The dollar’s continuing devaluation is hurting rice exporters, because they are subject to contracts signed before the decline. One rice exporter reportedly incurred a loss of VND11bil due to the dollar devaluation and higher material prices.

According to Pham Van Bay, Director of An Giang-based Afiex, some rice exporters are suffering losses because they hastily signed contracts, when they were not sure about the materials. Now, when they hurry to collect material rice for processing and export, the paddy prices are skyrocketing, pushing them into a corner

Nguyen Thi Nguyet, Secretary General of the Vietnam Food Association (Vietfood), has confirmed that rice exporters are facing big difficulties: the dollar value is sliding and banks are tightening credit. Nguyet said that Vietfood will work with the Ministry of Industry and Trade in the afternoon on March 14 to discuss solutions to the current problems.

Nguyet said that Vietfood will promulgate the regulation on signing new rice export contracts in several days, which stipulates that enterprises can sign contracts on exporting rice only when they can show that they already have 70% of necessary volume in reserve.

Since the beginning of the year, Vietfood advised its members several times to be cautious when setting export prices, as it anticipated the escalation.

According to Bay, with the high paddy price levels, at VND4,500-4,600/kg, farmers still can earn big money (50% of the production cost) despite fuel and fertilizer price increases.

According to the Tien Giang Agriculture and Rural Development, the net profit of the province’s 2007-2008 winter-spring crop increased 30% over the last winter-spring crop.

Bay advised farmers to store rice and not sell in big quantities, as the rice price is forecast to increase further.

Most Vietnamese rice exporters have stopped offering new contracts as the rice price escalates every day, which makes it difficult to define export prices. Vietnamese enterprises are now focusing on fulfilling the contracts it has signed with the Philippines.

The export price of Vietnam’s rice has risen by 50-53% since mid February compared to the same period of the previous year, to $430460/ton on average. In HCM City and Cuu Long River Delta, the 5% broken rice is selling at 550/ton, up from the $480/ton level last week, while the price of 25% broken rice has also risen from $450/ton to $520/ton.

The paddy price on the domestic market has reached its highest peak and is expected to rise further in the near future. The retail prices of rice are now at VND8mil/ton ($580/ton) in HCM City and VND11mil/ton in Hanoi.

According to the Ministry of Industry and Trade, the rice export price will see slight increases this month due to the high demand from import countries and the possible output decreases in big rice export countries, like Thailand and Vietnam.

Vietnam exported 381,000 tons of rice in the first two months of the year, reaping $150mil, an increase of 47% in quantity and 78% in value over the same period last year.
Source: Vietnamnet