VN urged to stockpile rice as Thailand cuts export prices
VN urged to stockpile rice as Thailand cuts export prices
With Thailand repeatedly cutting its rice exporting prices, the Vietnam Food Association is calling on the government to stockpile more rice to maintain domestic prices and help farmers.
The Thai government is seemingly unable to maintain its program to keep a large stockpile of some 16 million tons of rice, and Thai rice is thus getting cheaper on an almost daily basis, threatening the business of Vietnamese rice exporters as well as those from India and Pakistan.
Thai rice is currently exported at some US$380-$390 a ton, equal to Vietnam’s. Many of Vietnam’s importers have thus either canceled contracts or asked to buy at lower prices, threatening that they would switch to Thai exporters otherwise, according to the VFA.
The association thus suggested that the government stockpile 300,000 tons of rice from farmers between September 15 and November 15 to maintain domestic prices.
Should the proposal be approved, Vietnam will, for the first time ever, stockpile rice for all three of this year’s crops. Earlier this year, the government stockpiled 1 million tons of rice in each of the winter-spring and summer-autumn crops.
VFA said the stockpiling will keep businesses at ease instead of bargaining off their stocks to have money to settle debts, which would only exacerbate the current situation.
VFA chairman Truong Thanh Phong said only some 300,000 tons of the rice stockpiled for the summer-autumn crop have been sold.
“With rice businesses suffering a $30 loss on each ton of rice exported, and some 700,000 tons of rice remaining on stock, the total damage is up to $24 million,” Phong said.
The chairman said stockpiling more rice should be seen as a temporary solution, and any future price adjustments should be based on price development from the Thai side.
Nguyen Dinh Bich, an expert on the rice market, meanwhile said the situation is not all dark for local exporters, as there is no official information that Thailand will cut its export prices further.
“Vietnam can still rely on traditional markets like Indonesia and the Philippines when they resume rice imports,” he said.
“Meanwhile, once the situation returns to normal in Thailand, China will return to buying from Vietnam as our prices are more competitive than those of Thailand.”
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