Rice harvest indigestion - Gentraco Corporation

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Tue, 22/05/2012 - 6:14 am.

Rice harvest indigestion

VietNamNet Bridge - Despite a bumper crop, Mekong River Delta farmers are struggling to sell their crops to wholesalers...

According to the Ministry of Agriculture and Rural Development’s (MARD) Crops Production Department, the Mekong Delta, home to 90 per cent of Vietnam’s rice exports, has harvested more than half of the total 1.6 million hectares of the summer-autumn rice crop, which brought in an average output of over five tonnes per hectare.

Farmers and buyers are engaged in a game of cat and mouse

It is expected the crop will bring in more than eight million tonnes of rice, raising the total rice output of the two major winter-spring and summer-autumn rice crops to more than 18 million tonnes. However, according to the Vietnam Food Association (VFA), fetched prices have been slashed, going for VND4.2 million ($250) per tonne, down from the VND5 million ($297.6) per tonne in other harvests.

“A large amount of rice was left unsold as farmers will not sell paddy at low prices,” said Truong Thanh Phong, VFA chairman.

Wholesalers do not want to boost rice purchases as they are short of cash, while lending rates from bank loans are now overly high, standing at 20.6-20.8 per cent, per year A Dong Thap Foods and Agriculture Company representative, one of Vietnam’s biggest rice exporters, said companies were renting storage facilities, which could push their costs up.

“Meanwhile, the world’s rice price is going down quickly because the global supply has become abundant thanks to big crops from growing countries,” the representative said.

Experts from MARD’s Information Centre for Agriculture and Rural Development said enterprises could not buy rice at high prices while they were not sure of price hikes in rice exports until the year’s end.

“The government recently imposed a rice export tax and tax levels will increase in accordance with export prices. Companies are taking care before deciding on rice purchases,” said Pham Hoang Ngan, a rice expert from the information centre.

“Enterprises will boost purchases when ships are about to arrive in order to save costs,” the representative said.

Since early July when the government permitted the resumption of rice exports, companies have signed deals to ship 900,000 tonnes of the staple, raising total export volume to 3.4 million tonnes since early this year. The country is expected to export 4-4.5 million tonnes of rice this year earning an export turnover of $1.7-$2 billion.

(Source: VIR)