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Food corp to purchase 3.8m tonnes of rice

Update: February, 28/2012 - 10:07

HA NOI — The Viet Nam Southern Food Corporation (VINAFOOD 2) is planning to purchase about 3.8 million tonnes of paddy for commercial purposes despite slow rice exports.

Chairman of the Viet Nam Food Association (VFA) Truong Thanh Phong told the online newspaper VnPlus that so far this year, the Cuu Long (Mekong) Delta provinces had cultivated the IR50404 rice-variety in more than half of the growing areas. However, due to lower export demand, the price of rice was forecast to fluctuate dramatically.

VINAFOOD 2's plan was in line with the VFA's proposal of buying 1 million tonnes of rice for reserves since March 15.

The VFA suggested that the price of rice should be set at about VND5,000 (24 US cents) per kilo due to production costs which were estimated at VND3,400 (16 cents) per kilo.

Experts estimated that Viet Nam would export 6.5 million tonnes of rice this year, 9.72 per cent down against last year due to challenges on the domestic and world markets. The total export volume of rice for the first half of the year is expected to reach 3.5 million tonnes.

The domestic rice market would experience a tough time this year because of increased domestic rice output and greater world rice stocks that climbed to a record high of 100 million tonnes against global rice trading activities that had been reduced by 5-8 per cent, according to the VFA.

Tough competition

According to the Bangkok Post newspaper, Thailand might lose its leadership in rice exports to Viet Nam soon because of the government's rice mortgage scheme.

"Viet Nam, India and Myanmar are key competitors in the rice market but Viet Nam is the strongest competitor as the country is determined to become the world's leading rice exporter," said president of the Thai Rice Exporters Association Korbsuk Lamsuree.

She said Viet Nam could surpass Thailand within five years.

According to the Agriculture and Cooperatives Ministry, the countries would each export 6.5 million tonnes of rice this year.

Thailand and Viet Nam provided the largest share of rice to the global market last year.

However, their market share declined slightly from 2010 due to the rising demand for Indian rice, the newspaper said. — VNS

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