VietNamNet Bridge – While the rice prices in the world market continuously increase, there has been no response from the Ministry of Industry and Trade (MOIT) and Vietnam Food Association (VFA): they have not released any guidance to exporters on how to deal with the rising prices.
A report released by VFA showed that by February 10, 2011, Vietnam had exported 604,000 tons of rice with the FOB value of $302 million and the CIF value of $320 million. The figures represent the increase of 27.7 percent in the rice export volume and the increase o 36.34 percent in the FOB value. With the average price of $500 for the imported consignments, the export price has increased by $31 per ton in comparison with the same period of 2010.
However, the news about the January’s biggest ever exported volume of rice and about the rising food prices in the world seem to not affect MOIT, the agency that regulates the rice export, and VFA, the association representing rice exporters and protecting exporters’ benefits.
Truong Thanh Phong, Chair of VFA, said that with the demand and the rice price on the rise, Vietnamese enterprises would not meet any difficulties in selling rice. Therefore, it is not advisable to sign big contracts right at this moment, because the prices may increase in the near future. The information that the rice output in 2011 will increase (25 million tons of rice), should press rice exporters to bargain.
To date, MOIT has not made any official announcement. On February 16, the ministry submitted a report to the Government about the exports in January. However, except the reported figures about the export volume and the explanations about the sharp increases in the export turnover in January, there was no information about how the ministry plans to respond to the food price increases.
How Vietnam will take full advantage of the food price increases as the second biggest rice exporter, who is controlling 67.5 percent of the market share in South East Asia, where the Philippines and Indonesia are the two biggest food importers?
The increasingly high demand from rice importing countries has pushed the rice prices up. Bangladesh imported 400,000 tons of rice from Vietnam in 2010 and it plans to import 250,000 tons in 2011. The demand is also high from other loyal importers, including Indonesia and the Philippines. However, sources said that they were waiting for Vietnam to harvest the winter-spring crop, so that they can purchase rice at low prices.
The bad weather in China and India, the uncertainties in Africa and the higher demand in the world are the most noteworthy factors. This means that the right to control prices rests with rice exporters.
Should Vietnam boost exports right now or keep rice in stores and wait for the prices to increase? This is a question. Vietnam should learn the lesson from the rice export management in 2008, when it restricted rice exports despite the increasing prices in the world market, which caused big losses to farmers.
Phong believes that the world demand for rice is still very big, therefore, if Vietnam can control the stocks, it will be able to control the sale prices on the market. Thoi bao Kinh te Saigon has quoted its source from MOIT as saying that the ministry will make decisions after the price increases further.
“Vietnam is the second biggest rice exporter in the world. Meanwhile, all forecasts say that the rice prices will be high this year. Therefore, we need to grab opportunities to export rice at the best possible prices, to help farmers get higher profits,” said Cao Minh Lam, Director of An Giang Import-Export Company at a conference in mid February.
In Mekong Delta’s provinces, farmers are harvesting the winter-spring crop. VFA has announced that it has kicked off the program to collect one million tons of rice to store. The program will begin on March 1 and finish on April 15. Rice will be purchased by 60-65 enterprises belonging to VFA at the market prices.
However, VFA has warned that with the current high lending interest rates of 16-18 percent, rice exporters will not have enough capital to collect the planned volume of rice. It has asked for Government’s support by allowing the enterprises, which buy rice to store, to borrow money at the interest rate of 14.5 percent.