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Export prices down, but exporters told not to slash purchase prices
Analysts say that Vietnam should not slash the rice prices at which enterprises collect from farmers, in order to compete with cheap rice from India, Pakistan and Myanmar.
The conference reviewing the rice export in November and discussing the rice export plan for 2012 held in Tien Giang province by the Vietnam Food Association VFA heard a report that the export activities have been quiet, while the export prices have gone down, thus forcing the domestic prices down accordingly.
Rice price plummets
Huynh Minh Hue, VFA’s Secretary General, said that in November, Vietnamese exporters mainly delivered rice to Indonesia (300,000 tons) and Malaysia under the concentrated contracts. Meanwhile, the rice volume exported in November was low due to the lack of commercial contracts. The export rice was mainly fragrant and sticky rice. A lot of commercial contracts were canceled, while the export price decreased by 30-40 dollars per ton.
As a result, the domestic price has decreased. The rice price has dropped from 7500 dong per kilo to 6700 dong per kilo, while the price is expected to decrease further in the time to come.
Export companies said that previously, the domestic prices climbed to overly high levels because the domestic prices bore the influences from the Thai policy on collecting rice from Thai farmers at high prices.
However, the Thai policy remains not very clear. Meanwhile, India, Pakistan and Myanmar have offered to sell their products at very low prices, just 450 dollars per ton for 10 percent broken rice, or 360 dollars per ton for 25 percent broken rice.
The cheap rice offered by the exporters has attracted importers to shift to buy rice from them, which has led to the less orders for Thai and Vietnamese rice. Therefore, Vietnamese exporters have asked to lower the rice prices at which they collect rice from farmers. If so, the export prices would decrease, which would make Vietnamese rice successfully compete with the rice from the three countries.
However, a lot of enterprises still think that it would be not a wise move to reduce the domestic price at this moment, because this would discourage rice growers. They also said that it is not advisable to slash the rice purchase price to less than 7000 dong per kilo in order to compete with cheap rice from India, Pakistan and Myanmar.
Analysts have also said that VFA should apply a strategy on boosting exports under concentrated contracts which will help boost commercial contracts.
Farmers told to grow high quality rice
Truong Thanh Phong, VFA’s Chair, said that the world’s market is unpredictable. Now Thailand and Vietnam can only export fragrant rice, while the low quality rice market has been dominated by India, Pakistan and Myanmar.
Most recently, India has fixed the export price at 483 dollars per ton for low quality rice in a contract on providing 250,000 tons of rice to Indonesia. Meanwhile, Vietnam has also signed a contract on selling 300,000 tons or rice at 547 dollars per tone.
Analysts have warned that India now not only provides low cost rice to Africa, but it has also been trying to penetrate South East Asian market – the big market for Vietnam, which should be seen as a big threat to Vietnam.
However, Phong of VFA said that only 300,000 tons of rice has been left, which is only enough for the deliveries until February 2012. Therefore, Phong said, it is now the time for export companies to buy rice to store.
Also according to Phong, the Philippines has announced that it will import 850,000 tons of rice in 2012, which is really a big opportunity for Vietnam. Meanwhile, Thai exports would drop from 10 million tons to 8 million tons in 2012.
vietnamnet
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