VietNamNet Bridge – Vietnamese rice exporters have been selling rice at the prices below the floor prices, thus harming the whole rice agriculture production.

In principle, the Vietnam Food Association (VFA) sets up the floor rice export price, i.e. the minimum export price, for Vietnam’s rice exports. Vietnamese exporters should not sell rice at the prices lower than the floor prices to protect the value of Vietnam’s rice.

However, the decisions by VFA have never been respected by rice exporters and they have been existing on paper only. In fact, exporters still sell rice at the prices they want, or dump rice products in the world market in order to scramble for clients.

The noteworthy thing is that while VFA and rice exporters agree that the activity of dumping rice exports would harm the whole rice industry of Vietnam, no one thinks that it is necessary to punish the enterprises.

VFA, while forecasting that 2013 would be a tough year for rice exporters, which would badly affect the domestic market, on December 24, 2012, announced the floor prices for the contracts to be signed from December 27, 2012. Under the decision, Vietnam’s 35 percent broken rice must not be offered to sell at less than $370. Rice exporters can define the sale prices themselves when selling 5 percent, 10 percent and 25 percent broken rice, but the prices must not be lower than $370.

Nevertheless, Vietnamese rice exporters have been continuously decreasing the offer prices since the beginning of the year. 25 percent broken rice has been offered at $345-360 per ton, who even lower than the floor price level for lower quality exports of $370 for 35 percent broken rice.

VFA, after a recent steering committee’s conference held in HCM City on February 1, 2013, decided to raise the floor price for five percent rice to $410 per ton since early February 2013. However, enterprises now offer $385-395 per ton only.

An agriculture expert in Mekong Delta who asked to be anonymous, said that VFA’s decision has not been respected by export companies, because there has been no regulation stipulating the punishment on the enterprises which do not follow the decisions.

Therefore, he said, VFA has no voice in controlling the rice export prices. Enterprises would break promise on following the decision on the floor price just to scramble for clients.

Rice export contracts record high, but farmers still miserable

A report by VFA showed that in January 2013, rice exporters signed the contracts on selling 1.2 million tons of rice of different kinds, an increase of 184 percent over the same period of 2012.

Rice exporters in Mekong Delta have confirmed that they have obtained big contracts thanks to the competitive prices. The export price in January 2013 decreased by $20-30 per ton in comparison to that in late December 2012. At present, Vietnam’s offer price has become even lower than that of India and Pakistan.

The lowering of the export prices has made farmers in Mekong Delta suffer because they cannot sell rice for good prices. Nguyen Van Hoang in Hoa Loi commune of Chau Thanh district of Tra Vinh province complained that it’s very difficult to sell winter-spring crop rice this year.

Tran Van De, also a farmer in Chau Thanh, said during this crop he earns a modest profit of VND1 million dong per 1,000 square meters of rice field, while he fears the rice price would drop further. Fresh IR 50404 now sells at VND4,250 per kilo.

TBKTSG