 |
VFA vice chairman Pham Van Bay said at a year-end review meeting last week that the rice export sector had faced unfavorable conditions, including lower demand of major importing countries and falling prices which had lead to a tough competition among rice exporters.
India will focus on reducing its stockpile of agro-products that stands at around 60 million tonnes, including 26.3 million tonnes of rice.
Myanmar is also boosting rice exports this year. Meanwhile, the rice inventory in Thailand built up last year as the export price was less competitive, and the possibility of Thailand shoring up rice exports this year is high.
Vietnam is in difficulty as well. VFA chairman Truong Thanh Phong said Vietnam’s rice export to Asian countries accounted for 67% of total volume while that to African countries was 23%.
However, Vietnam’s African market share of 20% for low-grade rice, namely 15-25% broken, might go lost but the high-grade rice market share of 3% may remain intact.
“Normally, at this time of year, Vietnam often signs big contracts with Indonesia and Bangladesh, but has got no orders from these two countries so far this year. Local rice exporters signed contracts to sell 1.8 million tonnes in the first quarter last year, but the figure in the first quarter this year is only 1.1 million tonnes,” said Phong.
Vietnam is at a disadvantage as the delivery of some 780,000 tonnes from contracts which have been signed this year lasts until August. But the first quarter last year saw the same amount delivered.
Therefore, Vietnam will encounter many difficulties in exporting rice in the year’s first half, especially in the second quarter, if it fails to secure contracts with the Philippines, Phong added.
He warned of low consumption which has lasted since the third quarter last year if volume of low-grade rice continues to increase this year.
Le Viet Hai, director of Mekong Export-Import Co. in Can Tho City, said rice trading at this time was quiet, affecting domestic rice prices. Hai proposed stocking up on rice soon to prevent the price from further sliding just to affect farmers.
Farmers did not benefit from the high rice price last year. “There should be an intervention by authorities when the rice price is down. The competition between exporting firms brings no benefits but pushes down export and domestic prices,” said Pham Thai Binh, director of Trung An Co.
Speaking at the meeting, Deputy Minister of Industry and Trade Nguyen Thanh Bien said the ministry would seek to control the export rice and cushion any impact on the local market and farmers.
Phong said VFA would buy rice from farmers for temporary stockpiling if the domestic price declined. VFA will require its member firms to buy rice to keep the paddy (unhusked rice) above VND5,000 per kg.
The Ministry of Finance has estimated that with a production cost of VND4,400 for a kg of rice, farmers can earn a profit margin of 30%.
Vietnam exported 7.1 million tonnes last year with total export turnover of $3.5 billion.
