VietNamNet Bridge – Vietnamese exporters have won the bid to provide 800,000 tons of rice to the Philippines, thanks to low bids.

Vietnam’s rice price high or low?

Nguyen Hung Linh, Chair of the Vietnam Food Association (VFA), declined to provide information about the winning bid, but said it was a reasonable market price.

Meanwhile, Thoi bao Kinh te Saigon has quoted its sources as saying that Vietnam obtained the right to sell rice to the Philippines for $439 per ton CIF (cost, insurance, freight). The price was lower than that of the next lowest bid by $30 per ton. Cambodian exporters bid $469 per ton, with Thailand bidding $474.

According to Nguyen Dinh Bich, a well-known rice analyst, Vietnamese rice exporters may have bid exceptionally low prices out of a fear of being undercut by Thailand, whom they’d heard was determined to win the bid to clear its excessive stocks.

Bich noted that even if the Thai government had accepted selling rice to Thai businesses at low prices in order to support its farmers, the export prices would not be very low, because those businesses would have to tack on the costs of transportation, polishing and other expenses.

Lam Anh Tuan, Director of Thinh Phat Company Ltd, which is a member of VFA, noted that the “ability of the staff joining the bid for providing rice to the Philippines is limited”.

He stressed that the selling price could have been $30 per ton higher.

Another rice exporter also thinks that Vietnam made a blunder when offering such a drastically low price. “It seemed that winning the bid was the overriding priority for Vietnam,” he said.

Meanwhile, an exporter disagreed with Tuan, saying that Vietnam needed to bid prices which allowed it to win the bid and ensure profits for enterprises.

Farmers will suffer

It will be the farmers, not the rice exporters, who suffer most from the low export prices.

It can be expected that, in order to assure themselves of a profit, rice exporters will force the domestic rice price down. Farmers will have to sell their rice at low prices, making only small profits, or possibly even taking losses.

Contrary to all predictions, the ongoing government-instituted program to purchase one million tons of rice from Vietnamese farmers for storage has not helped to boost domestic prices. Prices did climb during the first days of the rice buying campaign, but later declined.

Dr Nguyen Ngoc Kinh, a farm produce expert, asserts that only merchants, who collect rice from farmers to sell to businesses, and rice exporters benefit from the rice production chain. Meanwhile, farmers’ profits are unstable because of their dependence on the market price fluctuations.

Businesses refuse to provide capital and give support to farmers. They would rather inject money into agriculture materials, industrial products or real estate to make a profit.

Kinh also states that farmers can make only a modest profit of VND50,000 per “sao” (360 square meters) of rice field, a sum of money just enough for two bowls of pho (Vietnamese traditional dish – noodles served with beef or chicken).

Dat Viet