For the first time in the last many years, the summer-autumn rice price does not decrease, even though it is now the highest harvesting season. The price keeps the upward trend, bringing more profits to farmers.
Vietnamese farmers now can sell rice well thanks to Thai price increases caused by the Thai government policy on supporting Thai farmers. Meanwhile, the fertilizer price and other input costs have increased dramatically recently, which has forced farmers to raise the sale prices.
More buyers, stiffer competition
Experts have pointed out that the rice price has been escalating because of the stiff competition on the market, when more and more merchants have jumped into the market and competed in collected rice from farmers.
In previous years, the material rice price was always decided by export companies. However, the situation is quite different this year: rice has been believed to bring high profits, which has prompted more the more merchants joint the market and store rice in anticipation of the price increases.
Truong Thanh Phong, Chair of the Vietnam Food Association, said that there have been more and more rice collectors joining the market. Those, who have money, no matter they are domestic or foreigners, all can set up husking factories, storehouses, buy boats to travel to rice fields, not only export companies as seen previously.
Also according to Phong, since the price in Thailand has become overly high, Thai businessmen have flocked to Vietnam to buy scented rice to export to China. Meanwhile, Chinese businessmen have also arrived in Vietnam and order rice with Vietnamese businessmen.
Vuong Tai Hien, a merchant at Moi Market in An Giang province, said that in order to exist and develop, merchants now need to have huge capital to purchase rice and store rice. He said that after purchasing husk rice, he will have the rice husked to get unpolished rice and only sell the rice if the prices are good. If not, he will store the rice and wait for the prices to go up. He does not hurry to sell rice to export companies when the price remains low.
Hien said that in 2011, he had 400 million dong in capital, but he has decided to double the capital after realizing that trading rice is a profitable business. With the current steady price increase of 100 dong per kilo per day, if someone stores 100 tons of rice, he would earn the profit of 10 million dong overnight.
Farmers have more power in price negotiations
The price of summer-autumn crop in Mekong Delta provinces in July increased by 54 percent over the same period of the last year and by 22 percent over the winter-spring crop price. After a lot of years, can farmers now sell normal rice IR 50404 at 7000 dong per kilo.
A lot of farmers even do not have to carry rice home for drying, but they can sell wet rice right at the fields at 6000 dong per kilo. The domestic rice market has been supported by the good information about the export markets.
According to the Ministry of Finance, farmers have to spend 3760 dong for every kilo of summer-autumn rice, up by 20 percent over the last year. Meanwhile, with the current rice price, the profits earned by farmers are higher than the expected level of 30 percent.
The rice price escalations have given farmers the power to define the sale prices. Exports companies have complained that it is getting more and more collect rice from farmers, because farmers tend to store rice for better prices.
“I think that we should not curb the rice price. Only when farmers can sell rice at high prices, will they be able to cover expenses and have money for re-investment,” said Ngo Minh Lam, Director of An Giang Food Export Company.