VietNamNet Bridge – The rice price in the domestic market has been increasing sharply, which may lead to losses for exporters if they bid for the contract to provide 500,000 tons of rice to the Philippines.

Rice exporters reportedly are making preparations to join the bid to provide 500,000 tons of rice to the Filipino National Food Authority (NFA), which is scheduled to make a decision for the end of August or early September.

However, the Northern Food Corporation (Vinafood 1) and Southern Food Corporation (Vinafood 2), the two enterprises most likely to join the bid, have said they fear they would take loss even if they can sell at the ceiling price, since rice has become more expensive in the domestic market.

International newswires reported NFA as saying that six tenderers have confirmed their participation. These include two Vietnamese food corporations, Vinafood 1 and VInafood 2.

NFA has a budget of $235 million for the 500,000 tons of rice import deal. This means that NFA can pay up to $470 per ton to buy rice.

Vinafood 2’s general director Huynh The Nang said even if his enterprise can sell at the ceiling price of $470 per ton, it would still take a loss of $10 per ton due to the high price in the domestic market.

Nang said the domestic supply has a shortage, while rice exporters continue to collect rice in large quantities to fulfill contracts.

It is estimated that Vietnamese exporters need to deliver 2 more millions tons of rice. Therefore, Nang believes the market would still be hot in the time to come.

However, Duong Van Men, a small merchant in Lap Vo district of Dong Thap province, who specializes in collecting rice from farmers to sell to rice exporters, said that exporters would still make big profits at current domestic prices.

According to Men, white five percent broken rice in Mekong River Delta is now selling at VND9.2-9.3 million per ton, or $438-443 per ton (US$1 = VND21,000). This means that Vietnamese rice exporters would be able to make a profit of $27-32 per ton, if they can sell rice to the Philippines at the ceiling price level of $470.

In fact, the price would be lower than $438-443 per ton, because the Philippines is buying 25 percent broken rice, which means that rice exporters can mix 20 percent broken rice with the 5 percent broken rice they buy from farmers. Meanwhile, a kilogram of 20 percent broken rice is now traded at VND5,000.

In the domestic market, the rice price has increased again after one week of decline. IR 50404 rice in Mekong River Delta, which was traded at VND7,500 per kilo one week ago, now can be sold for VND7,600 per kilo.

However, the current price level is just VND100 per kilo lower than the highest level set a couple of weeks ago.

Meanwhile, fresh IR 50404 rice in An Giang and Dong Thap provinces have regained the VND5,200 per kilo level after dropping to VND4,800 per kilo last week.

TBKTSG