Rice exporters rush to store rice for fear about price increases

As planned, from October 7, Thailand will kick off the plan to collecting rice from farmers at high prices in order to ensure the high profits for the countries’ farmers. The new policy is believed to have big impacts on the rice markets in the world, including Vietnam.

In fact, for the last many years, the domestic prices have been continuously breaking records. Fearing that the rice prices would increase further in the time to come, Vietnamese exporters now try to collect rice to store, as much as possible.

Hai Khuyen, the owner of Hai Khuyen rice granary on Phan Dang Luu Street in Phu Nhuan district, said that there is no rice product priced at 10,500 dong per kilo any more. The cheapest product is now selling at 11,000 dong, while high class products are priced between 16,000 and 22,000 dong per kilo.

The rice price has been increasing sharply over the last few weeks in HCM City, Scented rice products have seen the prices increase by several thousands of dong per kilo. Thai and Taiwanese scented rice price, for example has increased by 2000 dong to 15,500-17,000 dong per kilo.

“Over the last few weeks, the wholesalers inform new rice prices every day. The rice price has been skyrocketing, the same thing which once occurred in April 2008,” Khuyen said.

The domino effect

Thailand mostly exports the rice products with higher quality than Vietnam. However, once Thai rice increases in price, Vietnamese export price would also increase accordingly.

As planned, from October 7, 2011, the government of Thailand will apply the subsidization mechanism in collecting rice from farmers. It is clear that once the policy is applied, the production costs of Thai rice would increase significantly.

Analysts believe that Thai 100B rice, the most popular Thai export product, would see the price exceeding the 750 dollars per ton threshold (the current price is 620 dollars per ton). If so, the rice prices in the world would see big changes, because Thailand remains the biggest rice exporter in the world.

At present, all the harvested summer-autumn rice has been sold out. “I believe that farmers now do not have rice to sell. Only merchants, husking factories and traders now have rice,” said Huynh Tin Dung, Business Director of Minh Cat Company. “The retail prices will increase if there are just small signs of export price increases.”

Vietnamese people now mostly consume fragrant rice, not the rice products for export. However, Minh, the owner of the rice granary at Bac Ninh Market in Thu Duc district, said that once companies speed up the rice collection, the domestic prices would increase sharply.

“In August, when hearing that rice exporters could sign many rice export contracts, sellers once pushed the prices up. The price increased by 500-600 dong per kilo a day sometimes,” Minh said.

According to rice merchants, the rice retail price has increased by 30 percent at least. The sharpest price increases occur in the last two months.

Supply profuse

Nguyen Trong Kien, Deputy Chair of the Vietnam Food Association VFA, said that Mekong River Delta would harvest the third-crop rice on 0.5 million hectares. In theory, the rice supply in the market is always profuse, and the domestic price increases will not occur.

However, Kien believes that the information from the Thai market has put a hard pressure on the domestic market.

“When Thai prices increase, foreign importers will have to seek other supply sources, including Vietnam. When Vietnam strengthens rice exports, the domestic prices will increase accordingly,” he said.

Khuyen said that the quality of the third-crop rice is worse than that of the summer-autumn and winter-spring crops. Besides, fearing that the price would increase further, Khuyen and other merchants have to store rice.

“The rice volume I have is big enough to sell for one month,” she said.

Meanwhile, Dung said Minh Cat Company has spent 6 billion dong to store 600 tons of fragrant rice.

http://vietnambusiness.asia/rice-exporters-rush-to-store-rice-for-fear-about-price-increases/