VietNamNet Bridge – Vietnamese rice export price has, for the second time in this year, surpassed Thai rice export price. However, the information brings more worries than joys.
Rice exporters complain that they still cannot benefit from the export price increases, because the domestic prices of material rice have been increasing steadily. They have also been warned that orders may leave Vietnam for Thailand.
More worries than joys
Le Truong Son, General Director of Docimexco, which has been assigned by the Vietnam Food Association (VFA) to export 8000 tons of rice to Indonesia, has confirmed that the Vietnamese rice export price has increased to 560 dollars per ton, leaving the Thai rice price behind. This is for the second time in 2011 Vietnamese rice is more expensive than Thai. Prior to that, the same thing occurred in April 2011, when Vietnamese rice price increased to 470 dollars per ton.
However, he has also said that the price level is just for reference, while no transaction has been made, since importers have not accepted the price.
“Most exporters are now trying to fulfill the contracts signed before. Meanwhile, no one dares to sign new contracts at this moment, when the domestic prices are escalating,” he said.
The rice export prices would lead to the domestic price increases, which would make a lot of exporters suffer, because they now still have to collect rice to fulfill the orders signed before at the lower prices. Sources said that the export price fixed in the contract on exporting 500,000 tons of rice to Indonesia also is not high.
Man, the manager of Lien Hiep private run enterprise in Tien Giang province, said that the rice processing workshops have been running at full capacity these days, so that the enterprise can deliver enough rice to exporters to fulfill the contract on exporting five percent broken rice to Malaysia.
Man, who supplies rice to export companies, said that the domestic price increases have caused a big headache to enterprises. He believes that the contract with the Malaysian partner has the export price of around 500 dollars per ton. Meanwhile, brown unpolished rice is priced at 9200 dong per kilo on the domestic market, and polished rice at 10,700 dong per kilo. This means that the domestic prices have climbed to the levels nearly equal to the export prices.
“My workers and my machines have been running at full capacity these days. I have to deliver products soon, or I will incur heavy losses,” Man said.
The problem, according to Man, is that though anticipating the rice price increases, enterprises cannot purchase rice materials in big quantities. Lien Hiep’s storehouse, for example, has the capacity of 3000-4000 tons, but Man said, he just stores 1000-2000 tons only, because the bank loan interest rates have been always very high.
The multi-billion dollar worth lessons
Man recalled a bitter story which occurred in June 2011, when Lien Hiep accepted to sell rice at 9300 dong per kilo. At that time, he was sure that the price was high enough to bring profits, because the domestic price stayed at 8300 dong per kilo. However, when Lien Hiep collected rice later to fulfill the contract, the domestic rice price unexpectedly jumped to 10,300 dong per kilo, which then brought the loss of two billion dong.
Thoi bao Kinh te Saigon has quoted its sources as saying that a big rice export company in Can Tho City has decided to unilaterally break contracts, because it committed to export rice before at the low prices, while the domestic prices have been escalating.
An exporter in Dong Thap said that the price fluctuations always put enterprises into dilemma. The problem is that enterprises do not have money and cannot borrow money from banks to store rice in anticipation of the price increases. Or their storehouses are not big enough.
By August 11, Vietnam has exported 4.7 million tons of rice, worth 2.2 billion dollars.