The Vietnam Food Association (VFA) has ordered its members to buy 1 million tons of rice from farmers and stock the amount for three months to keep up the price for the grain.
The purchasing period will be between March 1 and April 15 when harvest of the winter-spring crop gets busy in the Mekong Delta, the country’s rice bowl.
Though Vietnam has won contracts to ship around 1.3 million tons of rice to Bangladesh and Indonesia, its failure to sign an export agreement with the Philippines which imported 1.5 million tons of rice at this time last year has negatively impacted prices, Truong Thanh Phong, VFA Chairman, remarked.
Consumption is currently a problem since firms have secured no deals for the second quarter onwards, making it most advisable for VFA members to buy and stock rice to keep domestic prices at a high level and support export deals, the bloc said.
Sixty of the food group’s 117 members will partake in the rice purchase at a market price which will surely be no less than VND5,000 per kilogram.
VFA said they have not asked for interest subsidies from the government but suggested banks facilitate the purchase campaign with preferential lending policies.
The Southeast Asian country is now facing difficulty in exporting its grain since prices tend to go down, worsened by stagnated deals, VFA said in a conference on rice Thursday in Ho Chi Minh City.
It revealed prices of the 5 percent and 25 percent broken rice are now capped by foreign buyers taking advantage of the sluggish export at US$440 and $390 per ton, respectively.
Some businesses have proposed to lower the floor export price but others go against the proposal, citing a possible consequent dip in domestic prices.
A deal of several thousand tons of rice traded at a low price will automatically set a bad precedent for the country’s remaining stock, Pham Thai Binh, Director of Trung An company based in Can Tho, said.
Vietnam should not worry too much about its rice export since supply will not be enough for rising demand this year besides a conceivable global food crisis like the one in 2008, insisted Cao Minh Lam, Director of An Giang Import Export Company.
The Philippines will definitely have to import 1.5 millions of rice at least by the end of this year and Vietnam would be its ultimate choice thanks to reasonable prices, according to Phong.
Vietnamese businesses then should not hastily export rice at low prices because the prices will rise towards the end of the year or at least stay as high as it is now, he added.
Phong underlined his belief by revealing Indonesia has yet to finalize its deal to import 820,000 tons of rice from Thailand and it will continue importing more rice in June and July this year.