per tonne while India priced it at $470 per tonne and Pakistan at $450 per tonne.
The prices of Vietnamese rice rose significantly in mid-2011 but were still lower than the price of Thai rice, making Vietnamese rice competitive in the world market.
However, the demand for Vietnamese rice has dropped since India resumed its rice export plan in August, according to Truong Thanh Phong, chairman of the VFA.
Indian rice, especially low-quality rice, had been dominating the African market while Viet Nam had only been selling high-quality rice to neighbouring markets, he said.
Meanwhile, the Thai Government's scheme to buy rice from farmers at higher prices has not been realised, and thus has had no impact on the world market.
Phong said despite huge losses of up to 6 million tonnes of paddy (or 3.6 million tonnes of rice) caused by the recent flooding, prices of Thai rice had not increased because they had big reserves – 2 million tonnes stored in Government warehouses and 3 million tonnes in traders' warehouses. Thai traders were also waiting for world rice prices to rise, he said.
Despite the competition from South Asian countries, big demand from its traditional markets would help ensure high prices for Vietnamese rice in the world market as well as reasonable prices for farmers, Phong said.
"Vietnamese rice does not directly face competition from Indian rice while being more competitive than Thai rice. That's the reason that in the coming months, local traders can still purchase paddy from local farmers at reasonable prices."
Vietnamese fragrant rice is more competitive than Thai rice and its quality has improved a lot over the last few years.
Phong asked local traders to buy more fragrant rice from the local market as well as from Cambodia to prepare for rice export contracts in 2012.
According to the VFA, in the first 10 months of 2011, Viet Nam shipped over 6.3 million tonnes of rice, up 8.4 per cent over the same period last year, earning $3.06 billion, up 24 per cent over 2010.
In the last two months of the year, an additional 700,000 tonnes of rice will be shipped, bringing the country's total rice export in 2011 to over 7 million tonnes.
Exporters were reluctant to sign new contracts as they awaited further information about the rice markets in India and Thailand, said Phong.
Nguyen Trung Kien, deputy chairman of the VFA, said local traders had reserves of 1.2 million tonnes stored in warehouses, almost twice as high as the volume of rice shipped in the last two months.
Kien said the current floods had damaged nearly 8,500ha of rice fields, accounting for 1.3 per cent of the total area under the autumn-winter crop in the Cuu Long (Mekong) Delta.
While the damage caused by the flooding would not seriously affect the Delta's rice supply, it would cause prices to rise in the coming months, he added.
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