According to the reflection of rice exporters, if limiting the amount of exported rice as the Ministry of Industry and Trade proposed to the Prime Minister, it will cause enterprises to be in a dilemma, many businesses may suffer losses.
Nguyen Chanh Trung, director of the rice industry of Tan Long Group – T&T Group, one of the largest rice exporters in the country, said that it is necessary for the Government to balance exports ensuring food supply for people when the COVID-19 pandemic is strained.
However, according to Mr. Trung, the Ministry of Industry and Trade proposed to export only about 400,000 tons in April 2020, which will make it difficult for enterprises. Mr. Trung said that due to the order to stop exporting rice on March 24, nearly 200,000 tons of rice were clogged in enterprises.
Along with that, the delivery will be based on the time the enterprise declares to the Customs, meaning that whoever declares first will be shipped first. Mr. Trung said that enterprises must have the code of containers, the seal container number before customs declaration.
“The risk is that if the contract is large and the goods are not timely delivered in April, then the company must postpone to May to export, while May is unclear. This will cause businesses to lose additional storage costs,” Mr. Trung analyzed.
Also according to Mr. Trung, after having an order to suspend export, some items’ price such as sticky rice’s decrease up to 800 – 1,000 VND/kg. Types of fragrant rice, Nang Hoa, Dai Thom 8, etc. which are the main export items of Vietnam, also dropped the price by 300-500 VND/kg.
Particularly for IR50404 white rice, people sow less in this year. This is also the goods that the General Department of State Reserve want to purchase about 300,000 tons, leading to the price increased from 9,300 VND/kg to 9,600 VND/kg.
“Currently, there are about 200,000 hectares of winter-spring rice in harvest; Early summer-autumn rice will be harvested from the beginning of May. If the rice’s price continues to fall, farmers will suffer losses.”
The representative of Tan Long – T&T Group expressed his concern that Apri and May were the “export season” because foreign traders coming to Vietnam to sign many rice import contracts. If they stop importing this year, the price of rice will go down.
Meanwhile, the director of another big exporting enterprise in the South said that the inventory in exporting enterprises is still very large. If they are not exported, businesses will face bankruptcy.
“For hundreds of thousands of tons of rice are packed and put on board for export, it is unknown how to handle them. Enterprises before exporting have loaned money from banks to buy rice. If it is left out for a long time, the enterprises will not have cash flow to repay the loan and interest,” he analyzed.
This enterprise leader said that, on average, Vietnam exports about 600,000 tons of rice each month. Therefore, if we can only export 400.000 tons, the rice inventory is very large.
Vietnam stopped exporting, Thai rice’s price increased sharply
According to the Department of Agricultural Product Processing and Market Development (under the Ministry of Agriculture and Rural Development), by the end of March 2020, the country’s rice export reached 1.67 million tons, turnover reached nearly 775 million USD, rising nearly 20% in volume and nearly 30% in value compared to the same period last year.
In the first 2 months of this year, tThe largest importer of Vietnamese rice is the Philippines, followed by China, Taiwan, and Mozambique.
Regarding the amount of exported rice this year, the Ministry of Agriculture and Rural Development calculates that in 2020, the whole country will reach 43.5 million tons of paddy, of which the Winter-Spring crop is estimated to reach 20.2 million tons of paddy, particularly the output of the Mekong Delta provinces is conjectured at 10.8 million tons.
The demand for consumption and domestic reserves in 2020 is nearly 30 million tons of paddy. In particular, the consumption of people is 14.26 million tons; processing service is 7.5 million tons; serving livestock is 3.4 million tons; using as seed and reserve seed is 1 million tons and domestic reserve is 3.8 million tons.
Thus, the remaining paddy for export is about 13.5 million tons, equivalent to 6.5 – 6.7 million tons of rice.
According to the Vietnam Food Association, after Vietnam halted rice export (on March 24), Thai rice’s price jumped to 548 – 552 USD/ton, increasing by more than 80 USD/ton within about 10 days.