Rice exports ready for recovery

Rice exports ready for recovery

Workers harvest rice in a Mekong Delta paddy. After several dim months of low prices, things are looking up for Vietnam’s rice export market as prices climb and experts predict a bountiful harvest. After a gloomy several months, Vietnam’s rice export market looks set to rebound on a healthy harvest and climbing prices.

More than five million tons of rice will be harvested this month and next in the Mekong Delta, Agriculture and Rural Development Minister Cao Duc Phat said in a statement on the government website. The delta produces about 60 percent of the national rice crop, and accounts for 99 percent of rice exports, according to the Vietnam Food Association (VFA). Earlier this week, deputy agriculture minister Diep Kinh Tan said the world’s second-largest rice exporter may increase exports by 6.4 percent to five million tons this year. The weather in the southern Mekong Delta’s main rice growing areas “has been favorable for the crop,” he said. Prime Minister Nguyen Tan Dung has set this year’s rice export target at 4.5-5 million tons, compared with 4.67 million tons in 2008. The target would be adjusted at the end of June based on rice production numbers and market trends, a government statement said. The prime minister has also asked the State Bank of Vietnam to make sure the local banking system will provide enough credit to rice producers and implement the government loan subsidy program, which grants interest subsidies of 4 percent on companies’ borrowings. VFA Chairman Truong Thanh Phong said local exporters have already signed contracts to ship three million tons of rice by the end of June, which he said was doable considering the winter-spring harvest’s projected output of 9.4-9.5 million tons. The Information Center for Agriculture and Rural Development (Agroinfo) has said Vietnam would increase rice shipments to new markets in Africa, especially Nigeria and South Africa. There are now seven African importers expressing interest in Vietnamese rice, according to Agroinfo. Phong said his association would monitor the export of rice based on the annual target set by the government this year, instead of monthly or quarterly targets like previous years. He estimated that the rice export revenue this year would be around US$2 billion. The VFA Chairman said he expected the entire winter-spring harvest and all of last year’s rice stockpiles to be sold by mid 2009. He expected both exporters and farmers to profit, he said. The government has ordered exporters to purchase rice from farmers at no lower than VND3,500 per kilogram. In line with current export prices, Phong said businesses would buy rice at VND4,000-4,500 per kilogram. He said as input costs have dropped this year, the average production cost for a kilogram of unhusked rice is only VND1,641 (10 cents). The price of Vietnam’s 25 percent broken rice has risen 13 percent this month on news of a deal to supply 1.5 million tons to the Philippines this year, according to VFA. The premium range, 5 percent broken rice, is now sold at $440 per ton FOB (free on board). The Food and Agricultural Organization (FAO) expects strong rice demand as the global economic crisis is prompting consumers to switch away from more expensive food. Global consumption of rice is expected to be around 426 million tons, an increase of around 1 percent from the previous year, FAO said. Source: TN, Agencies