Concerns increase as Vietnam’s Loc Troi Group wins rice exporting bids at low prices
Concerns increase as Vietnam’s Loc Troi Group wins rice exporting bids at low prices
Loc Troi Group Joint Stock Company announced on Thursday that it had won bids to supply a total of 100,000 metric tons of rice to Indonesian state procurement agency Perum Bulog, but the bid price stands at US$563 per metric ton, down $16 against the starting rate, causing concerns over local rice market instability and losses facing farmers.
Loc Troi Group JSC wins bids to export 100,000 metric tons of rice to Indonesia. Photo: Supplied |
The bids will generate over US$55 million in profit for the group.
In particular, Loc Troi Group won two bid packages with a combined volume of 60,000 metric tons, while one of its affiliates secured a tender to export 40,000 metric tons of rice to Indonesia.
Perum Bulog announced on May 22 that Loc Troi and Dai Tai Hi-tech Farming JSC, a unit of Loc Nhan Food JSC, which is a member of Loc Troi’s ecosystem, won bids of 100,000 metric tons of rice out of the total 300,000 metric tons.
The entire volume is set to be delivered to the Indonesian agency within two months.
Loc Troi Group is operating 10 rice processing plants with a total capacity of 10,000 metric tons daily to make it ready to conduct the shipment.
The company pledged to buy rice from farmers at a higher price than the rate set on the local market.
Many firms and experts said that when a company signs a rice exporting agreement at a high price, farmers will benefit from the deal as problems related to rice consumption can be addressed.
However, low bid prices might lower farmers’ income and affect the local market.
A representative of a Kien Giang-based company specializing in rice export told Tuoi Tre (Youth) newspaper that offering a high or low bid price is the right of firms.
However, if such companies win bids at low prices, the domestic prices of rice will become unstable.
The representative presented two scenarios for enterprises winning bids at low prices. Firstly, these firms will suffer losses after exporting rice to the buyers.
The other scenario is that these local exporters will purchase rice from farmers at low prices.
Rice exporting bids won at low prices will take a heavy toll on domestic rice rates and the local rice market, the representative affirmed.
Expressing worries, a representative from the Vietnam Food Association highlighted potential repercussions on rice export prices should Loc Troi Group and its subsidiary proceed to sell rice to Indonesia at significantly reduced rates.
