HCM CITY (VNS) — The Ministry of Agriculture and Rural Development has asked the Government to offer financial support to farmers who agree to stockpile rice.
With world rice prices expected to fall because of abundant supply, the ministry said it wanted to help farmers by preventing prices from falling in the domestic market.
The stockpile plan would begin on a trial basis in An Giang, Kien Giang, Dong Thap and Tra Vinh provinces.
Farmers, agricultural cooperatives and farm owners who agree to stockpile rice receive interest-free loans equivalent to the value of the stockpiled volume for a maximum of three months.
Businesses that take part directly in rice production or have contracts to purchase rice from farmers will also have interest-free loans.
In addition, food companies assigned to buy and stockpile rice by local authorities will receive interest-free loans as well.
Under the plan, the country is expected to stockpile a maximum of 2.5 million tonnes of rice from the winter-spring crop and the summer-autumn crop.
Last year, the Government provided interest-free loans to enable food companies to buy 1.5 million tonnes of rice for a temporary rice reserves.
Truong Thanh Phong, chairman of the Viet Nam Food Association, said rice exports in the first quarter of next year were expected to drop compared to earlier this year.
The Philippines and Indonesia, two important markets for Vietnamese rice in Asia, have already announced they would not need to import rice next year.
Several African countries have high inventories as well, so they are also unlikely to import rice during the first quarter of next year.
Because of higher purchase prices, Thailand has accumulated a large inventory, and if it decides to slash prices to clear its stock, rice prices are expected to fall further.
Phong said that the prices of Vietnamese rice were equivalent to the prices of rice from India and Pakistan.
At such prices, and with better logistics conditions, Viet Nam could compete with Pakistan and India in exporting rice to China and Africa when demand resumes.
The Food and Agriculture Organisation (FAO) has forecasted that global rice production would once again outpace consumption for the 2012-13 period, resulting in oversupply.
It is expected to reach 486 million tonnes, up about one per cent from the previous year.
The FAO also predicts that the international rice trade will have a record-high 37.5 million tonnes in 2013, up around two per cent against 2012. — VNS