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Farmers face fight as rice exports drop off

Update: September, 14/2013 - 10:21
Farmers harvest this year's summer-autumn rice crop in the Mekong Delta province of Hau Giang. Both rice exporters and farmers are facing difficulties due to supply outstripping demand this year. — VNA/VNS Photo Duy Khuong

HCM CITY (VNS)— Rice exports for September is estimated at about 650,000 tonnes, bringing the third quarter's total to 1.84 million tonnes, 230,000 tonnes less than planned.

A Viet Nam Food Association (VFA) report says enterprises exported 620,532 tonnes of rice last month for a FOB (free-on-board) value of US$264.34 million, a year-on-year fall of 32.55 per cent in volume and 33.09 per cent in value.

With supply outstripping demand, rice exporters have faced considerable difficulties this year. Recently, the Thai government decided to slash its rice prices to clear its stock, affecting the rice market in Asia and posing a greater challenge for local exporters.

The Thai Government has decided to lower the price of inventory rice through several means, including organising auctions for exporters, auctioning on the Agricultural Futures Exchanges of Thailand (AFET), selling rice under government contracts and even selling directly to international traders.

However, results of such moves have not been as good as expected since demand is weak and buyers are still cautious about Thailand's motivation for depleting its inventory.

Buyers are still waiting and watching the market's movements, as they are not sure of the prices that the Thai government will accept; and how deep the price cut will be.

In general, a strong reduction in Thai rice prices has had global impacts, and other Asian markets have been particularly affected.

In addition, India is going to harvest its major Kharif crop, which is going to be a bumper crop this year, yielding 90 million tonnes.

There is yet another development that is expected to affect the world rice market.

The Indian parliament has recently passed the Food Security Bill, which is the biggest national food programme in the world that will support 800 million people or 67 per cent of the Indian population. The programme is expected to cost $18 billion.

But there are concerns over how such a huge programme can be carried out.

Export prices of Indian rice have reduced much recently, mainly due to a depreciation of its currency, the rupee, while prices in the domestic market have been stable, the VFA said.

China has continued to be the biggest importer of Vietnamese rice this year, but there has been a slowdown ahead of the harvest season

Demand from Africa has been stable, but there will be more critical competition among rice exporters when the prices of Thai, Indian and Pakistani rice all reduce, shortening the price gap with Vietnamese rice.

Philippines and Indonesia will look to import rice in the remaining months of the year, but there will be fierce competition among rice suppliers to meet this demand, VFA said.

The report said that as of August 31, Viet Nam had exported 4.67 million tonnes of rice for a FOB value of $2 billion, a reduction of 7.86 per cent in volume and 10.9 per cent in value from the same period last year. — VNS

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