Rice prices boosted after export limit lifted

A recent greenlight from the government to expand rice exports after months of restrictions has injected new life into the paddy market in the Mekong Delta region.

On Thursday last week, Prime Minister Nguyen Tan Dung ordered an increase in rice exports to help farmers sell off their harvests and to help satiate the under-supplied world market.

In Soc Trang, Dong Thap and Bac Lieu provinces, rice prices are fetching an average of over 5,100 per kilogram (US$0.29-$0.30), an increase of VND300 per kilogram since the export limit lift was lifted.

In April, the government said it would temporarily cease signing new rice export contracts until the end of June and limit the year’s rice exports to between 3.5 million and 4 million tons in a bid to keep domestic prices down as inflation soared.

The move also aimed to ensure an adequate supply of rice for local consumption amid a global food crisis.

The prices of several high-quality rice varieties have reached as high as VND6,200 per kilogram in the rice basket.

“The farmers are set for a bumper harvest for the summer-fall crop. Paddy yield has reached up to 5.5 tons per hectare,” said Nguyen Loi Duc, a farmer in An Giang Province’s Luong An Tra Commune.

“But we fear rice companies won’t want to buy the rice during the harvest peak by the end of this month,” Duc said.

Duc’s worries are far from rare among delta farmers these days as rice distributors have appeared unready to buy.

Nguyen Anh Phong, Deputy Director of the Tien Giang Food Company, said it has been difficult for many rice businesses to borrow from banks due to high loan interest rates.

Many rice firms have also said that the Vietnam Food Association (VFA) had yet to issue any formal guidelines for the export increase in line with government instructions.

They urged VFA to soon approve their proposals for new export contracts.

Le Viet Hai, director of the Mekong Company, said he had sought the go-ahead from VFA for the export of an additional 13,000 tons of rice after the limit lift.

But the proposal had yet to be approved, Hai said.

Since January, Viet Nam has exported around 2.2 tons of rice to major markets like the Philippines, Indonesia and Cuba – 19 percent more than over the same period in 2007, according to government statistics.

That increase in rice exports, combined with inflation worldwide, has led to a sharp rise in revenues.

From January to May, Viet Nam earned US$1.2 billion on rice exports – an increase of 94.1 percent over the same period last year, according to official estimates.

The country is capable of exporting around 4-4.5 million tons of rice by the end of the year without jeopardizing national food security, according to government estimates.

Last week, the government website said the rice harvest “was very good this year, in the north as well as in the south.” (TN)